Shopping Guide: Life Insurance
Your life insurance plan should be structured to meet your life circumstances (for example, a single person may need less life insurance than a couple or a couple with children).
Utilize the services of trained life insurance professionals. Check if your agent and company are licensed to do business in your state.
An agent is not allowed to be the beneficiary of a life insurance policy the agent has sold you – unless the agent is a family member or a funeral director. Nor is the agent allowed to misrepresent any aspect of the insurance policy being sold or a policy you already own or encourage you to put incorrect information on your application.
Decide what type of insurance policy you want: term, whole life, universal life or a combination of these insurance policies. Make sure you calculate your total premiums for the life of the policy. It is possible to pay more in premiums than the face amount of the policy.
Some insurance policies have an accelerated benefits feature, which is a policy provision that lets the policyholder, under certain conditions, collect part of the death benefit before he or she dies.
Be alert to any promise that you will never have to pay premiums again (the vanishing premium pitch). Also, make sure you are aware of any surrender penalties.
Don’t sign any insurance application that has not been completely and accurately filled in and dated, and make a copy for your files.
Immediately study the insurance policy once you receive it and make sure it’s exactly what you ordered: many life insurance companies will offer a “free-look” (or “right to review”) provision. Take advantage of it.
The policy owner is the only person who can cancel the insurance policy. If premium payments are not being made the insurer will generally send a payment notice before cancellation.
Make your premium payment check to the life insurance company, not the agent.
A failure to pay your premium will cause your life insurance policy to lapse or it could be terminated.
Review your insurance policy periodically. Your insurance needs change during different periods of your life.
Dec 30, 2008
Shopping Guide: Life Insurance
Jun 13, 2008
Retirement: Medical and Life Insurance
Retirement: Medical and Life Insurance
by Michele Smith
If you are a union worker retiring now, you are exiting the workforce after a gold rush of paid medical expenses and lucrative defined benefit or pension plans. In 2003, the average life span became higher at 77.6 years. Some argue that overweight issues and new illnesses will stop the trend of Americans living longer. Because people are living longer, the financial future of tomorrow's retirees is at stake. When retired, you will have time to mine financial reports, find gold nuggets of understanding about the U.S. economy, and sift through your golden loot with your tax advisor, investment broker, insurance professional, and attorney. It is the right here and now, while you are still swinging the pick axe in your working years, where time can be your best friend and mentor. Know and understand what it is exactly you have stashed away and how you can protect or grow the savings you have worked so hard to get. So when will you call it a "done deal" and let the upper management and human resource department folks know you will retire? In today's world, it is a "win-win" to have the best financial advice available when considering your retirement options.
Knowledge is Power
Before you "turn in your hard hat", ask your human resource department for a hard copy of your medical benefits, disability, and life insurance benefits, or any other benefit which is offered to you as a retiree. Many employers now allow employees to get this type of information online using a personal computer with a PIN (personal identification number). If you don't have one, ask your human resource department to help you learn how to get the right information to get your information online. If you don't feel right getting information online over the computer, ask your human resource department for help.
Medical Coverage: Are the Big Buck Days Nearly Over?
General Motors (GM) spent $5.6 billion in 2004 to care for 1.1 million active and retired employees and their dependents. In 2003, health-care spending amounted to $1,525 for every vehicle GM produced in the U.S. 69% of the beneficiaries of medical coverage are retirees. If you are getting ready to retire and you are sixty-four (64), you need to look into your medical supplement insurance or Medigap. Be prepared for your union to make future changes, as GM may, to its current medical plan.
Many families already know about rehabilitation therapy and how important it is for triggering events like stroke or heart attack. In the case of Medicare supplement (or Medigap), Julia Apple (not her real name) was really helped by the policy her company had taken out at her retirement. Julia had a very serious stroke that left one side or her body without any strength and for about three months, she required rehabilitation therapy. The cost of the first one-hundred (100) days of her rehabilitation therapy was covered by her Medicare and Medigap policies.
The focus areas of medical insurance coverage in your retirement are: Medicare, the government subsidized health insurance for retired workers, Medigap, a privately paid for supplement to government health insurance, and long term care insurance. Medigap insurance may often be taken out by your company when you retire.
Medigap offers a wide assortment of medical supplemental benefits which Medicare will not, such as rehabilitation. These supplemental benefits are individually categorized as A-J. For each letter, A, B, C, D, E, F, G, H, I, and J, you will find a type of medical care, such as hospice care, for example. A Medigap policy will differ from state-to-state and from insurance-carrier-to-insurance-carrier. In Indiana, consult an independent insurance professional for advice in getting Medigap coverage, or contact your local Senior Health Insurance Information Program (SHIIP) office to get information and referral.
The single most serious financial issue is what to do and how to cope when the Medicare and Medigap policy benefits run out. This is where long term care insurance comes in and provides income to the person being cared for to help offset the out of pocket costs. In 2004, Genworth, a large long term care insurance provider estimated the national average for long term care costs was $75,000.00.
Life insurance: Is it Fool's Gold?
While it may be tempting to respond to direct mail offers you receive in the mail or solicitations on television, there is nothing like a face-to-face conversation with an agent who has the ability to meet you at your home or office to discuss your concerns.
Many of today's retirees do not have a permanent life insurance policy. However, they do have term insurance through their employer. Meet with an independent life insurance agent from a firm with good financial ratings and ask them to review or audit the policies you have. You can find out if the insurance you have through your employer is portable and also if it would be affordable for you to convert it to a permanent policy at your retirement. In many cases, a competent insurance professional will be able to assist you with determining the type of coverage that you should have. If you aren't sure about the advice you receive, seek a second opinion from another representative from a highly rated firm with a local sales office.
Life insurance is not fool's gold. It can help your family to have an income if you pass away; it can supplement retirement income, be borrowed against, and can help you minimize financial stress on the people you love at their most critical hour.
Jun 6, 2008
Quotes: How to Buy Life Insurance
Quotes: How to Buy Life Insurance
by Joanthan Askew
Who needs life insurance?
If there are people who depend on one person's income as the principal financial support, then the principle person needs life insurance to protect the dependant's from financial loss.
Older couples also may need life insurance to protect a surviving spouse against the possibility of the retirement savings being exhausted by unexpected medical expenses. And if persons have substantial assets then they need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.
Purchasing Life Insurance
The modern mindset to life insurance has changed. Now many fill out applications for life insurance through websites or fill out applications that was mailed to them and they receive their policies online or through the mail. Are these methods wise? Life insurance is an important purchase. One should be well informed, educated to what will fit their needs and goals.
As you will read on life insurance is an important asset to a financial portfolio or financial plan. Having a professional asset in choosing the correct coverage will help a person achieve their goals and will meet an important need or several needs. Consulting with a professional also will help persons see some other avenues of need that may be open when purchasing life insurance.
In other words, do not be reluctant to discuss a purchase of life insurance with a professional (life insurance agent). Although many large companies provide life insurance packages on the internet or through the mail, the coverage may be insufficient in meeting your needs and goals. Talking to a professional agent will help in making the best decision on purchasing life insurance that will meet needs and accomplish attaining financial goals.
How Much Life Insurance is Needed?
Life insurance is based on replacing a principle persons income for the benefit of dependents if do to the death of the principle. A formula of between five and ten times the principles annual salary is often used to calculate how much coverage is needed. Another method is to purchase life insurance based on individual needs and goals. Determine what goals or needs are to be meet with life insurance; also determine the principles unique income replacement needs.
Insurance benefits are generally income tax free and if chosen wisely it will support ones own lifestyle. Start off by determining the principles net earnings after taxes. Then add up all personal expenses such as food, clothing, recreation, memberships, vacations etc. The balance shows annual income that the life insurance will need to replace. You will want a death benefit amount which, when surrendered to the beneficiary or others, will provide income annually to cover this amount. Then, add to the balance one-time expenses such as college tuition for children or paying any debt that is incurred, like credit cards, car notes, or mortgage.
It is important to estimate the final expenses such as estate taxes, medical costs, and funeral costs.
Types of Life Insurance
Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.
Cash value can be accessed at any time through policy "loans". Since these loans decrease the death benefit if not paid back, payback is optional. Cash values are not paid to the beneficiary upon the death of the insured; the beneficiary receives the death benefit only. If the dividend option: Paid up additions is elected, dividend cash values will purchase additional death benefit which will increase the death benefit of the policy to the named beneficiary.
Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees.
Universal life policies guarantee, to some extent, the death proceeds, but not the cash function - thus the flexible premiums and interest returns. If interest rates are high, then the dividends help reduce premiums. If interest rates are low, then the customer would have to pay additional premiums in order to keep the policy in force. When interest rates are above the minimum required, then the customer has the flexibility to pay less as investment returns cover the remainder to keep the policy in force.
The universal life policy addresses the perceived disadvantages of whole life. Premiums are flexible. The internal rate of return is usually higher because it moves with the financial markets. Mortality costs and administrative charges are known. And cash value may be considered more easily attainable because the owner can discontinue premiums if the cash value allows it.
The disadvantages to this type of life insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.
Term Insurance Term life insurance or term assurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life, and variable universal life.
Term life insurance provides coverage for a limited period of time, the relevant term. After that period, the insured can either drop the policy or pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.
Term insurance functions in a manner similar to most other types of insurance in that it satisfies claims against what is insured if the premiums are up to date and the contract has not expired, and does not expect a return of Premium dollars if no claims are filed. As an example, auto insurance will satisfy claims against the insured in the event of an accident and a home owner policy will satisfy claims against the home if it is damaged or destroyed by, for example, an earthquake or fire. Whether or not these events will occur is uncertain, and if the policy holder discontinues coverage because he has sold the insured car or home the insurance company will not refund the premium. This is purely risk protection.
Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.
Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.
Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier.
Joint life: Either a term or permanent policy insuring two or more lives with the proceeds payable on the first death.
Survivorship life or second-to-die life: Life insurance policy insuring two lives with the proceeds payable on the second (later) death.
Single premium whole life: Life insurance policy with only one premium which is payable at the time the policy is issued.
Modified whole life: A whole life policy that charges smaller premiums for a specified period of time after which the premiums increase for the remainder of the policy.
May 3, 2008
Life Insurance Explained
Life Insurance Explained
by Matt McWilliams
Regardless of how fancy the policy title or sales presentation might appear, all life insurance policies contain benefits derived from one or more of the three basic kinds shown below. Some policies due combine more than one kind of life insurance and can be confusing.
- Term Life Insurance
- Endowment Life Insurance
- Whole Life Insurance
- Variable Life Insurance
- Universal Life Insurance
- Variable Universal Life Insurance
Term Life Insurance
Term life insurance is death protection for a term of one or more years. Some companies are offering policies with terms up to thirty years. Premiums on term insurance remain level during the life of the policy. Term Life Insurance has no cash value account. Death benefits will be paid only if you die within that term of years. Term insurance generally provides the largest immediate death protection for your premium dollar.
Some term life insurance policies are renewable for one or more additional terms even if your health has changed. Each time you renew the policy for a new term, premiums will be higher. You should check the premiums at older ages and the length of time the policy can be continued.
Some term insurance policies are also convertible. This means that before the end of the conversion period, you may trade the term policy for a whole life or endowment insurance policy even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.
Life Insurance "Endowment"
An endowment insurance policy pays a sum or income to you, the policyholder, if you live to a certain age. If you were to die before then, the death benefit would be paid to your beneficiary. Premiums and cash values for endowment insurance are higher than for the same amount of whole life insurance. Thus endowment insurance gives you the least amount of death protection for your premium dollar.
Whole Life Insurance
Whole life insurance gives death protection for as long as you live. The most common type is called straight life or ordinary life insurance, for which you pay the same premiums for as long as you live. These premiums can be several times higher than you would pay initially for the same amount of term insurance. But they are smaller than the premiums you would eventually pay if you were to keep renewing a term insurance policy until your later years.
Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher than for ordinary life insurance since the premium payments are squeezed into a shorter period.
Although you pay higher premiums, to begin with, for whole life insurance than for term insurance, whole life insurance policies develop cash values which you may have if you stop paying premiums. You can generally either take the cash, or use it to buy some continuing insurance protection. Technically speaking, these values are called nonforfeiture benefits. This refers to benefits you do not lose or forfeit when you stop paying premiums. The amount of these benefits depends on the kind of policy you have, its size, and how long you have owned it.
A policy with cash values may also be used as collateral for a loan. If you borrow from the life insurance company, the rate of interest is shown in your policy. Any money which you owe on a policy loan would be deducted from the benefits if you were to die, or from the cash value if you were to stop paying premiums.
Variable Life Insurance
Variable life insurance, provides permanent protection for you and death benefits to your beneficiary upon your death. The value of the death benefits may fluctuate up or down depending on the performance of the investment portion of the policy. Most variable life insurance policies guarantee that the death benefit will not fall below a specified minimum, however, a minimum cash value is seldom guaranteed. Variable is a form of whole life insurance and because of investment risks it is also considered a securities contract and is regulated as securities under the Federal Securities Laws and must be sold with a prospectus.
Universal Life Insurance
Universal Life insurance is a variation of Whole Life. The insurance part of the policy is separated from the investment portion of the policy. The investment portion is invested in bonds and mortgages, the investment portion of Universal Life is invested in money market funds. The cash value portion of the policy is set up as an accumulation fund. Investment income is credited to the accumulation fund. The death benefit portion is paid for out of the accumulation fund. Unlike Whole Life Insurance, the cash value of Universal Life Insurance grows at a variable rate. Normally, there is a guaranteed minimum interest rate applied to the policy. No matter how badly the investments go by the insurance company, you are guaranteed a certain minimal return on the cash portion. If the insurance company does well with its investments, the interest return on the cash portion will increase.
Variable-Universal Life
Variable universal life insurance pays your beneficiary a death benefit. The amount of the benefit is dependant on the success of your investments. If the investments fail, there is a guaranteed minimum death benefit paid to your beneficiary upon your death. Variable universal gives you more control of the cash value account portion of your policy than any other insurance type. A form of whole life insurance, it has elements of both life insurance and a securities contract. Because the policy owner assumes investment risks, variable universal products are regulated as securities under the Federal Securities Laws and must be sold with a prospectus.
Rates and coverage vary form state to state. Shop around on your own and talk to an independent insurance agent to make sure you get a plan that's right for you. It's amazing how much rates may vary from company to company for the same coverage.
Mar 4, 2008
Tips About Life Insurance Rates
Tips About Life Insurance Rates
by Chimezirim Odimba
If you want to bring down your life insurance rates by a huge margin, then you'll do well to apply the following tips. Just reading through won't do you much good. It's what you apply that will bring savings.
1. You will lower your life insurance rates by a huge margin if you take out time to do extensive and thorough shopping, and the simplest way to begin is to inquire from your trusted acquaintances what their experiences with their insurers are.
It's also a good way of getting the best value in life insurance as you'd be basing your choice on user experience and not any form of media hype. You can count on your friend to tell you their experience with an insurer the way it was whether good or bad.
If you inquire from your friends and acquaintances you'll hardly buy from a bad insurer.
2. You might not be enjoying some concessions you are eligible for with your preferred insurer just because you do not know. Your agent could, choose to overlook some discounts that you are eligible for. You will reduce the odds of this happening to you if you make it a point of duty to ask your agent point blank to tell you of every discount that is available. You might have a very pleasant surprise!
3. If you drive irresponsibly then expect to pay expensive life insurance rates. If you have many charges on rough driving or a history of street racing you'll spend much more. An individual who drives roughly might make a life insurance claim soon as they're more likely to require medical attention.
Improving your driving records and developing a good driving habit will reduce your life insurance premium. If you drive a sports car or power bike, you'll likely pay a huge sum in life insurance. The plain reason remains that you increase the probability that claims will be made sooner.
4. Are you aware of all the discounts that your insurance carrier offers? Since agents too are not above mistakes they might forget to tell you about some discounts you should take advantage of. The only way to ensure it's false in your case is by telling your agent to list out every discount that your preferred insurance carrier offers. You might be in for a really pleasant surprise!
5. You can get large discounts if you buy your life insurance policy from the same insurance company that maintains your other insurance policies. All insurance companies will usually offer a discount if you buy more than one policy from their company.
In spite of the fact that you can save a lot with a multi-policy discount, you may get a better deal by buying your various policies from various insurers.
6. Visit at least five insurance quotes sites. Requesting quotes from not less than five quotes sites raise the chances that you'd receive cheaper life insurance quotes. This is because insurers not covered by one site would be represented by another. Moreover, you should understand that since your chances of getting lower life insurance quotes has to do with the number of quotes you obtain, the more insurers you get quotes from, the brighter your chances will be. Getting your life insurance quotes online will help you save a bundle if you invest only 25 minutes to get quotes from a minimum of five quotes sites.
Feb 5, 2008
Types of Insurance: Life & Annuity Coverages
Types of Insurance: Life & Annuity Coverages
- Life insurance
- Annuities
