Posts Tagged ‘life insurance’

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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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The Five Biggest Factors that Raise Life Insurance Rates

Monday, March 8th, 2010

Your life insurance rates can be affected by many different factors. From your age and weight to your occupation, your life insurance rates directly mirror you and your lifestyle.

Life insurance companies use a series of factors when considering your life insurance premiums rates. The criteria used by an underwriter can vary depending on the life insurance company; however, there area a few factors that will always have a large impact on your premiums:

  1. Weight - Simply put, you can expect to pay higher life insurance premiums if you are deemed to be overweight by the life insurance company. This is because obesity equates to a number of medical conditions, such as heart disease, high cholesterol, high blood pressure and diabetes, as well as the likelihood of an obesity-related death. The premium discrepancy between an obese individual and an individual with a healthy weight could be as much as 50 percent or more.

  2. Smoking - It is no surprise that smoking plays a huge role in increased life insurance premiums. Regardless of how much you smoke or what kind of tobacco product you use (even chewing tobacco) you are consider a smoker by life insurance standards. However, you can drop you life insurance premiums back to that of a nonsmoker in as little as one year after you quit smoking.

  3. Alcohol Abuse - Alcohol abuse, because it can cause a number of diseases, health conditions and early death, will have a huge impact on your life insurance rates.

  4. Medical Conditions - Your medical health history plays a big role when it comes to determining life insurance premiums. Any conditions, such as high blood pressure, heart disease, cancer and heart attack that appear on your medical history will raise your life insurance premiums.

  5. Risky Lifestyle - Do you like to bungee jump, skydive or race cars in your spare time? If so, expect your life insurance premiums to rise substantially. Any type of engagement in activities deemed by the insurance company to be risky will earn you a spot in a higher risk category.

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The Impact of Smoking on Life Insurance Rates

Thursday, March 4th, 2010

We all know the health hazards of smoking, but many of us still smoke anyway.

Whether you are unable to kick the habit or if you simply enjoy smoking, one’s thing for certain: smoking can greatly affect your life insurance rates.

Regardless of how much you smoke, you are considered a smoker by life insurance standards. For example, if you indulge in one or two cigarettes day you will be placed in the same category as another individual who smokes two packs of cigarettes a day. In other words, a smoker is a smoker when it comes to life insurance policies.

The Consequences of Lying

Because of the high premiums associated with smoking, many individuals lie about smoking on their life insurance policy. In fact, many smokers will stop smoking for a few days before they take a urine test for their life insurance application.

So, the question is: can you get away with lying on your life insurance application; and, if so, what are the consequences of fooling the life insurance company?

The first thing you must remember is that a life insurance policy is a legally binding contract. Therefore, if you are caught after the policy is issued the insurer can cancel the policy or change your rates to reflect your smoker status.

Although a life insurance company will not likely deny your family benefits if you die and they find out you were a smoker, it doesn’t make sense to jeopardize the financial security of your loved ones simply to save money on life insurance premiums.

Honesty is the Best Policy when it comes to Life Insurance

In the end, the best thing you can do is to be as truthful and frank as possible when answering questions for a life insurance policy. This way you can be assured that your life insurance is protected and intact and that your family will be financially protected and secure in the event of your death.

Of course, the best possible scenario is to stop smoking now to decrease your chances of a smoking-related death!

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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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How Much Life Insurance do I Really Need?

Thursday, February 18th, 2010

It seems as if every time we get life insurance we are told that we don’t have enough. We all certainly want comprehensive life insurance to protect our family financially in the event of our death; however, how much is too much? Can you be over-insured?

The first place to start when determining how much life insurance you need is to determine your financial goals. For example, do you want enough life insurance to cover the balance on your mortgage? Do you want enough life insurance to send all of your kids to college? Or do you want enough life insurance to make a hefty donation to your charity of choice?

Determining Financial Goals

Once you have determined your financial goals, you can begin to understand the amount of life insurance that you must secure to meet those goals. Many individuals, for example, want to leave their family financially secure in the event of their death.

However, what exactly does that mean? The fact of the matter is that the term “financially secure” means very different things to different people. For one person, this may mean paying off all of the household debt, while for others it may mean providing living expenses for a certain number of years following their death. Finally, some individuals seek only “burial insurance,” or enough life insurance to cover their burial and funeral costs.

In other words, the amount of life insurance is dependent upon many factors, including your current financial situation, your family situation and your debts, among other things.

Generally speaking, though, most experts agree that a reasonable amount of life insurance is generally 20 times your annual salary.

Consider any other Life Insurance Policies

In addition to purchasing private life insurance, you will also want to take into consideration any life insurance your employer may offer, as well as any Social Security benefits afforded to your dependents and spouse upon your death. You may also have a vested pension benefit, so check all sources before purchasing private life insurance.

The bottom line is that your life insurance needs are very personal and very dependent upon your current financial situation. Your life insurance will change throughout your lifetime, so it is important to reevaluate your life insurance products at least every few years.

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Life Insurance Premiums: How to Pay when Money is Tight

Monday, February 15th, 2010

We all know that life insurance is incredibly important, as it will be there to protect our family financially in the event of our death.

However, what do you do when you know that life insurance is the right thing to have, but your budget is so tight it squeaks?

First of all, there are many things that you can cut back on when times are tight, but life insurance isn’t one of them. Resist the urge to cancel your life insurance policy and instead search for other ways to cut back.

With that said, there are ways to save money on life insurance so that you can protect your family while also protecting your budget:

  • Consider purchasing life insurance when you are younger. The long and the short of it is that life insurance is much, much less expensive to purchase when you are young. If you have college-aged children, encourage them to take out a quality, whole life insurance policy that can build cash value over the course of their lifetime. The super-low rates afforded to younger adults simply shouldn’t be passed up.

  • Change your payment schedule. Instead of paying your life insurance in one or two payments, ask your insurer to switch you to monthly payments. This will make the process of paying your life insurance much more manageable. In addition, ask your insurer if they have automatic debit payments; this will allow your insurer to deduct your monthly insurance premium directly from your checking account.

  • Consider slightly changing the terms of your life insurance policy. If you must, consider lowering your death benefits slightly. Although this should certainly be a last resort, it may be better than abandoning your life insurance policy altogether.

  • Consider a term policy over a whole life policy. Although there certainly are many advantages to taking out a whole life policy, you may want to instead focus on a term policy until your financial situation improves. Term policies have much lower rates, thereby allowing many individuals, regardless of their financial situation, to carry life insurance.

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Shopping for a Life Insurance Agent: what you need to Know

Tuesday, January 19th, 2010

Shopping for a life insurance agent may not be an easy task. After all, you are looking for a trusted individual who has plenty of experience and a proven track record of client satisfaction. It is because of these factors that you should take the time to make sure you choose the right agent through which to purchase life insurance.

Your life insurance agent should have your best interest at heart, and should understand both your needs and your desires so that the life insurance products you choose are best suited for you, your personal situation, your goals and your budget.

Your Shopping Checklist:

  • Rapport - Regardless of how much experience an insurance has in a particular area, your life insurance agent must be able to communicate well with you and be able to develop a good rapport with you. In other words, a professional relationship with a life insurance agent will simply not work if you don’t feel comfortable with him or her. Your life insurance needs are not “one size fits all,” so your agent must be able to understand your specific needs and customize life insurance policies to suit you.

  • Properly Licensed - Always check with your life insurance agent to make sure he or she has the proper license to sell insurance in your state. You may also check with your state insurance department regarding your agent’s ability to sell insurance in your state.

  • Industry Experience - The bottom line is that your life insurance agent is only as good as his or her experience in the industry.  Experience in the industry does more than show your agent’s knowledge; it clearly shows his or her commitment to the industry and his or her position. In other words, your agent’s industry experience usually means that he or she will be there for you, now and in the future.

  • Sensitivity - Your agent must be sensitive to your needs and your wishes, and must be able to help your loved ones navigate the process of claiming your life insurance policies once you pass. You owe it to your family to find a life insurance agent who will be there for them during this difficult time.

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Your Common Life Insurance Questions Answered

Monday, January 11th, 2010

Life insurance is a frequently misunderstood type of insurance. Although most of us realize that we need life insurance, many of us don’t know where to turn to get the best coverage at the best price.

Don’t let the unknown scare you; protecting your loved ones with comprehensive life insurance is one of the single best things you can do for them.

The following are some of the most commonly asked questions about life insurance:

Q:  Can someone else take a life insurance policy on me?

A:  Only those individuals with an “insurable interest” in you can take out a policy on your life. For example, a parent or spouse may take out a life insurance policy on you. There are also cases in which an employer or a business partner may also take out a life insurance policy on you.

Q: What does a standard life insurance application entail?

A: To apply for a life insurance product you will likely be asked to fill out an application, which often includes your age, your health history and other personal information. Based upon this information, the insurance company may or may not take insure you. Many insurance companies also require that applicants undergo complete health examinations before being eligible to receive life insurance benefits.

Q: What type of life insurance product is best for me?

A: There are many types of life insurance products available, including term and whole life insurance, as well as hybrid policies. The type of life insurance product you choose will largely depend on the following factors: your age; your health; your family situation; and your financial situation. Term policies, for example, are often more affordable than whole life policies, while whole life policies are intact for your lifetime, not just a certain length of time.

Q: Where can I shop for life insurance?

A: Shopping for life insurance has never been easier, thanks to a myriad of life insurance companies that offer online life insurance quotes and life insurance information. Shopping online for life insurance also allows you to compare policies between companies and even between the same insurer.

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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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Start the New Year off Right: Review your Insurance Policies

Thursday, December 31st, 2009

What better time to review your insurance policies than at the beginning of the New Year?

Reviewing your financial health and security is an important annual step to take. It is a great way to revisit your needs, wants and budget and to decide whether your current insurance polices are still working for you.

  • Life insurance - Review your life insurance policy amounts and consider whether your coverage is adequate. Consider your mortgage balance, your family dynamics and your children’s age when deciding how much life insurance you need. Don’t forget to consider additional life insurance while you are young and healthy - although many individuals don’t think about life insurance during this time in their lives, the fact of the matter is that life insurance rates are incredibly cost-effective at this time.

  • Disability insurance - Take a good look at your current income versus the amount of money you would receive in the event of a disability. This amount may be inaccurate, particularly if you received a raise or changed jobs at some point throughout the year.

Consider your group disability policies and your private disability policies, as well as your Social Security benefits. All of these sources of disability insurance need to be considered before you can make the best decision regarding your private disability insurance policy.

  • Auto insurance - Don’t get caught up in complacency when it comes to your auto insurance. Check your rates every year and pay close attention to the rates of other auto insurance companies. Remember: what may have been a good deal just a couple years ago may not be such a good deal now. Make sure your policy meets both your needs and your budget.

  • Homeowners insurance - Have you made any major renovations or improvements to your home in the past year? Have you added on or built a new back deck? Have you added a swimming pool or installed a new security system? Any one of theses changes can affect your homeowners insurance rates, so make a checklist of all home improvements you have made over the last year and contact your insurance agent to discuss whether these changes will affect your homeowner’s insurance policy.

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