Posts Tagged ‘whole life insurance’

Your Permanent Life Insurance Options

Wednesday, June 23rd, 2010

You may be interested in permanent life insurance, but quite confused about all of your options. If so, then you’re not alone. There are quite a bit of options when it comes to permanent life insurance.

Some individuals take out permanent life insurance policies because of the death benefits associated with them, while others take them out to build cash value. Whatever your reasons for taking out a permanent life insurance policy or your financial goals, here are your options:

  • Whole Life Insurance - Whole life insurance is the most popular type of permanent life insurance, as the contracts pays dividend from the issuing company, while cash value grows at the same time. The dividends paid out by the issuing company are produced when the company invests the premium dollars.

  • Universal Life Insurance - Universal life insurance is a bit different from whole life insurance, as it features a term insurance component. However, a universal life insurance policy also has a cash component, thereby allowing an individual to use the policy as an investment. The cash earned in a universal life insurance product is similar to that of a bond investment.

  • Variable Universal Life Insurance - A variable universal life insurance product is similar to a universal life insurance product; however, the owner of the account can choose from several sub account and asset allocation. A variable universal life insurance policy is subject to the risks of the market, though, which therefore either increases or decreases the cash available on the policy at any given time. Many individuals choose variable universal life insurance policies as a supplement to retirement income.

Individuals usually decide which type of permanent life insurance is best for them based on cost. Term insurance, for example, is usually chosen first because it is inexpensive. However, individuals may also consider permanent life insurance because of the accumulation of cash over time.  A permanent life insurance policy will remain in effect for your lifetime, provided you meet your financial obligations, whereas a term policy is for a specific length of time.

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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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Types of Permanent Life Insurance Explained

Monday, May 3rd, 2010

For some people, especially those with no dependents and few late-in-life worries or debts, term life insurance is a good choice. It expires after a set period of time. Their out the money spent, but hey, it was there, just in case. For those with dependents, debt, etc., permanent  life insurance might be the better choice. After all, it never expires, is there whenever you need it and some also build a cash value that you can borrow against, with the option to pay it back or not. However, permanent life insurance is not that cut and dry. There are different types of permanent life insurance policies. You’ll want to know your options before making your final decision.

Whole Life

Whole life is probably the most common and most popular type of permanent life insurance. It is considered a great retirement investment. While the premiums are somewhat higher than that of term life insurance, whole life does not expire, often gives greater benefits, such as a dividend option which returns any over-payments to you, as well as building a cash value.

Universal Life

Universal life is comparable to whole life, but comes with its own set of benefits and advantages. Universal policies are also often called adjustable life insurance. They build the same kind of cash value as whole life insurance, however, universal gives you the option to borrow against that cash value. It is flexible and you might even be able to pay smaller premium, should your cash value cover the difference in costs. These loans do not come without their terms and conditions, so be sure to read the details. However, one loophole is that you might not have to pay it back. The only downfall is you loose the amount of cash taken out in overall benefits. So be careful. You could lose your entire policy altogether if you withdraw too much money without returning at least some of it.

Variable Life

Variable life insurance is like the stock market of the life insurance game. Not only does it offer death benefits to your loved ones when you are gone, it has a bevy of investment options for you to choose from, which will be managed just like regular stock would. You can use your cash value to invest for greater returns. Is it risky? Perhaps. You will certainly want to invest in stable options, though nothing is predictable, and have a professional guide you through the process so you don’t lose much and hopefully gain a lot more. Of course, variable policies also allow you to borrow against the cash value under the same terms as universal policies; another excellent benefit, should you need it.

Variable Universal

This option is pretty much a compilation of all the other options. It gives you the same kind of investment options, builds cash value and also will allow you to pay lower premiums once you have enough cash value built up to help cover the difference.

There is not a great deal of difference in these policies, however, there is enough difference to encourage you to look closely and choose the option that best suits you, your family and your lifestyle.

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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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Term or Whole Life: Which Life Insurance Policy is Best for You?

Tuesday, March 23rd, 2010

We’re all going to die someday. It’s a fact of life. Maybe not one we all care to spend our days thinking about, but still, it’s a good idea to give it some thought and be prepared. Life Insurance is a big part of that preparation. Truth be told, it’s a very selfless act to purchase a life insurance policy. You’re not thinking of yourself when you do this; you’re thinking of the loved ones who will be left behind with both memories of you and final expenses to pay.

You will probably leave some bills and debts unpaid. Most of us will. Relentless creditors won’t care that your gone. They still want what’s owed to them and will harass your loved ones to get it. Life insurance can help take care of that. Then, there are the expenses of the funeral and burial or cremation. Funeral cost thousands of dollars these days, and even if you choose to forgo a memorial service for yourself (put it in writing; your loved ones might not know or agree if you don’t have it stated in black and white), something still has to be done with the remains of your physical existence. Burial or cremation are both still expensive, so life insurance is a sure bet that your loved ones will be able to carry out your final wishes.

Before you purchase a policy, you need to decide which type of life insurance is right for you.

Term Life Insurance

Term life policies offer death benefits for a certain number of years. You choose the amount and the length of the policy. Should death occur within the term of the policy, benefits will be paid. Should you outlive the policy, well, no money will be seen. Still, term life is a fairly affordable option, though the premiums can fluctuate, especially for those with few or no dependents. Even without children or a spouse who depends on you, you will still probably have family or friends who will want to see to your final wishes and expenses. A term life policy can do this.

Whole Life Insurance

Whole life policies, while a bit more expensive than term policies (the premiums do remain the same though), are excellent for those with dependents or those who truly want to be prepared for death, no matter when it comes. Unlike term policies, whole life does not have an expiration date, therefore, as long as the premiums remain paid, the policy is always in effect no matter what age your death may occur. Whole life policies really give you and your loved ones that extra peace of mind. These policies also gain cash value, so should there ever be a need, you could borrow against it, though it is not advised to do this frivolously. Only borrow on your life insurance if it is an important reason and there is no other option.

There are other types of life insurance as well. Your best bet is to look at your needs, compare the options and choose the policy that best suits you and those you will leave behind.

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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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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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How to Distinguish Between Life Insurance Policies

Friday, December 18th, 2009

We all know the importance of life insurance, but after that it often gets a bit muddled. The first step in taking out a comprehensive life insurance policy involves educating yourself on the different types of life insurance that is available so that you know you are making the best decision possible.

When searching for quality life insurance, you will likely encounter the following types of insurance:

Term Insurance

Term life insurance is life insurance that is available for a certain period of time. The time period for term insurance can range anywhere from 5 years to 30 years, depending on the length of time you desire. However, one the term period has expired, you are left without insurance. Often times, term insurance is ideal for individuals that need life insurance for a certain time frame in their lives. For example, you may choose to take out a term life insurance policy that will last until your children are adults. Term life insurance is often chosen by individuals because it is much less expensive than whole life insurance policies.

Permanent Life Insurance

Permanent life insurance is the most frequently purchased life insurance policy, as the policy lasts until the individual dies, provided he or she continues to pay on the policy. Permanent life insurance policies also have a cash surrender value, which thereby allows the individual to build up cash value as they pay on the policy; the cash value in the permanent life insurance policy grows tax-deferred. In addition, permanent life insurance provides a fixed premium and a fixed death benefit.

The cash value of a permanent life insurance policy may allow you to borrow from the insurance company and use the policy’s cash value as collateral. You may use the cash value to pay premiums, buy more coverage and even exchange the policy into an annuity product. You may also cancel the policy and receive a lump sum of money.

There are two, different types of permanent life insurance:

  • Whole Life Insurance - Whole life insurance allows an individual to pay a fixed premium for a fixed death benefit over the life of the policy.
  • Variable Life Insurance - Variable life insurance involves allowing the insurance company to invest your premiums; your cash value and death benefit depend on the performance of these investments.

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Which Type of Life Insurance Meets Your Unique Needs?

Wednesday, July 15th, 2009

Whether you are seeking to manage your long-term finances, or if you want to ensure that your new family will be cared for in the unfortunate case of an unforeseen incident, life insurance can help individuals experience reduced stress and worry. As life insurance is an investment that provides for one’s family members in cases of physical injury, death, or other challenges, people who invest in life insurance can customize their plans to meet their own unique needs.

Which Type of Life Insurance is Best?

Depending on your own personal needs and desires, you’ll need to customize your own life insurance plan by following specific steps and asking detailed questions. Ultimately, you want to ensure that your life insurance policy will help to alleviate any financial stress for your loved ones if you are no longer able to provide an income / support. To begin evaluating your options, start by assessing your specific needs.

Family - Both married and single individuals (also with or without children) typically choose to invest in some form of life insurance policy. In the case of one’s death, any life insurance policy allotments will be delivered to the established beneficiaries without any additional taxes; therefore, one should consider whether or not they would like to choose specific individuals who would benefit from such financial provisions.

Financial Goals - Also, regardless of one’s size of family, a life insurance policy can be adjusted to help one’s partner pay off debts, continue ownership of the family’s home, pay for college tuition, and manage additional life costs. For individuals who are single and / or do not have any children, a life insurance policy can be customized to ensure that a specific charity, school, church, or other organization is the beneficiary of the financial endowment.

Children - While individuals who do not have children can certainly benefit from a life insurance policy, men or women who are single parents should undoubtedly sign up for a life insurance policy. As a single parent, planning for unforeseen events can help ensure that one’s child / children are cared for if anything is to harm the parent.

Term and Permanent Life Insurance Plans

Once you have clarified your needs and desires, meet with a life insurance representative to choose the term of your plan. You will be able to choose from either a term or a permanent policy, depending more on your own preferences. A term policy provides temporary benefits that can range from a few years to even 50 years. A permanent policy, or whole life policy, on the other hand, provides life-long coverage for one’s peace of mind and assurance.

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