Life insurance, at its core, is a means to protect the financial security of one's survivors. It is generally thought of as a way to provide income replacement for a wage earner's survivors in the event of death. Life insurance is purchased from an insurer by making regular payments of premiums during the life of the insured. Upon the death of the insured, designated beneficiaries receive a financial benefit.
Although all life insurance policies maintain those consistent characteristics, there are different means to achieving the same end. Four distinct types of life insurance have been developed and are in common usage.
Term Life Insurance
Term life insurance is probably the most basic form of life insurance. Term insurance is purchased for a specific period of time (the term). The length of the term can vary considerably. There are term policies that are effective for well over twenty years, whereas some only involve a one-year term. A regular premium is paid throughout the term. If the insured dies at any point during the term, the designated beneficiary receives the death benefit. If one survives the term, however, there is no payout and the policy simply ends.
Whole Life Insurance
Whole life insurance has a long history and maintains great popularity. The cost of premiums is guaranteed for the entire time the policy in place. As premiums are paid, the insured accumulates a cash value for the policy, with the insurer determining the interest rate applied to that cash value. One may either "cash out" their whole life policy, or maintain it so that benefits are paid to survivors upon the policyholder's death. Whole life insurance policies were long "the norm" in the insurance industry.
Universal Life Insurance
Universal Life Insurance is considered a more flexible approach to life insurance. The required regular premium amount can vary as long as the policy has a cash value in excess of the policy's costs. The insured can alter the policy's future payout while the policy remains in force, making it a flexible insurance solution for those who may have more complicated or rapidly-changing needs than can be addressed with term or whole life solutions.
Variable Universal Life Insurance
Variable Universal Life Insurance takes the flexibility of universal life coverage and adds to it by providing investment choices. The policy's cash value is not based simply on an interest rate determined by the insurer. Instead, the policy's value is based upon the performance of various investments. The insured allocates his premiums among a series of investment options with a variable universal life insurance policy.
Although all insurance policies do share common characteristics, the four different types of insurance policies have some marked differences. Each type of insurance policy has advantages and limitations. For some, a simple term policy will more than suffice to meet their life insurance needs. Others may benefit considerably from a more full-featured insurance policy that includes an investment component and the ability to alter the nature of benefits and the premium.
Thursday, 8 March 2012
Life Insurance Policies: Term vs Permanent
When it comes to purchasing life insurance, deciding which kind of policy to buy can be a challenge. But by learning about the characteristics of available life insurance policies and working together with an experienced life insurance agent, you'll be able to choose the right policy to protect your loved ones.
Term Life Insurance
As the name suggests, term life insurance provides coverage for a certain period of time, as specified in your policy. This means that a death benefit will only be paid out if you die within your policy's term. Because of this central characteristic, term life insurance policies tend to be much cheaper than permanent life insurance policies--making it a very appealing option to young adults or families who can't spend a lot on life insurance.
Though term life insurance comes in two forms--level term (pays the same death benefit no matter when you die during the term) and decreasing term (the death benefit decreases throughout the duration of the policy)--level term policies are by far the most popular.
According to the Insurance Information Institute (I.I.I.) common types of level term policies are:
Annual (least popular)
5 year
10 year
15 year
20 year (most popular)
25 year
30 year
Many term life insurance policies are renewable, which means that you may be able to reinstate your policy after the term ends, although reinstatement may be contingent on passing a medical exam and will likely involve an increased premium. Additionally, the I.I.I. reports that most insurers will not renew a policy ending after 80 years of age.
Premiums for term life insurance are typically based on your age and health status at the time the policy is written. Some insurers guarantee your premiums to stay the same throughout the length of the term, but others may not make that guarantee (and increase your premiums throughout the term)--so be sure you're aware of premium provisions before signing a policy.
Life insurance tip: Buying life insurance when you're young and healthy will help you secure low premiums. Not a spring chicken? Take care of your health--stop smoking and exercise regularly to get the lowest insurance premium.
Permanent Life Insurance
Unlike term life insurance, permanent life insurance pays a death benefit whether you die they day after you sign the policy or 50 years later. Permanent life insurance policies are also appealing because of their ability to grow tax-deferred over a certain length of time--which can result in a large chunk of change. This cash value can be used in a variety of ways, providing additional benefits to policyholders and their families.
Because of these characteristics, permanent life insurance policies tend to be more expensive than term policies, which may not be conducive for young adults or families with income limitations.
Life insurance tip: Some term life policies can be converted to permanent life insurance policies, so if you're interested in a permanent policy but can't afford the premiums, ask your agent about term policies with this feature.
Permanent life insurance policyholders also have a wide array of policy options to choose from. The four common types of permanent life insurance are whole, universal, variable and variable-universal.
Whole life policies are the most common form of permanent life insurance and offer both a death benefit and the additional benefit of a savings account. If you buy a whole life policy, you agree to pay a certain amount for a predetermined death benefit. And, unlike a term life policy, whole life policies have the potential to earn annual dividends--which will earn interest if you let them accrue.
Universal life policies offer more flexibility, allowing you to vary how much you pay and when you make premium payments (with some limitations, of course). You may also be able to obtain a larger death benefit, provided you pass a medical exam, and like whole life policies, your universal policy may earn cash value over time.
Variable life policies incorporate a death benefit with a savings account that you can invest in stocks, bonds or mutual funds. While this may increase the value of your policy, it's important to remember that if your investments don't perform well, your death benefit will decrease. To avoid this, the I.I.I. says you can ask about variable policies that guarantee that the death benefit will not fall below a certain amount.
Variable-universal policies combine the features of variable and universal life policies, meaning that you have the investment options of a variable policy and the flexibility of premium payments of a universal policy.
Which Policy is Right for You?
Now that you have some idea of what policy options appeal to you, take the time to speak with a licensed life insurance professional that can answer questions and help you come closer to your life insurance decision. Because when you have all the facts, it makes finding affordable life insurance that much easier!
Term Life Insurance
As the name suggests, term life insurance provides coverage for a certain period of time, as specified in your policy. This means that a death benefit will only be paid out if you die within your policy's term. Because of this central characteristic, term life insurance policies tend to be much cheaper than permanent life insurance policies--making it a very appealing option to young adults or families who can't spend a lot on life insurance.
Though term life insurance comes in two forms--level term (pays the same death benefit no matter when you die during the term) and decreasing term (the death benefit decreases throughout the duration of the policy)--level term policies are by far the most popular.
According to the Insurance Information Institute (I.I.I.) common types of level term policies are:
Annual (least popular)
5 year
10 year
15 year
20 year (most popular)
25 year
30 year
Many term life insurance policies are renewable, which means that you may be able to reinstate your policy after the term ends, although reinstatement may be contingent on passing a medical exam and will likely involve an increased premium. Additionally, the I.I.I. reports that most insurers will not renew a policy ending after 80 years of age.
Premiums for term life insurance are typically based on your age and health status at the time the policy is written. Some insurers guarantee your premiums to stay the same throughout the length of the term, but others may not make that guarantee (and increase your premiums throughout the term)--so be sure you're aware of premium provisions before signing a policy.
Life insurance tip: Buying life insurance when you're young and healthy will help you secure low premiums. Not a spring chicken? Take care of your health--stop smoking and exercise regularly to get the lowest insurance premium.
Permanent Life Insurance
Unlike term life insurance, permanent life insurance pays a death benefit whether you die they day after you sign the policy or 50 years later. Permanent life insurance policies are also appealing because of their ability to grow tax-deferred over a certain length of time--which can result in a large chunk of change. This cash value can be used in a variety of ways, providing additional benefits to policyholders and their families.
Because of these characteristics, permanent life insurance policies tend to be more expensive than term policies, which may not be conducive for young adults or families with income limitations.
Life insurance tip: Some term life policies can be converted to permanent life insurance policies, so if you're interested in a permanent policy but can't afford the premiums, ask your agent about term policies with this feature.
Permanent life insurance policyholders also have a wide array of policy options to choose from. The four common types of permanent life insurance are whole, universal, variable and variable-universal.
Whole life policies are the most common form of permanent life insurance and offer both a death benefit and the additional benefit of a savings account. If you buy a whole life policy, you agree to pay a certain amount for a predetermined death benefit. And, unlike a term life policy, whole life policies have the potential to earn annual dividends--which will earn interest if you let them accrue.
Universal life policies offer more flexibility, allowing you to vary how much you pay and when you make premium payments (with some limitations, of course). You may also be able to obtain a larger death benefit, provided you pass a medical exam, and like whole life policies, your universal policy may earn cash value over time.
Variable life policies incorporate a death benefit with a savings account that you can invest in stocks, bonds or mutual funds. While this may increase the value of your policy, it's important to remember that if your investments don't perform well, your death benefit will decrease. To avoid this, the I.I.I. says you can ask about variable policies that guarantee that the death benefit will not fall below a certain amount.
Variable-universal policies combine the features of variable and universal life policies, meaning that you have the investment options of a variable policy and the flexibility of premium payments of a universal policy.
Which Policy is Right for You?
Now that you have some idea of what policy options appeal to you, take the time to speak with a licensed life insurance professional that can answer questions and help you come closer to your life insurance decision. Because when you have all the facts, it makes finding affordable life insurance that much easier!
Wednesday, 7 March 2012
Why to Choose Term Life Insurance
By far, the most efficient way to obtain life insurance is through a term life insurance policy. Some financial advisors insist that their clients use whole life insurance rather than term life insurance. I am going to show you why they are wrong.The three primary reasons they give for recommending whole life are:
1) whole life insurance lasts the period of your entire life so you don't have to worry about renewal or possible health downturns that could increase your life insurance rates on term renewal;
2) whole life insurance can be used as a retirement investment;
3) if you should decide you want to have life insurance for your surviving family, whole
life insurance will provide that extra net of security. These reasons miss some very important facts about the whole life insurance vs. term life insurance debate. First of all, if you are concerned about possible downturns in your health, then you can be sure to choose a term life product that extends until the time when you will no longer have dependents for whom to provide security. It is not as tenuous a matter as these whole life insurance proponents would suggest.
Problem solved. Secondly, a whole life insurance policy has a poor return on investment. If you are interested in retirement planning, as everyone should be, then term life insurance is the most effective type of life insurance. This is because it does not pretend to be an investment vehicle the way that whole life insurance does. Term life insurance is up to four times less expensive than whole life insurance. The money that you save on the insurance premiums can then be invested in a stock or other investment that will provide a much higher return on investment. Get a term life insurance quote and see the truth of what I'm saying here. As for the third reason, realistically this will not likely be an issue for most folks.
Most of us are only interested in a life insurance product that makes up for our lost income should we die while dependents are still at home. For those few who have a different objective, there are far better ways to purchase security for your family in your old age. This is because the security purchased in a whole life insurance policy comes at too high a price. If you want to make sure that your family has some form of death insurance for you after you retire, there are cheaper ways to provide itAt this point it should be clear that the most cost effective form of life insurance is term life insurance. Whole life insurance just pads the premium price for the sake of a segment of your life during which you won't be needing life insurance. On the other hand, term life covers the period for which the life insurance product is appropriate, while leaving savings and investments to better suited products. As if you needed more confirmation, even the federal trades commission recommends
1) whole life insurance lasts the period of your entire life so you don't have to worry about renewal or possible health downturns that could increase your life insurance rates on term renewal;
2) whole life insurance can be used as a retirement investment;
3) if you should decide you want to have life insurance for your surviving family, whole
life insurance will provide that extra net of security. These reasons miss some very important facts about the whole life insurance vs. term life insurance debate. First of all, if you are concerned about possible downturns in your health, then you can be sure to choose a term life product that extends until the time when you will no longer have dependents for whom to provide security. It is not as tenuous a matter as these whole life insurance proponents would suggest.
Problem solved. Secondly, a whole life insurance policy has a poor return on investment. If you are interested in retirement planning, as everyone should be, then term life insurance is the most effective type of life insurance. This is because it does not pretend to be an investment vehicle the way that whole life insurance does. Term life insurance is up to four times less expensive than whole life insurance. The money that you save on the insurance premiums can then be invested in a stock or other investment that will provide a much higher return on investment. Get a term life insurance quote and see the truth of what I'm saying here. As for the third reason, realistically this will not likely be an issue for most folks.
Most of us are only interested in a life insurance product that makes up for our lost income should we die while dependents are still at home. For those few who have a different objective, there are far better ways to purchase security for your family in your old age. This is because the security purchased in a whole life insurance policy comes at too high a price. If you want to make sure that your family has some form of death insurance for you after you retire, there are cheaper ways to provide itAt this point it should be clear that the most cost effective form of life insurance is term life insurance. Whole life insurance just pads the premium price for the sake of a segment of your life during which you won't be needing life insurance. On the other hand, term life covers the period for which the life insurance product is appropriate, while leaving savings and investments to better suited products. As if you needed more confirmation, even the federal trades commission recommends
Advantages of a Whole Life Insurance Policy
To begin with, you need to understand that life insurance falls into two very broad categories: Whole and term. The basic difference between term and whole life insurance is this: A term policy is life coverage only.
In whole life insurance policy, as long as one continues to pay the premiums, the policy does not expire for a lifetime. As the term applies, whole life insurance provides coverage for the whole life or until the person reaches the age of 100. Whole life insurance policies build up a cash value (usually beginning after the first year). With whole life, you pay a fixed premium for life instead of the increasing premiums found on renewable term life insurance policies. In addition, whole life insurance has a cash value feature that is guaranteed. In term and whole-life, the full premium must be paid to keep the insurance.
With level premiums and the accumulation of cash values, whole life insurance is a good choice for long-range goals. Besides permanent lifetime insurance protection, Whole Life Insurance features a savings element that allows you to build cash value on a tax-deferred basis. The policyholder can cancel or surrender the whole life insurance policy at any time and receive the cash value. Some whole life insurance policies may generate cash values greater than the guaranteed amount, depending on interest crediting rates and how the market performs. The cash values of whole life insurance policies may be affected by a life insurance company's future performance. Unlike whole life insurance policies, which have guaranteed cash values, the cash values of variable life insurance policies are not guaranteed. You have the right to borrow against the cash value of your whole life insurance policy on a loan basis. Supporters of whole life insurance say the cash value of a life insurance policy should compete well with other fixed income investments.
Unlike term life policies, whole life insurance provides a minimum guaranteed benefit at a premium that never changes. One of the most valuable benefits of a participating whole life insurance policy is the opportunity to earn dividends. The insurance company based on the overall return on its investments sets earnings on a whole life policy. In addition, while the interest paid on universal life insurance is often adjusted monthly, interest on a whole life policy is adjusted annually. Like many insurance products, whole life insurance has many policy options.
Make sure you can budget for whole life insurance for the long term and do not buy whole life insurance unless you can afford it. You should buy all the coverage you need now while you are younger, and if you cannot afford whole life insurance, at least get Term. That is why whole life insurance policies have the highest premiums it is insurance for your whole life, no matter when you pass on. The level premium and fixed death benefit make whole life insurance very attractive to some. Unlike some other types of permanent insurance, with whole life insurance, you may not decrease your premium payments.
In whole life insurance policy, as long as one continues to pay the premiums, the policy does not expire for a lifetime. As the term applies, whole life insurance provides coverage for the whole life or until the person reaches the age of 100. Whole life insurance policies build up a cash value (usually beginning after the first year). With whole life, you pay a fixed premium for life instead of the increasing premiums found on renewable term life insurance policies. In addition, whole life insurance has a cash value feature that is guaranteed. In term and whole-life, the full premium must be paid to keep the insurance.
With level premiums and the accumulation of cash values, whole life insurance is a good choice for long-range goals. Besides permanent lifetime insurance protection, Whole Life Insurance features a savings element that allows you to build cash value on a tax-deferred basis. The policyholder can cancel or surrender the whole life insurance policy at any time and receive the cash value. Some whole life insurance policies may generate cash values greater than the guaranteed amount, depending on interest crediting rates and how the market performs. The cash values of whole life insurance policies may be affected by a life insurance company's future performance. Unlike whole life insurance policies, which have guaranteed cash values, the cash values of variable life insurance policies are not guaranteed. You have the right to borrow against the cash value of your whole life insurance policy on a loan basis. Supporters of whole life insurance say the cash value of a life insurance policy should compete well with other fixed income investments.
Unlike term life policies, whole life insurance provides a minimum guaranteed benefit at a premium that never changes. One of the most valuable benefits of a participating whole life insurance policy is the opportunity to earn dividends. The insurance company based on the overall return on its investments sets earnings on a whole life policy. In addition, while the interest paid on universal life insurance is often adjusted monthly, interest on a whole life policy is adjusted annually. Like many insurance products, whole life insurance has many policy options.
Make sure you can budget for whole life insurance for the long term and do not buy whole life insurance unless you can afford it. You should buy all the coverage you need now while you are younger, and if you cannot afford whole life insurance, at least get Term. That is why whole life insurance policies have the highest premiums it is insurance for your whole life, no matter when you pass on. The level premium and fixed death benefit make whole life insurance very attractive to some. Unlike some other types of permanent insurance, with whole life insurance, you may not decrease your premium payments.
Life Insurance Basics: Getting Started
Let's be honest. The topic of life insurance isn't exciting or glamorous, but it is important. In fact, many experts consider life insurance to be the cornerstone of good financial planning.
But how do you know if you need life insurance? How much is enough? What kind of life insurance policy is best for you?
Answering these basic questions about life insurance will help to simplify the shopping process and ultimately allow you to select the best policy to secure your family's future for years to come.
Establishing Your Needs
To clear up any misconceptions, life insurance is designed to protect your loved ones from financial loss in the event of your death. Knowing this, it's important to establish whether you need life insurance and how much you should purchase.
According to MetLife you generally need life insurance if:
You have a spouse
You have dependent children
Relatives or elderly parents depend on your income
Your retirement funds are not enough to provide for your spouse's future
You own a business
You have a large estate
The beneficiaries of your life insurance policy can use the proceeds from your life insurance to:
Pay for last expenses and funeral costs
Cover estate taxes (if applicable)
Pay off existing debts (mortgage, car loan, credit card debt)
Pay for everyday expenses (food, clothing, childcare)
Put towards your spouse's retirement fund
Donate to charity
If you don't have dependents, you may still wish to purchase a life insurance policy to avoid becoming a financial burden to your loved ones in the untimely event of your death. Young singles also benefit from purchasing life insurance while they're young and healthy, allowing them to secure a low premium for years to come.
Choosing a Dollar Amount
Figuring out how much life insurance your loved ones would need to maintain their quality of living can be tough. Generally speaking, experts recommend purchasing between 5 and 10 times your annual salary. But, as MetLife points out, your exact need for life insurance will depend on your personal and financial circumstances.
You can get a ballpark estimate of your life insurance needs by first totaling the funds your family would need for the abovementioned items (funeral costs, daily living, etc.). You can find helpful worksheets online that will help you organize and come up with this list of expenses.
After you've totaled your expenses, take stock of the funds you have in cash, savings, retirement accounts, bonds, property, pension and Social Security. Subtracting your financial resources from your expenses will give you a rough idea of how much life insurance you should purchase.
When it comes to choosing how much life insurance to purchase, it's a good idea to get an idea of your needs before buying a policy--but your licensed life insurance professional will undoubtedly help you choose a dollar amount that accurately reflects the needs of your beneficiaries.
Selecting a Policy
Generally speaking, there are two types of life insurance: term life insurance and permanent life insurance. The type of policy you select will depend largely on your life insurance needs and what resources you have to pay life insurance premiums.
Term Life Insurance
Term life insurance, as the name suggests, will cover you for a specified amount of time, which means the insurer will only pay out a death benefit if you die during the term of your policy.
According to the Insurance Information Institute (I.I.I.), most people purchase a 20-year term policy, although smaller terms are available. Of course, you can renew your term life policy after it expires, although your premiums may increase as you age. But all in all, because of the "temporary" nature of term life insurance, policies are generally much cheaper and are therefore an attractive option for young people and families with a limited income.
Permanent Life Insurance
On the other hand, permanent life insurance, as you might have guessed, is permanent. A permanent life policy will pay out a death benefit whether you die tomorrow or in 60 years.
Permanent life insurance is also an appealing option for many because of the added benefit of the policy growing on a tax-deferred basis, which can grow to be fairly large over time. As a policyholder, you may be able to borrow against this cash value while alive, which has been of great help to some. Of course, most loans need to be paid back otherwise they will be subtracted from the death benefit, and your beneficiaries may have to liquidate assets to pay back the loan.
Nonetheless, permanent life insurance offers a wide variety of saving and investment options. Because of this, policies are generally more expensive than term policies, which may be hard for young adults to handle.
Your life insurance professional will help you decide which type of policy is best for your life insurance needs--and your budget. But researching these policy types beforehand can help you narrow down which policies appeal to you.
Knowledge is Power
No, learning about life insurance and planning for the unexpected isn't glamorous, but it is important. So take advantage of consumer resources and talk to a life insurance professional about purchasing affordable life insurance. You'll rest easier at night knowing your loved ones are taken care of for years to come!
But how do you know if you need life insurance? How much is enough? What kind of life insurance policy is best for you?
Answering these basic questions about life insurance will help to simplify the shopping process and ultimately allow you to select the best policy to secure your family's future for years to come.
Establishing Your Needs
To clear up any misconceptions, life insurance is designed to protect your loved ones from financial loss in the event of your death. Knowing this, it's important to establish whether you need life insurance and how much you should purchase.
According to MetLife you generally need life insurance if:
You have a spouse
You have dependent children
Relatives or elderly parents depend on your income
Your retirement funds are not enough to provide for your spouse's future
You own a business
You have a large estate
The beneficiaries of your life insurance policy can use the proceeds from your life insurance to:
Pay for last expenses and funeral costs
Cover estate taxes (if applicable)
Pay off existing debts (mortgage, car loan, credit card debt)
Pay for everyday expenses (food, clothing, childcare)
Put towards your spouse's retirement fund
Donate to charity
If you don't have dependents, you may still wish to purchase a life insurance policy to avoid becoming a financial burden to your loved ones in the untimely event of your death. Young singles also benefit from purchasing life insurance while they're young and healthy, allowing them to secure a low premium for years to come.
Choosing a Dollar Amount
Figuring out how much life insurance your loved ones would need to maintain their quality of living can be tough. Generally speaking, experts recommend purchasing between 5 and 10 times your annual salary. But, as MetLife points out, your exact need for life insurance will depend on your personal and financial circumstances.
You can get a ballpark estimate of your life insurance needs by first totaling the funds your family would need for the abovementioned items (funeral costs, daily living, etc.). You can find helpful worksheets online that will help you organize and come up with this list of expenses.
After you've totaled your expenses, take stock of the funds you have in cash, savings, retirement accounts, bonds, property, pension and Social Security. Subtracting your financial resources from your expenses will give you a rough idea of how much life insurance you should purchase.
When it comes to choosing how much life insurance to purchase, it's a good idea to get an idea of your needs before buying a policy--but your licensed life insurance professional will undoubtedly help you choose a dollar amount that accurately reflects the needs of your beneficiaries.
Selecting a Policy
Generally speaking, there are two types of life insurance: term life insurance and permanent life insurance. The type of policy you select will depend largely on your life insurance needs and what resources you have to pay life insurance premiums.
Term Life Insurance
Term life insurance, as the name suggests, will cover you for a specified amount of time, which means the insurer will only pay out a death benefit if you die during the term of your policy.
According to the Insurance Information Institute (I.I.I.), most people purchase a 20-year term policy, although smaller terms are available. Of course, you can renew your term life policy after it expires, although your premiums may increase as you age. But all in all, because of the "temporary" nature of term life insurance, policies are generally much cheaper and are therefore an attractive option for young people and families with a limited income.
Permanent Life Insurance
On the other hand, permanent life insurance, as you might have guessed, is permanent. A permanent life policy will pay out a death benefit whether you die tomorrow or in 60 years.
Permanent life insurance is also an appealing option for many because of the added benefit of the policy growing on a tax-deferred basis, which can grow to be fairly large over time. As a policyholder, you may be able to borrow against this cash value while alive, which has been of great help to some. Of course, most loans need to be paid back otherwise they will be subtracted from the death benefit, and your beneficiaries may have to liquidate assets to pay back the loan.
Nonetheless, permanent life insurance offers a wide variety of saving and investment options. Because of this, policies are generally more expensive than term policies, which may be hard for young adults to handle.
Your life insurance professional will help you decide which type of policy is best for your life insurance needs--and your budget. But researching these policy types beforehand can help you narrow down which policies appeal to you.
Knowledge is Power
No, learning about life insurance and planning for the unexpected isn't glamorous, but it is important. So take advantage of consumer resources and talk to a life insurance professional about purchasing affordable life insurance. You'll rest easier at night knowing your loved ones are taken care of for years to come!
Term Life Insurance - What the Heck Does 'Annuitant' Mean?
Few things in life are as complicated - and vital - as life insurance. In many cases, you may think that you need a lawyer present to sort through the jumble of confusing legal terms used in a standard term life insurance quote. You need to remember, life insurance companies rely heavily upon statistics that take into account a number of factors, such as age, medical history, and life expectancy, to calculate life insurance quotes for potential customers. These policies are legally binding, and the insurance company is taking a risk on anyone they insure - which is precisely why any given policy is filled with so much legal jargon that even lawyers might feel overwhelmed when reading through it! But don't worry - there is a light at the end of the tunnel, because your life insurance quote is not as complicated as it may seem at first.
Do I even need term life insurance?
That is a great question, and the answer depends on exactly what needs you happen to have. There are numerous life insurance options, but for now we will just focus on the two big ones: term life insurance, and whole life insurance. You will want a term life insurance quote if you want to provide your family with protection against any outstanding debts. This includes things like mortgages or other large chunks of debt. Parents of young children, who want to make sure that their kids will be taken care of in the event of their death, generally buy a term life insurance policy. You will want a whole life insurance quote if you want to use the policy as a potential investment, as these policies build cash value over time.
I just want to make sure my loved ones are taken care of...
In that case, you probably need a term life insurance quote. Again, whole life insurance policies are more for investment purposes, and this is why they have higher premiums. Term life insurance has lower premiums, but never builds any cash value, while a whole life insurance policy can be "cashed in" at some point.
OK, so I need term life insurance. What now?
Ah, now...that is the question, isn't it? Before you ask for a term life insurance quote, you need to decide just how long the "term" needs to be. Without getting in too deep and needing to bring the lawyers in, a term life insurance quote will be based upon a specified period of time. So, how long do you need the policy for?
Hey, I just thought it was life insurance! I thought you just needed it...you know, forever!
Actually, term life insurance is supposed to help you take care of your family and debts in the event of your untimely death. So, if you have young children who are 15 years away from leaving for college, then you might want to get a policy that lasts for 20 years. This way, they can go to college and hopefully become financially independent by the time the coverage expires. When trying to decide on the term to ask for in your life insurance quote, consider the following factors: your age, the amount of outstanding debt you have, and where children are concerned, the time it will take for them to be financially independent.
So I need a twenty-year term life insurance quote...what else do I need to do?
Life truly is in the details, isn't it? Well, after you have determined that you need term life insurance, and you know how long you'll need the policy for, there will be some additional factors that will affect your quote. For instance, your term life insurance quote will most likely be contingent upon a medical exam, and there may even be a waiting period before it kicks in. Don't take it personally!
After all, this policy could take care of your family after you are gone, and that will cost the insurance company a sizeable chunk of cash. They certainly don't want to give someone a life insurance policy with a large payout if they have a terminal condition. But don't worry; your term life insurance quote is contingent upon a fairly non-invasive exam that will involve a blood and urine test. So long as you pass those with flying colors, you will have your term life insurance policy - and the peace of mind that comes from knowing that your family will be taken care of should anything happen to you.
Getting the Best Life Insurance for 50+
For many seniors, quote for life insurance 50 and over is very important. This is because at earlier age in life, one may not consider the importance of having coverage. They consider its benefits when they realize they are aging fast. However, getting a life insurance for 50+ may not be easy. This is because there are many companies and brokers claiming to give their client the best coverage.
As such, it requires one to do some research before signing for coverage. You need to consider the following when getting the best life insurance for 50+ policies:
• You need to consider the cost of the policy. Find out how much the company requires you to pay in terms of policies. Choosing the company with the cheapest policy is advisable. There are a number of policy brokers online who can give you a free quotation. However, you should be cautious in the amount of money you spend because these brokers are also interested in making money by selling the policy to you.
• You can also consider expert advice. There are very many experts online who can guide you in choosing the best quote for life insurance 65 and over. You can visit their websites for information that will guide you in choosing the best policy.
• You also need to know the exact amount the company will expect from you for premiums. This is very important because you should have a policy that you will afford and still have some amount left to cater for your other needs.
• Compare various types of coverage from different companies. Different companies will offer policies with different conditions. As such, it is important that you consider conditions of various policies before you sign for them.
• It is also important to know that some companies will want to know more about your family history. Perhaps, this may even be used in determining how much one should spend on the coverage.
• There are also companies that will consider blood pressure, cholesterol level, weight and height. This is all in a bid to ensure that the senior is in good health before they sign for the coverage. However, some companies will not consider health history of the applicant.
• There are a number of online providers of these policies. Getting the best requires you to do thorough research online. This will ensure that you get the best policy available. With some providers of this coverage, you can even apply for a quote online.
Getting a good quote for life insurance 50 and over persons or their loved ones should be keen as they look for the best coverage. Understanding the terms of the life insurance for 50+ is also very important before signing for it.
As such, it requires one to do some research before signing for coverage. You need to consider the following when getting the best life insurance for 50+ policies:
• You need to consider the cost of the policy. Find out how much the company requires you to pay in terms of policies. Choosing the company with the cheapest policy is advisable. There are a number of policy brokers online who can give you a free quotation. However, you should be cautious in the amount of money you spend because these brokers are also interested in making money by selling the policy to you.
• You can also consider expert advice. There are very many experts online who can guide you in choosing the best quote for life insurance 65 and over. You can visit their websites for information that will guide you in choosing the best policy.
• You also need to know the exact amount the company will expect from you for premiums. This is very important because you should have a policy that you will afford and still have some amount left to cater for your other needs.
• Compare various types of coverage from different companies. Different companies will offer policies with different conditions. As such, it is important that you consider conditions of various policies before you sign for them.
• It is also important to know that some companies will want to know more about your family history. Perhaps, this may even be used in determining how much one should spend on the coverage.
• There are also companies that will consider blood pressure, cholesterol level, weight and height. This is all in a bid to ensure that the senior is in good health before they sign for the coverage. However, some companies will not consider health history of the applicant.
• There are a number of online providers of these policies. Getting the best requires you to do thorough research online. This will ensure that you get the best policy available. With some providers of this coverage, you can even apply for a quote online.
Getting a good quote for life insurance 50 and over persons or their loved ones should be keen as they look for the best coverage. Understanding the terms of the life insurance for 50+ is also very important before signing for it.
Tuesday, 6 March 2012
Life Insurance for Seniors Over 50
Selecting a life insurance plan when you are a senior over 50 does not have to be so complicated. It really all comes down to the same questions one may ask when they are under age 50. What does the plan cover and how long is my coverage good for?
What should your plan cover if you are over 50?
Fist of all, if at all possible, your plan should offer immediate coverage. In other words, should the insured die shortly after the coverage is in force, the full face amount should be paid to the beneficiary(ies). Although cash value is a nice added benefit, we do not feel that it is of prime importance to a senior's life insurance plan. Some may say that with full endowment polices, the senior will have the advantage of getting the full face amount of their policy in cash at the end of the term. We do not feel that this is a great advantage as, unlike the face amount, the cash value may be taxable. So, what should have been a tax free payment upon death becomes a possible taxable payment to a senior who outlived the insurance policy. If at all possible, if a insured outlives a whole life insurance policy, the owner of the life insurance policy, should request an extension of coverage rather than a cash payout.
Some insurance policies will also offer a terminal illness rider. That rider is often included at no extra cost to you but it may need to be requested to be included. The terminal illness rider, allows for the insured senior to use a portion of the face amount of the policy before death and in case of a covered, diagnosed terminal illness. Another rider that may be important, although not often available, is the long term care benefit rider. This rider can be very useful, particularly if you do not carry a long term care insurance policy. Briefly, long-term care (LTC) is a variety of services which help meet both the medical and non-medical need of people with a chronic illness or disability who cannot care for themselves for long periods of time.
Please be aware that some whole life insurance policies, when the insured is not in the best of health, will postpone coverage for two to three years. What that would mean for the senior or mainly the beneficiary, is that during first the two to three years of coverage, should the insured die, the face amount will be limited to the premiums paid plus some interest. If applicant cannot qualify for a standard life insurance policy, we have found these polices (graded life insurance) are a very good choice. After all, some of these policies may pay you 5% to 10% on your money for the first two to three years until the full face amount kicks in. How many people can get 5% to 10% on there money without risk in bad or even in good economic times. So if you are a senior over 70 and cannot qualify for level whole life insurance, then graded life insurance may be a very good choice.
How long should coverage and rates be guaranteed on life insurance policy for a senior over 50 or 70?
The answer is simple, as long as possible! The reason is that many seniors today will live to age 90+. So if a senior over 70 gets a term life insurance policy and, most likely, will only be able to get a 10 to 15 year term, the insurance coverage may run out at a time it will likely be most needed. In a situation where the life insurance coverage, a senior needs, is very specific to a liability (mortgage, car loan...) a term life insurance policy may be the better choice. Most senior policies are used for the purpose of taking care of final expenses including among other things, burial cost though. Your coverage is more likely to be a long term need and if you do a term life insurance plan, after it runs out, you may have to get re-approved for coverage and will pay much more in premiums and are more likely to be highly rated or declined (depending upon your health and other factors). If a term policy is absolutely needed, we recommend that seniors over 70 also take a whole life policy. The whole life should guarantee rates and full coverage to at least age 100 or longer (age 120 maybe available). Beware of whole life polices, particularly group sponsored or government issued whole life policies, that grade down the coverage after age 70 or 75. Those could be as bad as having term life insurance. Get your own senior life insurance plan!
Exam or no exam life insurance for seniors over 50?
We have covered the exam or no exam issue in many other articles. We felt though that it would be important to mention the major factors for seniors over 50. Simply, if you need a smaller amount of coverage such $5,000 to $50,000, we recommend the no exam route. The policy is more likely to be approved and approved fast. If you need a large amount of coverage, then the no exam plans will either not be available or become too expensive. The full underwriting exam route is best.
Irregardless of which plan you select, as we say in all of our articles, ask, ask and ask more questions. Be well.
Philippe Deray - About the Author:
What should your plan cover if you are over 50?
Fist of all, if at all possible, your plan should offer immediate coverage. In other words, should the insured die shortly after the coverage is in force, the full face amount should be paid to the beneficiary(ies). Although cash value is a nice added benefit, we do not feel that it is of prime importance to a senior's life insurance plan. Some may say that with full endowment polices, the senior will have the advantage of getting the full face amount of their policy in cash at the end of the term. We do not feel that this is a great advantage as, unlike the face amount, the cash value may be taxable. So, what should have been a tax free payment upon death becomes a possible taxable payment to a senior who outlived the insurance policy. If at all possible, if a insured outlives a whole life insurance policy, the owner of the life insurance policy, should request an extension of coverage rather than a cash payout.
Some insurance policies will also offer a terminal illness rider. That rider is often included at no extra cost to you but it may need to be requested to be included. The terminal illness rider, allows for the insured senior to use a portion of the face amount of the policy before death and in case of a covered, diagnosed terminal illness. Another rider that may be important, although not often available, is the long term care benefit rider. This rider can be very useful, particularly if you do not carry a long term care insurance policy. Briefly, long-term care (LTC) is a variety of services which help meet both the medical and non-medical need of people with a chronic illness or disability who cannot care for themselves for long periods of time.
Please be aware that some whole life insurance policies, when the insured is not in the best of health, will postpone coverage for two to three years. What that would mean for the senior or mainly the beneficiary, is that during first the two to three years of coverage, should the insured die, the face amount will be limited to the premiums paid plus some interest. If applicant cannot qualify for a standard life insurance policy, we have found these polices (graded life insurance) are a very good choice. After all, some of these policies may pay you 5% to 10% on your money for the first two to three years until the full face amount kicks in. How many people can get 5% to 10% on there money without risk in bad or even in good economic times. So if you are a senior over 70 and cannot qualify for level whole life insurance, then graded life insurance may be a very good choice.
How long should coverage and rates be guaranteed on life insurance policy for a senior over 50 or 70?
The answer is simple, as long as possible! The reason is that many seniors today will live to age 90+. So if a senior over 70 gets a term life insurance policy and, most likely, will only be able to get a 10 to 15 year term, the insurance coverage may run out at a time it will likely be most needed. In a situation where the life insurance coverage, a senior needs, is very specific to a liability (mortgage, car loan...) a term life insurance policy may be the better choice. Most senior policies are used for the purpose of taking care of final expenses including among other things, burial cost though. Your coverage is more likely to be a long term need and if you do a term life insurance plan, after it runs out, you may have to get re-approved for coverage and will pay much more in premiums and are more likely to be highly rated or declined (depending upon your health and other factors). If a term policy is absolutely needed, we recommend that seniors over 70 also take a whole life policy. The whole life should guarantee rates and full coverage to at least age 100 or longer (age 120 maybe available). Beware of whole life polices, particularly group sponsored or government issued whole life policies, that grade down the coverage after age 70 or 75. Those could be as bad as having term life insurance. Get your own senior life insurance plan!
Exam or no exam life insurance for seniors over 50?
We have covered the exam or no exam issue in many other articles. We felt though that it would be important to mention the major factors for seniors over 50. Simply, if you need a smaller amount of coverage such $5,000 to $50,000, we recommend the no exam route. The policy is more likely to be approved and approved fast. If you need a large amount of coverage, then the no exam plans will either not be available or become too expensive. The full underwriting exam route is best.
Irregardless of which plan you select, as we say in all of our articles, ask, ask and ask more questions. Be well.
Philippe Deray - About the Author:
Over 50 Life Insurance Policy: What Is It?
The elderly are important members of society. They are, however, delicate as they are advanced age. They should be carefree, but many do not. They think of their loved ones, and what will happen to their relatives when they die. Social security benefits, pensions, and others can help the survivors, when they lost their loved ones. But that's not enough. It is therefore necessary that more than 50 life insurance be provided by the elderly.
Requirements and benefits of over 50 life insurance policy
Insurance providers in the evaluation of various methods of its customers. Although some may require health checks, others do not. For retirees who are interested in getting the whole policy of life, they are likely to go without medical examination. Although the entire policy life requires more advance, it nevertheless provides coverage for the elderly for 120 years. This figure, of course, varies from one insurer to another.
With more than 50 life insurance policy, a senior no longer worry about leaving his / her family the financial burden. Pay out of politics can easily cover the cost of the funeral, debts, taxes and others. Security and peace are the byproducts of having a good senior life insurance policy.
It is important to remember that not all insurance companies are more than 50 life insurance. You should do research on which vendors offer such. Typically, this type of insurance serves the needs of people, at least 50 years. There are two types of senior life policies, whole life policies and term policies. There is also a final score of insurance, which provides additional benefits such as payment for burial. This is usually in conjunction with or for life or term policy.
If a pensioner is ready to undergo medical examinations of health, and if the results are satisfactory, the insurance policy is likely to be more accessible to a broader scope. Whereas, if the elderly to give up medical examination policy, he will get quite expensive with higher premiums, but less coverage. Some insurers do not require a medical examination, you will only have to answer a few questions about your health. There are people who do not even ask questions.
What is the guaranteed insurance for the elderly?
Type of insurance policy that does not require a health check is a guaranteed acceptance life insurance. It is classified as a kind of permanent insurance. If the insured dies of natural causes (eg, illness) during the two years since the policy, the beneficiaries will receive the total amount of premiums paid and interest accrued cash value. If the cause of death is accidental, in the full enjoyment of the policy will be satisfied.
Requirements and benefits of over 50 life insurance policy
Insurance providers in the evaluation of various methods of its customers. Although some may require health checks, others do not. For retirees who are interested in getting the whole policy of life, they are likely to go without medical examination. Although the entire policy life requires more advance, it nevertheless provides coverage for the elderly for 120 years. This figure, of course, varies from one insurer to another.
With more than 50 life insurance policy, a senior no longer worry about leaving his / her family the financial burden. Pay out of politics can easily cover the cost of the funeral, debts, taxes and others. Security and peace are the byproducts of having a good senior life insurance policy.
It is important to remember that not all insurance companies are more than 50 life insurance. You should do research on which vendors offer such. Typically, this type of insurance serves the needs of people, at least 50 years. There are two types of senior life policies, whole life policies and term policies. There is also a final score of insurance, which provides additional benefits such as payment for burial. This is usually in conjunction with or for life or term policy.
If a pensioner is ready to undergo medical examinations of health, and if the results are satisfactory, the insurance policy is likely to be more accessible to a broader scope. Whereas, if the elderly to give up medical examination policy, he will get quite expensive with higher premiums, but less coverage. Some insurers do not require a medical examination, you will only have to answer a few questions about your health. There are people who do not even ask questions.
What is the guaranteed insurance for the elderly?
Type of insurance policy that does not require a health check is a guaranteed acceptance life insurance. It is classified as a kind of permanent insurance. If the insured dies of natural causes (eg, illness) during the two years since the policy, the beneficiaries will receive the total amount of premiums paid and interest accrued cash value. If the cause of death is accidental, in the full enjoyment of the policy will be satisfied.
Can You Get Life Insurance If You're Over 50?
Most people over 50 who are interested in life insurance seem to express two main concerns. Will they qualify medically and will the rates be affordable. Of these concerns, the one that comes up the most, is health qualification. It is not uncommon for an individual to be quoted good rates and then just be declined for insurance.
If you are in great health
If your are one of the many people over 50 who are in good health or you only have had some very minor health issues such as colds, headaches... Or anything treatable with over the counter medication, then you should be able to get the best possible rates. Also, most plans should be available to you with a possible limit on the term life insurance plans which may offer guarantees for only 15 years. If you need longer coverage, then a whole life or even a lower priced universal life plan should do the job.
The fast answer no exam over 50 life insurance plan
This plan is probably the most popular plan with people over the age of 50. Very often it is the child of a senior that gets the life insurance and this makes it much easier for everybody to secure a policy. Keep in mind that these policies are very limited in the amount of coverage they offer, with most companies offering a maximum of $25,000 in coverage (usually whole life). Keep in mind also that, if you are over 80, and do not wish to do a life insurance exam, whole life insurance may be the only option available.
The slower answer full underwriting life insurance (exam required)
Although it takes longer to underwrite (get a final answer), the full underwriting plan or sometimes called the exam required plan, should yield the most and best life insurance coverage for the least amount of premiums. Before you get all excited about this option, keep in mind that, you cannot be in a hurry to get the coverage as it can take weeks for an answer (you are over 50!) and there is always a chance that the life insurance exam will uncover some health issues you did not know you had. If you are not 100% sure about your health (in other words you have not had a physical in over three months) then, we recommend that you secure coverage with a no exam plan first and then apply for the full underwriting plan. If your full underwriting plan gets approved at good rates, just cancel the more pricey no exam plan.
If you have some minor health issues
For individuals over 50 who have minor health issues, both plan options above may still be available and the process is about the same. Some examples of minor health issues are controlled high blood pressure, non-evasive external cancer (skin), diet or pill controlled diabetes, internal cancer with last treatment more than 5 to 10 years ago, controlled heart health issues and the ability to care for your personal needs (bathing, dressing...). Some insulin dependent diabetics may fall under this category too.
If you have major healthy issues
Having major health issues, as you may know, will limit the number of life insurance plans available to you. In most situation, graded life insurance is the only type of plans a senior over 50 will qualify for. Graded life insurance simply means that for the first two to thee years, the death benefit is limited to the premiums you paid plus some in interest (we have seen interest rates range from 4% to 10%). Although, some people may decide that the plan is worthless since full coverage does not start right away, we fee that, if you cannot qualify for any other life insurance coverage, it is a big mistake not to get a graded lief insurance plan. After all, worst case scenario, you died within the graded period, but you have made 4% to 10% on the money you sent to the insurance company for premiums - where else can you get that kind of return at no risk? Applying for full underwriting life insurance may still be OK but be prepared to be declined fast. In rare cases, you may get approved with very very high rates. One tip most people do not know is that it is easier to get approved for permanent life insurance (whole life, universal life...) than term life.
Note that, in all options above, we have covered the most common health issues. Of course, if you have a health issues not mentioned above, you may fall under any of the above categories. Please ask your advisor about plan availability for your specific health issue(s) and give the advisor as much information as possible. The more information you give your advisor the better the results (in most cases). We hope this article gave you a good head start on getting life insurance if you are over 80 and it made you feel more comfortable about the process. Please feel free to ask us questions too. The answer is fast and clear. Be well.
If you are in great health
If your are one of the many people over 50 who are in good health or you only have had some very minor health issues such as colds, headaches... Or anything treatable with over the counter medication, then you should be able to get the best possible rates. Also, most plans should be available to you with a possible limit on the term life insurance plans which may offer guarantees for only 15 years. If you need longer coverage, then a whole life or even a lower priced universal life plan should do the job.
The fast answer no exam over 50 life insurance plan
This plan is probably the most popular plan with people over the age of 50. Very often it is the child of a senior that gets the life insurance and this makes it much easier for everybody to secure a policy. Keep in mind that these policies are very limited in the amount of coverage they offer, with most companies offering a maximum of $25,000 in coverage (usually whole life). Keep in mind also that, if you are over 80, and do not wish to do a life insurance exam, whole life insurance may be the only option available.
The slower answer full underwriting life insurance (exam required)
Although it takes longer to underwrite (get a final answer), the full underwriting plan or sometimes called the exam required plan, should yield the most and best life insurance coverage for the least amount of premiums. Before you get all excited about this option, keep in mind that, you cannot be in a hurry to get the coverage as it can take weeks for an answer (you are over 50!) and there is always a chance that the life insurance exam will uncover some health issues you did not know you had. If you are not 100% sure about your health (in other words you have not had a physical in over three months) then, we recommend that you secure coverage with a no exam plan first and then apply for the full underwriting plan. If your full underwriting plan gets approved at good rates, just cancel the more pricey no exam plan.
If you have some minor health issues
For individuals over 50 who have minor health issues, both plan options above may still be available and the process is about the same. Some examples of minor health issues are controlled high blood pressure, non-evasive external cancer (skin), diet or pill controlled diabetes, internal cancer with last treatment more than 5 to 10 years ago, controlled heart health issues and the ability to care for your personal needs (bathing, dressing...). Some insulin dependent diabetics may fall under this category too.
If you have major healthy issues
Having major health issues, as you may know, will limit the number of life insurance plans available to you. In most situation, graded life insurance is the only type of plans a senior over 50 will qualify for. Graded life insurance simply means that for the first two to thee years, the death benefit is limited to the premiums you paid plus some in interest (we have seen interest rates range from 4% to 10%). Although, some people may decide that the plan is worthless since full coverage does not start right away, we fee that, if you cannot qualify for any other life insurance coverage, it is a big mistake not to get a graded lief insurance plan. After all, worst case scenario, you died within the graded period, but you have made 4% to 10% on the money you sent to the insurance company for premiums - where else can you get that kind of return at no risk? Applying for full underwriting life insurance may still be OK but be prepared to be declined fast. In rare cases, you may get approved with very very high rates. One tip most people do not know is that it is easier to get approved for permanent life insurance (whole life, universal life...) than term life.
Note that, in all options above, we have covered the most common health issues. Of course, if you have a health issues not mentioned above, you may fall under any of the above categories. Please ask your advisor about plan availability for your specific health issue(s) and give the advisor as much information as possible. The more information you give your advisor the better the results (in most cases). We hope this article gave you a good head start on getting life insurance if you are over 80 and it made you feel more comfortable about the process. Please feel free to ask us questions too. The answer is fast and clear. Be well.
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