If you cringe at the idea of term life insurance due to the fact that you feel as if you're wasting your money because you don't think you'll die, it'll be easy to understand the appeal of a "return-of-premium" or ROP term life insurance.
A return-of-premium term life insurance policy provides the peace of mind that comes with a traditional term life insurance policy, but you'll pay a bit more (about 30-45%) and 20 or 30 years later, if you outlive your policy, you'll get all of your money back, tax-free!
For someone needing life insurance, this can be a good deal. But there are some cautions. The first is to think about whether you can realistically afford the higher premiums.I believe that the first priority for life insurance is to have sufficient coverage.If you can't realistically afford return-of-premium coverage for the amount you need, I would recommend that you choose a cheap life insurance policy for that coverage amount.
It's always best to talk with a life insurance agent to find the best life insurance company and policy for your family's needs.
Finding andchoosingthe right term life insurance coverage can be a time consuming and complex process, especially if the individual looking to secure coverage has outstanding health issues and/or a lifestyle that includes activities deemed to be "high-risk."Clearly, this is not a "one-size-fits-all" proposition.Depending on the specific medical condition or high-risk activity, it is not uncommon for one insurance company to charge significantly more than another. Why? Because each life insurance company has a different set of underwriting guidelines.
Some of these company-specific underwriting rules are well known, but most are not, and don't even show up in the carrier's rate books or product brochures.The only way to know about them is to deal with a broker who does a lot of business with several carriers - and is in a position to know what each will or won't do.This experience is critical because industry-wide, only about 30% of individuals qualify for the "preferred plus" rate class.
Tips for finding affordable life insurance:
·Ask the right questions – Talk with an expert that is familiar with multiple carriers' underwriting rules.Such experts will know which carriers will bend their rules, and when.
·Deal with a broker – Brokerage firms, such as AccuQuote, know the ins and outs of several carriers - and are in a position to know what each will or won't do.Some of these carrier-specific underwriting rules are well known, but most are not, and don't even show up in the carrier's rate books or product brochures.
·Make sure you fess up – if you do anything extreme, such as sky dive on a regular basis, and don't tell your life insurance company at the time of applying, they can refuse to pay the death claim should you die.
·Think about pursuing a policy that excludes your risky endeavor – Some insurers will allow you to purchase a policy, which states that if you perish while engaged in the excluded activity, your beneficiaries would not receive the death benefit.The advantage to this is that you would not pay extras above the cost of your policy.
·Educate yourself – Go to school, get a license, do all the safety things that you're supposed to be doing and present yourself as an expert in skydiving.
·Notify your agent if you stop this activity – If you no longer are skydiving, contact your agent as you can save money immediately.
I write about key man insurance at least once a year. Why?Because it can make a break a business.
If you're a business owner, you should ask yourself: what happens to my company if something happens to a key employee or me?
The answer can decide whether the company survives the loss -- and whether a business owner puts his family at financial risk.
There are ways to provide protection, including key-man term life insurance.Such coverage takes over should income be interrupted.And it's not just business owners that need life insurance protection.The company's top salesperson should also be covered.In fact, companies should look at insuring anyone who is integral to its financial success.
If you lose a key employee, key man life insurance will pay you for your lost profits, thereby buying you some time to replace the individual and get the business up and running again.
The key man term life insurance policy can also serve as an incentive to retain key employees and use it as part of your benefits package.How? You can split the benefits from the life insurance policy any way you want.You can offer part of the proceeds to the employee's family.
How much key man life insurance coverage is needed?Typical benefits run between $250,000 and $1 million.There are two ways to determine the right amount of key person life insurance.You can buy 8 to 10 times the employee's salary or look at the economic value of the employee to your business and ask yourself, "How much money would I lose if something happened to this person?" The answer to that question will tell you how much life insurance to buy.
How much does it cost?That depends on several factors, including the age and health of the people.However, today life insurance rates are 60% less than what they were 10 years ago.In 1994 it cost $995 to insure a 40-year-old man with an average 20-year term life insurance policy.Today, that same policy would cost you less than $400 per year.
Most employers would say that their most powerful business asset is their employees.So, why wouldn't you insure your most important assets? Getting life insurance quotes is easy. Just use the internet to get several quotes in a matter of minutes.
During this time, where good investments are hard to come by, some life insurance agents are touting permanent life insurance policies as an attractive alternative.However, as with any "investment", it's important to know the pros and cons of permanent life insurance policies before deciding whether or not to buy one.
The basic difference between term life insurance and permanent (whole or universal) is this: On the death of the insured, both term life insurance and permanent policies pay a death benefit to the named beneficiary.However, permanent life insurance plans include "living values" in the form of cash values.These values can be accessed in the form of policy loans, withdrawals, and also by surrendering the policy.
A permanent life insurance policy is a type of 'forced savings' plan. However keep in mind, assuming the same death benefit; they premiums on these types of plans are generally 5-12 times as much as a level term life insurance policy. A permanent policy will typically not work out well for you unless you're prepared to stick with it for a long time.Unfortunately, most people aren't able to afford the face amount of insurance they need to protect their family in a permanent insurance chassis.Even if they stretch their budget to buy permanent coverage, they often lose the faith and bail out too early.When this happens, they find out that they'd have been better off never having started the plan.They have no life insurance protection, and the surrender values add up to abysmal results on the 'investment' side of the transaction.
I prefer term life insurance for most people because it is affordable, making you less likely to lapse your policy.The main purpose of having a life insurance policy should be to protect your family. Term life insurance accomplishes this need for a lot less.If you are determined to consider permanent coverage, you might consider the old adage, 'buy term life insurance and invest the difference'.Simply take the cost difference between a permanent policy and term life insurance policy and invest that money.
At today's rates (which are the lowest in the history of life insurance), the annual premium for a 40-year-old male (non-smoker) in good health for a $500,000, 20-year term level term life insurance policy is only about $350!
To get a real sense of the value of term life insurance, let's compare term life insurance quotes and universal life quotes.A healthy 40-year-old nonsmoking male would have to pay about $3,000 per year to acquire a $500,000 universal policy.For the first few years, most of these policies have zero surrender value.But say he had instead invested $2,650 (the difference between $3,000, the cost of the universal policy, and $350, the cost of a term life insurance policy) in a mutual fund that averaged a total return of 10% annually. At the end of the first year, he'd have $2,841, accounting for taxes on the earnings at a 28% rate.At the end of 10 years, he would have accumulated more than $46,000 in after-tax savings in the mutual fund.Over the same period, the cash value of the policy would likely only have climbed only to about $21,558.
Here are some tips when shopping for a term life insurance policy:
Whether you smoke two packs of cigarettes a day, or have an occasional cigar or pipe, the life insurance quotes you'll most likely see are going to be smoker rates which are typically double, often, as much as triple, the price of` non-tobacco users.
For example, a 40-year-old male who is a smoker qualifying for preferred term life insurance rates on a policy with a face value of $500,000 would be quoted $2,480 for a 30-year level term life insurance policy.If that same person qualified for non-smoker rates he would only pay $620 for the same policy.That's a savings of $1,860 per year and $55,800 over the length of the policy!
If you've been putting off shopping for life insurance because you're a smoker, or think you are paying exorbitant premiums because of your habit, it's time to start shopping around.Many people are overpaying for their life insurance because they don't realize that there are deals to be had out there.
We suggest the following tips for finding a life insurance company that will offer tobacco users more favorable rates – sometimes, even non-smoker rates:
Shop around – Some companies require a negative test for nicotine in order to qualify for non-smoker term life insurance rates.While at others, testing positive for nicotine is acceptable. As a result, an occasional cigar smoker or tobacco chewer could end up paying a lot more than they have to.
Deal with a broker – Only a brokerage firm that has a broad pulse on the insurance market will know which company might offer the most favorable rates to a given person, based on their individual profile.
Do NOT lie on your application – Because premiums offered to those who admit to tobacco use are often triple those of people who don't smoke, some people are tempted to lie to get a better rate, but the effort often backfires.
If you're an ex-smoker don't think you'll automatically qualify for non-smoker rates.Life insurance companies usually require that you be smoke-free for at least one year; however some require longer periods. However, don't delay the process. Get the coverage you need today and reapply after some time goes by.
Every individually underwritten term life insurance policy requires a medical exam.The exam is paid for by the life insurance company and is completed by a medical technician or a nurse.
The exam usually consists of a series of health questions as well as a:
Blood test
Urine specimen
Blood pressure reading
In some cases, an electrocardiogram (EKG) or additional tests may be required. The exam can take place in your home or office.
Before you can purchase life insurance coverage you must qualify by meeting specific requirements. The process is known as risk-classification or underwriting. The underwriting process helps the insurer determine the rate you will pay, based on the level of risk you pose.
Auto insurance helps illustrate the concept. Good drivers pay less for coverage than poor drivers. The amount of premium you pay is based on the amount of risk you pose. Life insurance is similar. For instance, if you smoke, you present a higher risk than a non-smoker. Therefore, you will pay a higher premium for life insurance for the same amount and type of coverage.
Life insurance is not like most products that you can buy on the spot and take home with you that day.
The life insurance application process can be confusing.That's why I'm happy to explain what's involved in the process and why it can take 8 weeks or sometimes longer for an offer to be made.
During the underwriting process, the life insurance company will examine a number of factors based on its standards and guidelines. These factors include:
This podcast is brought to you by AccuQuote, a leading provider of term life insurance quotes.In part two of this two-part series, AccuQuote will continue to discuss the various types of wills and living trusts and their uses with Chas Rampenthal, General Council for LegalZoom.
The popularity of life insurance for estate planning purposes is increasing among 's senior citizens. Here are some ways it can be used in estate planning according to an article by InsuranceNewsNet.com.
Life insurance can help reduce the impact of the huge estate tax your estate may incur.For instance, if a 70-year old man's heirs are facing a $2 million estate tax bill for his property, he can take out a policy with a $2 million death benefit. Assuming the insured is in good health, such a policy would cost about $54,000 annually. If he lives for 15 years, his total premium paid amounts to $810,000. In exchange, the heirs get the full $2 million death benefit to cover the estate tax.
·You can utilize life insurance to efficiently transfer wealth to heirs or charitable institutions by creating an irrevocable life insurance trust or a wealth replacement trust.
·Life insurance policies can be useful if you do not want to purchase private, stand-alone long-term care insurance because it is too expensive – especially if it comes with optional death benefits. Under this set-up you would pay for the cost of his or her long-term care. A life insurance trust guarantees proceeds of large amounts to pass tax free to beneficiaries even if you spend down your assets to pay for skilled services.
·Life insurance can provide for your children from previous marriages. In this approach you would name your children from a former spouse as the life insurance beneficiary while your current family would get your other assets.
This podcast is brought to you by AccuQuote, a leading provider of term life insurance quotes.In part one of a two-part series, AccuQuote will talk aboutthe various types of wills and living trusts and discuss their uses with Chas Rampenthal, General Council for LegalZoom.
Learning about life, health, disability and long-term care insurance has always been a bit confusing.However, recently the nonprofit LIFE Foundation unveiled a significantly enhanced version of its award-winning website and moved it to a new Web address at www.lifehappens.org. The LIFE site has been completely redesigned and retooled to provide visitors with objective, easy-to-understand educational content on all the major types of life and health insurance. It features a wealth of multimedia content and interactive planning tools, including:
Insurable Interest and how it relates to life settlements
Byron Udell, founder and CEO of AccuQuote, a term life insurance quote provider, shares his thoughts on the topic of viaticals or life settlements the role insurable interest plays in these deals.
This is an age-old question. A lot of experts give a rule of thumb of 7-10 times your income.However, you really need to take into account a lot more than that. First, what are your current and future financial obligations? Do you have school-age children, a mortgage, a business, parents that are getting older?There are many good life insurance needs calculators out there that can help you get a better ball park figure.These calculators walk you through various questions you should consider before determining how much term life insurance you need. However, the best way to figure out how much you need is by talking with a life insurance agent. He/she will be able to ask the right questions you need to think about before making a purchase.
Many people are turning to the internet to find auto insurance, life insurance and even health insurance.When it comes to life insurance, there are several "quote services" on the Internet.What people don't realize is that my competitors and I sell the exact same products for the exact same price because life insurance is regulated by the government.So, what does that mean for you?
When shopping around using the internet to do price comparisons keep a few things in mind:
oMost of these services merely list the plans in order of their premium, or cost. Obviously, the least expensive plans appear at the top.
oUnfortunately depending on your health, family history and even driving record to name a few, you may not qualify for the least expensive rate only to find out months later after you've applied for it.
So, what can you do to make sure you find the best life insurance rate?Talk to an insurance agent that deals with multiple carriers to help you figure out the actual availability of the products for YOU, taking into consideration your complete health and lifestyle profile. Once you have all the facts, it will be easier to make an informed decision.
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