Posts Tagged ‘life insurance’

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Whole Life Insurance: What to do About a Lapsed Policy

Tuesday, May 18th, 2010

At some point in your life, things were going great, financially, so you got yourself in on a life insurance policy. You paid the premiums for a long time, then, life, as it tends to do, happened. You found yourself unable to pay the premiums, and after a while, your policy lapsed. Maybe you simply stopped paying because you no longer need the insurance. Either way, your policy is no longer in effect. What should you do?

Late Payment

If you still want the policy, and can find the extra money to pay, there is often a grace period of about one month to catchup on payments and keep your policy working for you. Most insurance companies will still pay benefits to your beneficiaries, even if you are late on the payment, should you leave this earth during the grace period. The insurance company will simply deduct that which is owed from the benefit amount being paid.

Reinstating Your Policy

If your whole life insurance policy lapses, you might be able to reinstate it. This can be much cheaper than trying to get a new policy. You might still have to go through the company’s requirements to prove insurability again, such as credit checks and medical exams, etc. You will have to do this within five years of lapsing and make sure you have satisfied all debts on the policy to be reinstated. Do not make it a habit though. The chances that any life insurance company will allow you to lapse and reinstate over and over again is pretty slim.

Surrender Value

Instead of allowing your whole life insurance policy to lapse, you can ask the company about the surrender value of the policy. The company might be willing to use the cash value to consider the policy paid up. You can no longer borrow against it at this point, however, the policy remains in place and there is still a death benefit, should the need arise.

Life Settlement

Another alternative to allowing a policy to lapse is to sell it. This is known as a life settlement. You sell your policy to an investor. You collect the cash and they become the beneficiary of your policy, collecting benefits at the time of your death. It’s a win-win situation. You get cash now and stop paying premiums. The investor takes over your payments, collecting the benefits in the end. This is done by investors who are looking for a higher yield than that within the general market. There are some conditions for doing this, so be sure to talk it over with a professional first.

Before you allow any policy to lapse or take an alternative route, consider why you bought the insurance in the first place and how your choice will affect your dependents.

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What are Life Insurance Annuities?

Thursday, May 13th, 2010

A lot of people are very familiar with annuities and have begun putting them to use in planning for the future. Then, there are other people who hear the word annuity and give you a blank stare as if you are speaking a foreign language. It’s not uncommon. Many people know little about what an annuity is, how they work and how they can benefit you in the future.

What is an Annuity?

In a nutshell, an annuity is a form of life insurance. However, this kind of life insurance is actual an investment plan between you and the insurance company. They allow you tax-free savings with a wide array of investment choices, benefits for your heirs or beneficiary in the event of your death and are a good choice for planning for retirement, as they can provide you with retirement income.

Why Purchase an Annuity?

There are many different annuity options to choose from. Talk to you life insurance company, bank, and read online reviews of other places that offer annuities to see what they offer and what is right for you. There are many reasons to consider an annuity. For one, when you retire, your income typically decreases. You might have retirement savings, investments, pension, personal savings, and social security to live on, but you could also wind up outliving many of those assets. Retirement plans place a limit on contributions. While you should still have one of those, and annuity does not place these limits, therefore, you can substantially increase your savings and future income.

An annuity can help fill the gap when social security and pensions fail to provide enough cash flow for your later years. Other forms of retirement savings and income can be eaten away by taxes. Annuities do get taxed, but the tax is deferred to when you actual begin to withdraw the money, making it a great way to save plenty of untaxed money beforehand.

If an Annuity is a Type of Life Insurance, What is the Difference?

Basically, life insurance is purchased in the event that you leave this world too soon. Annuities are geared toward the idea that you will live a very long life, possibly outliving all of your assets and much of your income.

If you want added security for your future, an annuity might be a great way to go.

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Life Insurance and Being Overweight

Thursday, May 6th, 2010

There is no doubt that a number of health conditions can make it difficult to obtain life insurance. Sometimes the consumer winds up paying more just to secure the same coverage as a healthy person or they find themselves getting turned down flat because they are just too high risk.

Weight is a sensitive issue for many people. Whether it is due to some other health factor, genetics or lifestyle choices, being overweight is a serious issue for many Americans. Because weight problems can and do often lead to other serious issues such as diabetes, hypertension, heart disease, heart attacks and strokes, it can be downright next to impossible for an overweight person to obtain an inexpensive life insurance policy, at least in the mainstream.

What They Look For

When you apply for life insurance, the insurance company will take into account your age, medical history, and other lifestyle factors that make you a low or high risk customer. When it comes to your weight, the number on the scale will make a difference, but they will take this is account compared to your body size and build. They will consider your weight in proportion to your height and bone structure in order to determine what kinds of risk factor your weight poses to your future health. The more you weigh in relation to the size of your body, the more health risks you are likely to face. This could wind up costing you a lot in insurance premiums.

Your Options

To the insurance company, the “ideal customer” is one who lives a healthy lifestyle, poses little to no risk factors and expects to live a long and healthy life. In a perfect world, this would make sense. However, accidents happen, none of us are promised tomorrow, and more and more Americans are facing weight challenges each and every day. Now, if you absolutely feel that you need to have insurance from some well-known, mainstream life insurance company, odds are, you will have to obtain what discounts you can (if there are any) and just bite the bullet, paying whatever you have to in order to keep the coverage. If at any time in the future, you do lose weight, your rate could come down.

If you find it unfair that you have to pay more for life insurance because of your overweight status or see those rates as much too high, you might be able to find lower-priced coverage by going with an insurance company that does not ask a lot about your medical history and requires no medical exam or a company that specializes in insuring the higher risk groups. While you won’t get an exceptionally favorable rate, you’ll still save some money over going with the other guys.

Your other option is weight loss. Do this only under the supervision of a medical doctor. Weight loss is often easier said than done, but set realistic goals and do not get discouraged. You can do this by keeping the right motivation in mind. Don’t do it for the insurance alone and do not lose weight because you’re aiming to look like some model you saw on TV or in a magazine. Do it for you and your health alone. In the end, you will feel better, have more self-esteem, be healthier and might just find a better insurance rate after all.

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Life Insurance and Tobacco Use

Tuesday, April 20th, 2010

If you use tobacco products of any kind, you can expect to pay a higher life insurance rate than non-users. Life insurance companies understand the difficulties that tobacco users face with their addiction. It’s not a habit you can break as easily as 1, 2, 3. Still, they view tobacco use negatively, considering users a high risk. Cigarette smokers are viewed even less favorably than those who smoke cigars, a pipe or even use chewing tobacco. You’re high risk lifestyle could result in cancer, cardiovascular disease and other health problems, including an early death, which causes your life insurance rates to soar.

Policies

You can pay a higher rate and get reasonable life insurance coverage from companies with strict rules for tobacco users. There are also a few companies out there who specialize in policies for tobacco users. If you choose to go with this option, you might be able to save some money on your policy, though you will still pay more than a non-tobacco user.

Be honest about your tobacco use when applying for life insurance. Any medical exam required can easily determine if you fibbed or not. This could result in no coverage at all. if you are an occasional smoker, you could get a lower or non-smoker rate, whereas those who smoke moderately to heavily will not. The same goes for people who use tobacco products other than cigarettes; their rates will probably be better than that of the cigarette smoker.

What Can You Do?

Life insurance is obviously a concern for you. Otherwise, you would not be looking into your options. Even if you have quit smoking and using tobacco products, you might still pay a higher rate the first few years, depending on how long it has been since you quit. After all, the health risks are still there; the damage has been done. It takes a while for your body to restore to the health of a non-smoker.

If you have not quit smoking or using tobacco products, you could always either quit or try to quit. It is easier said than done, though. Some people can lay the tobacco and cigarettes aside and never look back. Other struggle to quit, often turning to a variety of methods to help them; some successful, others not so much. Then, there are those people who actually enjoy their tobacco use. Sure, it is an addiction, but also something they like to do. Who has the right to judge what makes another happy?

If quitting is not in the cards for you, look into life insurance policies that ask little to no nosy personal or health questions and do not require a health exam. You might pay a little more than a standard policy, but you will still save money over those policies that have strict tobacco use rules and penalize you for that personal choice.

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Insuring Your Child’s Life: Right or Wrong?

Tuesday, April 13th, 2010

It’s been a conversation of controversy for many years. Should you or should you not insure the life of your child? Some people see it as morally reprehensible; like you have bad motives and it makes you a horrible parent. Admittedly, there have been instances where that was the case, but for most people, it’s not about ulterior motives. It’s about protection and being prepared, come what may.

Insuring you child’s  life is not wrong. It does not make you a bad parent. If anything, in most cases, it probably makes you a very good and conscientious parent. While some may disagree, it is a matter of personal opinion. A parent should do what they feel is best, by weighing the pros and cons and not letting others influence their choice. It’s your child and your lives that you need to be concerned with. No one else has the right to make that decision for you.

Why Consider Life Insurance for a Child

Children are no less vulnerable to illness, accidents and death than adults. In fact, they are probably far more vulnerable, even under the best of circumstances. Trying to insure a child after illnesses are discovered is often difficult, if not impossible. Getting that insurance in advance will help you to avoid this issue should their health become a problem later on.

For all those naysayers out there, the truth is, few parents are thinking about profiting from the death of their child. Many would gladly give that money up in a heartbeat if they meant they could have their child back, living and breathing and happy. Still, the money is a good thing. It does not cost any less to handle the final expenses of the tragic loss of a child, and often, there are medical bills and other expenses to worry about. Grief is not alleviated when compounded by the stress and worry of paying extra bills.

Added Benefits

Another good thing to know is that when you insure your child through a reputable company you don’t have to pay a lot to keep the policy going. When paying the premiums and keeping the life insurance policy up to date, if benefits are never needed during childhood, the policy will double in coverage at age 21. These policies also build cash value, so you could borrow on it if you had too, and your child also has the cash option when they are older. It’s a nice investment for the child’s future, at the very least.

In the end, it is completely up to the parent to decide if children’s life insurance is needed or is right for them. It does not matter whether someone else thinks it is wrong or if the media makes it sound that way. This kind of insurance exists for a reason and is good to have when most needed.

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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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Attention Alcohol Consumers: Imbibing Could Have an Impact on Life Insurance Rates

Friday, April 2nd, 2010

It’s pretty much a given that if you’re more than a social drinker, someone who maybe likes to party and drink a little more than you should, that it could have an impact on your health and your health insurance. Did you know that excessive drinking could also impact your life insurances rates?

To life insurance companies, and in all reality, there is a huge difference between those who occasionally enjoy a glass of wine or beer and those who tip the bottle back until the last drop and go back for more. No offense is meant by this statement. Excessive drinking is a serious problem that is admittedly difficult to overcome. It’s simply important that you know if you have this problem, your life insurance company will want to know, will find out and it could adversely impact the premiums you pay every month.

Why Drinking Impacts the Price

Heavy drinking impacts your life expectancy. In 2008, the CDC announced that a lifestyle of heavy drinking is now considered the third leading cause of death in the U.S. chronic alcohol abuse can lead to serious medical conditions including physical conditions such as cardiovascular disease, cirrhosis of the liver, stroke, gastrointestinal problems and many other physical ailments. it could also negatively impact you mental and emotional health as well.

When you apply for a life insurance policy, they will want to know your drinking habits. Frankly, you might as well be honest. It can’t be hidden. Should they not find out about it beforehand, if you death is found to be due to anything related to alcohol consumption, the insurance claim could be disputed or altogether denied.

On the life insurance application, admitting to more than 2 drinks per day will not get you a preferred rate. 3 or 4 will even bar you from a standard rate, therefore you will wind up paying much more than you probably want to.

Don’t Try to Hide It.

Excessive alcohol use is likely to be noted in your medical records, even if only suspected. Most doctors do not simply suspect this without good reason. Your insurance company will look at this, your application and will also consider other factors. If you have an alcohol related condition at the time of application, if you have been in treatment or are currently in treatment and if you have any DUIs or other alcohol related violations and how long it has been since you last had one. All of these factors could impact your rates.

If you tried to hide your alcohol use, tough luck. Even if you were not honest on your application, the insurance company can still find out from your medical records and background check. Either way, you will wind up with a higher rate, a “rated” policy (which carries an additional premium) or an outright denial.

Insuring Your Life in Spite of Alcohol Problems

The truth is, it can be very difficult to obtain life insurance if you are a heavy drinker. You are very high risk. The insurance company knows you are a liability and statistically, your death is likely to be sooner rather than later. Therefore, you are looking at paying a higher price or being completely denied. If the company finds out you lied about your alcohol consumption after the policy is in effect, they could cancel it. If you can get yourself into a program and sober up  you have a better chance of obtaining life insurance. It still won’t be easy. Some life insurance companies might postpone a decision to insure you for up to 2 years after treatment to ensure sobriety and possibly improved health.

It really boils down to this fact; if life insurance is a concern for you, and you want to prepare yourself and your family for the inevitable, excessive drinking could get in the way. You might not have the option for life insurance and if you do, you’re going to pay more. Your best bet is to put the glass or bottle down and walk away, even if it means rehab and regular support, regaining your health and the option to protect the future of your family.

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Is it still Possible to Find Affordable Life Insurance after 50?

Wednesday, March 17th, 2010

This answer is most undeniably “yes!”

Let’s face it: the best policies for the best prices are reserved for younger individuals. In fact, you’d be crazy not to purchase a life insurance in your early 20s: this is the best time to buy!

However, not all of us are in the best financial state to purchase life insurance during this time, and many of us find our life situation changing dramatically as we get older. It is because of this that many middle-aged Americans are searching for comprehensive - yet affordable - life insurance policies.

Longer Life Expectancies Keeping Insurance Rates Low

Prices for life insurance are still quite attractive, even during middle age, as people are living longer; and that means better pricing. In other words, as life expectancies rise, life insurance rates lower.

Today’s older Americans are much different that their parents or grandparents, as they are most likely working and incurring debt. They are also much more likely to have minor children. As a result, the need for quality life insurance for individuals, even well into their 50s and 60s, is much greater.

The Competitive Life Insurance Business

Keep in mind that the life insurance business is a competitive one, and there seems to be an endless supply of life insurance carriers that provide life insurance to individuals of nearly an age. In other words, take advantage of that competition to get the best deal on life insurance.

Because of the increase in life expectancies, and because many middle aged individuals are still quite active, many life insurance companies have taken notice and have therefore developed a nice array of affordable term life insurance plans. Many of the newer term life insurance plans do not even require an extensive physical or medical evaluation.

Looking to the Internet

A great source for life insurance policies for older Americans is the Internet. Many of the companies online offer easy, online applications and quotes, thereby great simplifying the process of shopping for term life insurance.

Let’s assume that term policies for older individuals will be limited; in other words, you wouldn’t be able to find a 30-year term policy for someone who is 70, but there are still many shorter-term policies available at affordable rates.

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Are your Hobbies Jeopardizing your Life Insurance Rates?

Wednesday, March 17th, 2010

There are many things that affect life insurance rates, such as your health and your age. However, did you also know that your lifestyle can greatly affect your life insurance rates?

In particular, did you know that your hobbies can not only affect your life insurance rates, but also affect your acceptance for life insurance?

Most of the time, our hobbies don’t interfere with our ability to qualify for life insurance. After all, a leisurely round of golf or a weekend bicycle ride certainly doesn’t increase your likelihood of dying all that much.

However, there certainly are some hobbies - particularly those that provide that all-elusive adrenaline rush - for which you may end up paying for in terms of life insurance denial and/or higher life insurance rates.

Although each life insurance company views risks differently, there are a few activities that are deemed to be risky across the board:

  • Diving
  • Sky diving
  • Rock climbing
  • Aviation
  • Motor sports

Other activities that may raise a red flag with your life insurer include:

  • Surfing
  • Hang gliding
  • Skiing/snowboarding
  • Bungee jumping
  • White water rafting

Many individuals naturally assume that because they are in good health that they are eligible for low life insurance rates. However, most life insurance companies don’t look at it that way. In fact, if you actively participate in certain activities you could be either be placed in a higher risk class (thereby costing you more money in premiums) or simply excluded from coverage altogether.

Your life insurer will likely ask you a host of questions regarding your “risky” hobby, including: how many times a year you participate in the activity; how long you have been participating in the hobby; and how many hours you have logged in with the sport.

One thing’s for certain: don’t answer any questions about your sport dishonestly; otherwise, the insurer may deny your family your life insurance claim if you die as a result of your dangerous hobby.

Regardless of your participation in hobbies deemed dangerous or risky by your insurer, you should be able to find an insurance company that will offer you a life insurance policy; you just may end up paying more for it.

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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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