Posts Tagged ‘life insurance policy’

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The Importance of Life Insurance for your Business

Monday, June 21st, 2010

Most of us think about life insurance for personal reasons. We want adequate life insurance policies to protect our families and loved ones in the even of our death, and rightly so. However, have you considered the importance of life insurance to protect your business?

Life insurance for your business can protect the business itself, your partners, your family, your employees, and even your customers.

Consider your Business’ Key People

Both small and mid-sized businesses can benefits from life insurance and, as a result, many companies are taking out policies on the owners, partners and key employees of the business. Known in the industry as “key people,” these people are vital to the operations and success of the business. If there is an individual who is instrumental to the success of the business then you should consider life insurance for him or her.

Proper life insurance for a business can provide financial protection, risk management and asset protection, among other things.

Life insurance for a business can solve a myriad of problems: it can keep the business operating in the event of the owner’ death; it can buy out a partner’s share in the business from the family of the deceased; and it can help buoy along the business until a replacement has been found in the event of the death of a key employee.

Preventing the Interruption of a Business

The ultimate goal of a life insurance policy for a business is to eliminate financial interruption. It will ensure that the rent or mortgage continues to be paid, bills and invoices continue to be paid, employees continue to be paid and ordering and other operational activities continue.

One of the biggest questions you should ask yourself when taking out a life insurance policy on a key employee (or yourself) is: how much would I need to keep my business running? What would it cost to replace that key person?

In short, life insurance for a business can help prevent the interruption of a business in the event of a key person’s death. If you have doubts about the survival of your business should a key member of your business die, then you owe it to yourself to consider a comprehensive life insurance policy.

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How Cause of Death Affects Life Insurance Benefits

Wednesday, May 19th, 2010

If you have a life insurance policy and you die from the complications of a medical condition or natural causes, it’s a pretty cut and dry case. Benefits will typically be paid to your beneficiaries as quickly as the death certificate can be issued and your death is verified by the insurance company. However, if your death is caused by other circumstances, your loved ones might face quite the hassle when trying to collect benefits and could be denied altogether in certain cases.

Accidents

Most accidents are typically covered by life insurance. However, accidental death often brings some added expenses and burdens to a family. You can help to ease this by opting to pay a higher premium that pays a larger benefit should your death be caused by an accident. In order for a claim to be paid, the insurance company will have to determine if, in fact, your death was caused by accident. Your contract should state reasons why an accidental death claim might be denied. In some cases, accidental death caused by your willing participation in risky activity could result in a delayed claim full of hassles or denial of benefits. If you are a risk taker, you might consider high-risk insurance, which recognizes this lifestyle more than the other guys.

Suicide

It is a sad event to see someone who has given up on life and ends it all by their own hand. An already devastated family now faces and even harder road. There was a time when most insurance companies would not even consider paying benefits if the insured party took their own life. While some companies still do observe this policy, the majority have come to realize that suicide does happen and has begun to pay benefits, under certain conditions. For the most part, a policy needs to be in effect for at least two years before benefits will be paid on this cause of death. That does not mean one should be considering this plan to end their life and wait it out to ensure benefits are paid. If you are suicidal or you think a loved one is, don’t wait until it is too late. Get help now!

Foul Play

Murder. A devastating, cold and callous event. In an ideal world, this would never happen. However, in reality, it does and we have to consider what would happen to and for our loved ones in that event. If foul play is suspected in your demise, the insurance company will hold up the payment of benefits until the investigation into your death is complete. They want to ensure that your beneficiary had no part in your death. While murder for insurance money happens more in movies than in real life, it is a felony crime and the insurance company does not want to see anyone wrongly benefit from your untimely and tragic death.

It is important to be aware of these provisions in your life insurance policy, but it is even more important to try and plan ahead to protect the ones you love.

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No Medical Exam Life Insurance: Is This the Right Choice for You?

Thursday, April 8th, 2010

For the longest time, those who wanted a life insurance policy had to endure medical exams that could easily result in higher rates or even flat-out denial because of existing health conditions that could easily impact their lifespan. For many people, the fear of dealing with the exams and the insurance company decisions caused them to simply forgo any life insurance at all, leaving their families without those much needed benefits in the end. Then, along came no-exam life insurance policies. These would appear to be the ultimate answer to the problem. However, no-exam policies are not for everyone. There are several things to consider before you simply jump aboard the no-exam bandwagon.

The Advantages

Life insurance policies not requiring a physical exam do have their advantages. Instead of filling in some lengthy booklet that details your entire medical history, you simply answer a few health questions or sometime, none at all. This makes the life insurance application process much shorter. These kinds of policies also often allow for you to fax, e-mail, or mail in your application, as opposed to meeting with an agent. The whole idea protects your privacy regarding anything beyond the basics.

In addition, you do not have to worry about taking the time out to go see a doctor or possibly even spending money out of your own pocket for an exam. Even if you only had to pay a co-pay or just spend the money for the gas to get there, money is money and every little bit saved makes a big difference.

Because it takes far less time to process no-exam applications, the cost is lower for the insurers. That, in addition to the overall lower rates that have appeared in the last decade could be a good thing.

What to Consider

If you are young or in reasonably good health, it might be worth it to go ahead and go through a standard application process and medical exam. Your good health and age could qualify you for an even cheaper rate. For older folks, those with preexisting health problems, a history of smoking, and other major lifestyle considerations, it might be best to go with the no-exam option. Few questions are asked, so no one is going to raise an eyebrow over health-related concerns, and in the event of the inevitable, the benefits will still be there to help your loved ones in their time of need.

The best way to go about it is to get quotes from several companies based on both options. See what the rates will be and if you feel you can qualify for the cheaper rates with a physical, the whole effort might pay off. However, if you don’t see yourself qualifying or you don’t feel there is much difference in the rates being offered to you, skip the hassle and go for the no-exam plan.

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Borrowing From Your Life Insurance Policy

Tuesday, April 6th, 2010

When you’re facing a terrible financial crisis or some kind of emergency, often the cash you need to handle the situation just isn’t readily available to you. However, if you happen to be the owner of whole life or permanent life insurance policy, you may be able to borrow against that policy and get the cash you need. Of course, you really should only do this if it is really a very serious need, and it will also depend on how long the policy has been in effect.

Can I Borrow From My Life Insurance?

You sure can, as long as your policy is not term life. It works differently, so you can not borrow against it. A whole life policy builds up a cash value. Technically, it is a type of investment. You would borrow against the benefit amount of the entire policy, as opposed to only the amount you have paid in premiums. The sum you borrow, for whatever reason, will simply reduce the amount of benefits payable in the event of your death.

Now That I Have Borrowed All of This Money, What’s it Going to Cost Me?

Well, as the policy owner, it’s your money. It is not like a bank loan. You can choose to pay the money back if you want to ensure that the original benefit sum is available later on, however, if you can live with a little less being paid to your family in the end, then you don’t have to pay it back. It won’t affect your credit score and no one will come around, trying to collect a debt.

Are There Any Limitations?

Not really. However, there are a few things to be aware of. You can borrow up to the full cash value of your policy. It simply reduces what will later be paid out. If you want that policy to be there in the end, you will want to repay it. Some policies might be better for borrowing than others are, so check with your insurance company. This is due to interest rates ion investments made by the insurance company and fees and such. Get the terms and conditions up front. Still, you won’t have to repay if you choose not to. There are not ground rules for what the money has to be used for either. That is completely up to you, and no one can say an differently.

A life insurance policy that allows you to borrow on the cash value is a great asset to have. However, if you want to protect the interest of those you will leave behind someday, be cautious and don’t borrow too much or at least return some of the funds so the policy will be there to fulfill its ultimate purpose one day.

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Buying Life Insurance on a Budget: what you Need to Know

Wednesday, March 10th, 2010

You know you need life insurance, but your budget is near its breaking point. What do you do?

The answer is simple: you owe it your loved ones to find the money in your budget to purchase life insurance. However, given the highly competitive life insurance business, you can be sure to find affordable and comprehensive life insurance.

Whole Life Insurance vs. Term Life Insurance

The most affordable route to take when purchasing life insurance on a budget is term life insurance. Many life insurance agents will push whole life insurance policies because of the big commissions they receive. Make no doubt about it: whole life insurance policies do have their place, but if finances limit you, a term life insurance policy is certainly the next best thing.

Many individuals choose term life insurance policies because they provide excellent coverage for a certain time period; this may be during the time they have a mortgage, or when their children are young. Whatever your reason for choosing a term life insurance policy, make sure it covers your debts so that you can best take care of your family financially in the event of your death.

Longer Term Policies and Better Rates

Because of the competitive nature of the life insurance business, it is quite simple to find great policies, with high death benefits, for as long as 30 years. And, when considering the price difference between whole life insurance policies and term life insurance policies, the choice is quite simple for most individuals: term policies win the race.

For individuals on a budget, consider term and take out the largest term life insurance policy that you can comfortably afford. Your term life insurance policy should cover your mortgage, your debts, your funeral and burial costs, and any other monies that you want to leave to help provide financial support for your family.

Do your research and compare a number of life insurance policies through different life insurance carriers. However, don’t automatically choose the cheapest policy; instead, research companies and decide which one has the best reputation, history and financial standing so your policy is protected.

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Q and A: Choosing a Beneficiary for your Life Insurance Policy

Monday, March 1st, 2010

A comprehensive life insurance policy should have a chosen beneficiary. However, many individuals are unsure of the purpose of a beneficiary and the role your beneficiary plays in your life insurance policy.

Q: What is a beneficiary on a life insurance policy?

A: A beneficiary is the person named on a life insurance to receive your death benefit. The beneficiary will often be a spouse, child or family member; however, it may be more than one person, as well as a charity, a trustee of a trust or your estate. Life insurance policies that don’t have a named beneficiary will be paid to the deceased’s estate.

Q: What is the difference between a primary beneficiary and a contingent beneficiary?

A: You may have noticed that your life insurance policy has both a primary and contingent beneficiary. A primary beneficiary is the primary person who is named to receive your death benefit. A contingent beneficiary is the next beneficiary in line, should the primary beneficiary not be able to be located.

Q: Is it necessary to choose a beneficiary, since my life insurance policy will go directly to my estate and can be distributed at that time?

A:  Probate proceedings can often delay the distribution of your life insurance policy, and the cost of probate could take away from your life insurance benefits, so it is best to name a beneficiary to avoid the probate process. Keep in mind that you can change your beneficiary at any time, so don’t delay naming a beneficiary in fear that you may change your mind in the future.

Q: When should I re-evaluate my life insurance beneficiary designations?

A: Any time there is a life change you should reevaluate your life insurance policy. Some of the events that may change your beneficiary status include: marriage; divorce; birth or adoption of a child; and changes in relationships. It is also best to review your life insurance policies on an annual basis to ensure that they are still meeting your financial needs.

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Alcohol Use and Life Insurance Premiums

Tuesday, February 23rd, 2010

How do life insurance companies view alcohol use? How much alcohol use is deemed to be alcohol abuse?

For those individuals who occasionally enjoy alcoholic beverages, life insurance premiums will not likely be affected. However, heavy alcohol use can have an affect on your health and your life expectancy, which means that life insurance companies will likely frown upon insuring someone who engages in frequent, heavy drinking.

The Effects of Alcohol Abuse

From shorter life expectancies to a host of health problems, including heart disease, stroke, depression and liver disease, heavy alcohol can have a detrimental affect on a person’s life. So it is no surprise, then, that life insurance companies are very interested in the amount of alcohol you assume when it comes to applying for a life insurance policy.

Social Drinking vs. Heavy Drinking

Social drinking will likely not affect your life insurance rates; however, drinking as little as two alcoholic drinks daily can take you out of the running for preferred rates. Any more than two alcoholic drinks daily can even knock you of standard rates. In short, the more alcohol you drink on a daily basis, the better the likelihood of paying much, much more in premiums than non-drinkers.

And, depending on the severity of alcohol abuse, an insurer could potentially deny a life insurance application altogether. If your medical history shows alcohol abuse, you can expect to be denied for a life insurance policy.

Many times, life insurance rates will offer drinkers a rated policy, which essentially means that the applicant must pay additional premiums, which could end up costing them big.

Your Life Insurance Medical Exam

Don’t expect to hide your alcohol use from your life insurer, as the typical life insurance policy requires a medical exam, which will likely include both blood and urine tests. The insurer may also ask for a liver function test if you have a history of alcohol abuse; this test may show liver disease or cirrhosis of the liver.

In addition, if you have a DUI arrest on your driving record, you can expect higher life insurance premiums. Any type of drunken driving arrest or conviction on your record raises a red flag with insurance companies, thereby resulting in higher life insurance premiums or even denial of life insurance benefits.

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Understanding your Life Insurance Policy’s Terms and Exclusions

Tuesday, January 5th, 2010

A comprehensive life insurance policy is crucial for the protection of your family in the event of your death. However, not all insurance policies are created equal, so it is up to you to understand the terms, conditions and exclusions of your life insurance policy so that you can be assured you have secured a premium life insurance product.

The provisions and exclusions of any life insurance policy, in short, detail how the policy will pay out in the event of your death. There are a set of common provisions in any life insurance product, which include:

  • Ownership clause - The ownership clause of your life insurance policy states that you own the life insurance product as long as you are alive. The ownership clause allows you, as the owner of the policy, to designate beneficiaries, make all decisions regarding the policy and make all decisions regarding the cash value of the policy.

  • Grace period provision - The grace period section of the insurance policy details the time frame during which you can make your premium during the policy’s grace period (the grace period for a monthly premium is typically 30 days). If you are unable to make a timely payment, your policy may be cancelled by the insurance company, which is where the policy’s reinstatement clause comes in.

  • Reinstatement clause - The reinstatement clause in your life insurance product allows you to reinstate the policy and continue receiving benefits. There are certain conditions, however, that you may have to meet before reinstating your policy.

  • Incontestability clause - The incontestability clause protect you, the policyholder, from a denial of benefits due to misrepresentation or false information. Most insurance companies are very particular about health exams because of this type of clause.

  • Suicide clause - Most policies have a suicide clause that prohibits your family members from drawing on the policy if you commit suicide within two years of taking out the policy.

  • Dangerous activity clause - Most policies prohibit your family members from drawing on your policy if you die during participation in a dangerous activity, such as sky diving or auto racing. It is because of this clause that it is important to point out your participation in any type of dangerous activity to your insurance agent upon applying for a life insurance product.

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Why your High Cholesterol Levels Affect your Life Insurance Rates

Thursday, December 3rd, 2009

Your ability to obtain a great life insurance policy, at a competitive rate, is dependent upon many things, including your cholesterol levels! Besides your age, your weight and your overall level of health, there are many things that can’t be seen that impact your ability to obtain life insurance as much as the obvious.

Because high cholesterol levels are linked to coronary heart disease, and coronary heart disease is the number-one killer of both men and women in the United States, it only makes senses that life insurance companies are more than interested in the health of their applicants; in particular, their cholesterol levels.

High Cholesterol Equals Deadly Consequences

The Centers for Disease Control estimates that one in five Americans has high cholesterol. It is because of this fact, and the fact that many people with high cholesterol suffer a stroke or heart attack, that life insurance companies have given this health topic great attention. In fact, if you have high cholesterol, you can be sure that you will end up paying higher premiums than those individuals with low blood cholesterol levels.

Testing for High Cholesterol Levels

During the physical exam for life insurance, you will likely be given a physical, which includes blood work. Among other things, your blood will be tested for cholesterol levels. It is important to realize, however, that individuals who previously had high blood cholesterol levels, but are now successfully controlling them, will likely not be penalized.

Although each insurer’s definition of high cholesterol is different, you can generally expect to be penalized for your cholesterol if your bad cholesterol, or your LDL cholesterol, is above 100, or if your overall cholesterol levels are above 200. You can check with your insurer regarding their requirements for blood cholesterol levels.

What to do Before Applying for Life Insurance

The best thing you can do before applying for a life insurance policy is to get a full physical exam from your doctor, including blood work. If your doctor finds that you have high blood cholesterol levels then you can start being treated, therefore remedying the situation before you apply for life insurance.

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How to Choose the Best Life Insurance Policy

Monday, November 30th, 2009

Choosing life insurance should be a multi-step process. Your ability to obtain the best insurance, at the most competitive rates, involves hard work on your part.

Although most people don’t give life insurance too much of their time - after all, it is often an unpleasant topic to think about - it is important to research your options and consider both your and your family’s needs when choosing a life insurance product.

To do this, there are a few steps you should take:

  • Consider your options regarding insurance providers. Do your homework and research a variety of insurers. Check out whether the company is fee-based or commission-based, and don’t forget to research the company’s history, performance ratings and customer-service reputation.

  • Consider your coverage needs. In order to determine the value of your life insurance policy you should consider your needs, for both yourself and your family. Many insurers, for example, recommend that your life insurance policy value equal at least two to three years of your annual income. You may choose your life insurance amount based on your children, your spouse or the amount of money it would take to pay off your mortgage, for example. Many life insurance companies offer easy, convenient online calculators that help you decide how much life insurance you may need to protect your family and care for them in the event of your death.

  • Decide which policy is right for you and your budget. There are many different life insurance products, including term life insurance and permanent life insurance. What works for one individual may not work for another; in other words, your decision will be a personal one, based largely in part on your budget. Your decision to purchase a particular life insurance product may be based on your ability to cover short-term expenses, or it may be based on your age.

  • Re-evaluate your circumstances and your needs on an annual basis, and make changes to your policies, if necessary. Your circumstances can change at any given time, so it is important to make sure your life insurance policies reflect both your and your family’s needs.

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