Life Insurance Buying Tips

Joint Life Insurance Policy

Filed under: life insurance — Alston @ 12:56 am February 27, 2011

Joint life insurance policies are life insurance policies that are usually owned by spouses or business partners. There are two basic types of these plans.

The first is a life insurance policy whose terms indicate that it will pay a death benefit when the first person dies. For a childless couple, the advantage to this type of coverage can be that the mortgage gets paid off regardless of which one dies first. There may be need for a second payment from a life insurance company and therefore no need to insure the second death if they have no children.

Sometimes small companies with partners will purchase first to die life insurance coverage. If their business has a mortgage or other debts they may need a lump sum payment to cover that financial obligation if one dies, but will not need a second sum of money when the second one passes away

Premiums are likely to be less with a first-to-die joint life insurance policy. This is when the premiums are compared to the premiums for two separate policies with the same face amount.

The other type of joint life policy pays a death benefit only when the second person dies. These policies are usually purchased by couples for estate planning purposes.

Financial advisors often suggest these types of joint life policies to affluent couples. Since there can be tax advantages to passing money to the next generation via insurance as opposed to other assets, many couples will choose to pass money to their children through a second-to-die policy.

Money and other assets that are left to a spouse will not get reduced by estate taxes the same way that they would when they get passed to the children or grandchildren. This is why there isn’t the same tax payment issue when the first spouse passes away.

Another advantage to a second to die policy is that it can be easier to qualify for. Since the policy terms indicate that it won’t pay until the second party dies, the insurance companies’ underwriting can focus on the health history of the healthier of the two people being underwritten.

A joint life policy isn’t for everyone or every couple. Most of us are not in a financial situation where a financial planner is likely to think that a joint life policy is advantageous for us. These policies are mainly needed by business owners and for the affluent whose financial advisors have recommended estate planning.

Even where a first-to-die policy makes sense many people will choose to purchase separate policies. You may pay a lower premium, with a joint life policy as opposed to having two separate policies.

However, rates for term life insurance coverage is so inexpensive today, it can be a better option for most couples. You can get a quote for term life insurance from this site.

How to Find Out If Someone Has a Life Insurance Policy

Filed under: life insurance — Alston @ 4:51 pm February 20, 2011

When someone dies, often the family will want to know how to find their life insurance policies. Unfortunately not only will this take some work and you will never know whether or not you have found all of the life insurance policies. Finding these policies takes some detective work.

You’ve probably already brought the usual suspects in for questioning. You’ve talked with those who are close with the person who died. You’ve looked in the safe deposit boxes, desks, filing cabinets and closets.

You may want to contact the place of business of the person who passed away. Many active workers have life insurance coverage as a part of their benefits package. Some retirement packages also include a death benefit, but this is less common.

You should also take a look at the decedent’s bank records or check register. Since life insurance will usually have monthly or annual payment terms, you should be able to find evidence of most or all policies that are current if you look at the last year or 18 months worth of cancelled checks or statements.

(While you are looking at bank statements, look to see if any health or auto insurance policies were paid for recently. If the insured’s paid for coverage that included a term after his or her demise, the estate may be eligible for a refund of unearned premiums from the company.)

There may be other financial records to look at. If the person who died may have paid for a life insurance policy with cash from a mutual fund or other similar investment, be sure to check those records as well. A pension, annuity or 401k might have been a source of funds for a life insurance policy.

There may however, be other policies that pay a death benefit that are active. Some life insurance policies are single premium policies. Some policies are paid up by design. By default other cash value policies stay in force until the cash value is eaten up by the deductions the company makes for the cost of the insurance. (This is what usually happens when a policy is just forgotten about and never cashed in.)

For this reason, you may want to do more detective work. There may be an older policy that won’t be discovered by looking at recent banking transactions. It may pay to look at older bank statements.

You may also want to check with the family tax professional attorney or CPA who handled financial matters for the decedent. They may be aware of policies purchased or may have made recommendations to buy a given life policy.

You can also ask questions of insurance agents the decedent has worked with. Who handled the car or house insurance? Are there any calendars around the house with an agent’s name and contact information on them? The agent who sold the auto insurance to the person who died may have also sold them a term life insurance policy.

Insurance companies are not supposed to give information to you without proper documentation. If you are not the beneficiary and you cannot prove that the insured died, the company may not be willing to share any information with you. They are not legally allowed to inform you about the death benefit or other date regarding other policies.

Now that you have gotten a taste of how hard it is to take care of all the business that needs to be taken care of after a loved one’s death, you may want to make this process easier for the next generation. So that you make things easier for those you love, be sure to make a list of your list your insurance policies in a place that they will be able to find.

Life insurance isn’t the only type of policy to be concerned about. If you are alive but unable to communicate, you will want them to keep your health and disability insurance active so that you can continue to receive the benefits of those policies. Make it easy for your spouse or child to contact your insurance company and find the information regarding your Life Insurance and other policies.

Life Insurance For Over 50

Filed under: life insurance — Alston @ 3:53 am February 13, 2011

If you are over 50 and in the market for a personal life insurance plan, you have probably heard some of the TV ads targeted at boomers and seniors. Although these guaranteed issue and simplified issue policies can be good for some people, they are not the best way to purchase life insurance for most consumers.

Since these policies are easier to qualify for they also have higher costs. You run the risk of avoiding a slightly more involved application and underwriting process and by doing so get a higher premium month after month. This is not good for your financial health.

These policies tend to be “modified benefit” policies. This means that the policy covers you differently than a standard policy would. Your family would only receive the full death benefit if you live two or three years after your effective date. Other life insurance policies will pay your beneficiary even if you died right.

This means that the coverage provided is not as good. Since the monthly costs for each dollar of death benefit is also higher as well, these policies should be avoided by all who can qualify for an underwritten policy.

If you are over 50, chances are you are not quite as healthy as you were when you were 20 or 30. However, chances are you still qualify for an underwritten personal life insurance policy.

The “regular” life insurance companies still want your business and are willing to offer you reasonable rates for the coverage. You will find that common ailments like hypertension will have an impact on the price that you are charged, but you will probably also find that the rate you are offered is still less than the rate you would be quoted for a guaranteed issue policy.

Whether you are looking for a whole life or term insurance plan, be sure to get personal life insurance quotes on the Internet and/or from a local broker before you buy a “guaranteed issue” life insurance policy. Buying one of these policies isn’t a good financial move for most. Most people who purchase these policies pay too much per month for each $1,000 of face amount (death benefit).

Insurance for Funeral Expenses

Filed under: life insurance — Alston @ 1:29 am February 6, 2011

Final expense life insurance is just one way to cover your funeral expenses. A portion of a larger life insurance policy, a prepaid funeral arrangement and other assets from your estate are other options.

Final expense insurance plans tend to be small policies that pay only about enough to cover a burial and funeral services. These policies can pay your chosen beneficiary and can reduce the burden on your family, but often cost more for each dollar of death benefit than other larger policies.

For this reason, it is often best to avoid purchasing separate policies to cover your life insurance needs. The quotes for two separate policies purchased within a short period of time will usually cost more than one policy that has a face amount equal to the sum of the face amounts of the two policies.

You will probably have more expenses to be taken care of at your death besides your burial. You may have other final expenses as well as income that needs to be replaced by a life insurance policy.

(Since insurance premiums go up as we age older permanent policies should be looked at carefully and compared with quotes for new policies before cancelling them.)

Prepaid funeral arrangement plans are popular ways of taking care of your funeral expenses. These arrangements have the disadvantage of being illiquid, but generally offer the advantage of combining the planning of your funeral service and your internment with a contract that will pay for both.

Using other assets from your estate to take care funeral expenses is another option. You have to consider whether your family will have enough assets to use to cover your funeral costs. You will also have to be sure that the money will be available to them in a timely manner.

A Final expense life insurance plan can make things simpler for your family in the aftermath of your death, but there are other options to consider.

Whole Life Insurance Pros And Cons

Filed under: life insurance — Alston @ 12:46 am January 30, 2011

Which is better whole life or term? That debate has been going on for a long time.

I was probably exposed to this debate during my first week as a health and life insurance agent back in 1985. Not much has changed. The pros and cons are the same.

Unfortunately many of the people debating this issue have a dog in the fight. Insurance agents and insurers make bigger commissions on whole life insurance coverage and therefore will often point out the “cons” associated with term life insurance policies. Certain financial advisers will suggest that you invest in cheaper term insurance policies and invest the difference in hopes that you will invest with their businesses.

Who is right? Term insurance is cheaper today, but gets more expensive as we get older. Whole life insurance is more expensive today, but doesn’t increase in price as we age.

Neither type of policy is inherently better when it comes to its primary reason for existence. Your widow or widower won’t care much about the type of policy that you bought. They are only going to care about the amount of the death benefit check.

Many suggest that we “buy term and invest the difference.” This usually results in a much higher return in the long run.

However, often those who suggest this to their clients show the returns one might expect from investing in instruments that have much more risk than a whole life policy. If one buys term and invests the difference in CDs or a savings account, one can expect much less of a difference.

Insurers want you to buy their more expensive products because their companies make more money on them. However, sometimes the more expensive product is a better product.

In order to determine whether the pros of whole life insurance outweigh the cons, you will need to do a little math. Do your own math and don’t let someone else’s slanted numbers push you in the wrong direction or towards the wrong company.

Death Benefits from Social Security

Filed under: life insurance — Alston @ 6:17 pm January 23, 2011

You may need less life insurance than you think! Why? Your family may qualify for death benefits from Social Security. Family members such as widows, widowers, children and dependent parents can receive benefits.

98 percent of children who lose a parent while that parent is working will be eligible to receive benefits. Although you may still need to research 10 year term life insurance rates or whole life insurance plans, you may not need quite as much coverage as would without these social security benefits. The benefits that you earn when you are a worker and pay taxes can reduce your need to buy as much insurance and thereby lower the rates you pay for coverage.

It is easy to estimate how much the benefit will be. If you are over age 25 and have a job, you probably receive a social security statement in the mail each year. This is one of the free services of the SSA. The information in the statements include an estimate of survivors’ benefits for each worker.

  • Who may qualify for these benefits?
  • Your widow or widower
  • Your surviving divorced spouse
  • Your unmarried children
  • Your dependent parents
  • Your surviving widow or widower may receive benefits while taking care of your child who is under age 16. Your widow or widower may qualify for your retirement benefits when they reach full retirement age.

    Your former spouse can also be eligible for benefits if he or she is over 60. (A disability can matter. If he or she is disabled per social security’s definition he or she can be younger and still receive benefits.) Your marriage must have lasted ten years or more or he or she must be the caretaker of your child who is 16 or younger.

    Your unmarried children may also receive benefits until age 18 or 19. They must still be in school to receive benefits at age 19.

    Your dependent parents may be eligible for benefits. They must be age 62 or older and you must have provided 50 percent or more of their support.

    Benefits are typically received 12 times a year. Your beneficiary can receive a monthly check or receive a direct deposit to a personal checking account.

    You can find out more about how death benefits from Social Security works including information on securing benefits from the Social Security website.

Whole of Life Insurance

Filed under: life insurance — Alston @ 3:31 am November 15, 2010

Whole Life or whole of life insurance is a traditional form of permanent life insurance. These policies build cash value and have fixed premiums. As the name implies, you can keep a whole of life policy as long as you live.

Whole life has more guarantees that other types of life insurance policies. If you pay your premiums on time you can’t lose your coverage because your cash value ran out. Your premium never goes up.

This is different from a term life policy. Term polices tend to be less expensive, but they have no cash value. Also your cost will go up if you apply for another policy after the current term of your policy expires.

As with all other life insurance policies a death benefit is paid at the time of death. This money goes to the named beneficiaries unless there are none. If there are no beneficiaries, the proceeds may go to the insured’s estate.

How Does Universal Life Insurance Work?

Filed under: life insurance — Alston @ 2:34 am November 5, 2010

A universal life insurance policy works differently than traditional insurance policies. The mechanics of the policy is different. There is more potential for gain in addition to additional risk.

When you put money into your universal life policy some of it goes to toward the cost of the term insurance that is part of the policy. Some of it goes to administrative and other costs. If there is excess money, it will go into an account that earns interest for the policyholder. If there is a deficit and there is enough money in the fund some of that money can be used to pay the term insurance costs.

With a universal life policy the policy owner has a lot of flexibility. He or she can put extra money in to take advantage of the interest that can be earned. The policy owner can also stop paying for the policy for a period of time if the amount is the fund is great enough.

With a traditional whole life insurance policy the cash value build up is guaranteed by the insurance company. If the insurance company does not meet their investment goals, the policyholder still gets the cash value guaranteed by the policy. If the company exceeds their goals, the policyholder gets no additional money unless the policy pays dividends.

The same is true regarding mortality. If the insurance company has to pay more in death benefits than they predicted, they do not change the cash build up in the policies nor will they change the cost of the policy.

With a universal life policy, the policy holder’s policy is affected if the company’s investments do better or worse. The same is true regarding mortality.

There are limits on how much the insurance company can charge for mortality. There are also limits on how low the interest rate can go.

You can request life insurance quotes by completing the form at the top of this page.

Whole Life Insurance for a Child

Filed under: life insurance — Tags: — Alston @ 12:31 am October 26, 2010

There are advantages of purchasing life insurance for your child. However, in many cases the money spent to insure a child might be better invested in insurance on the parents.

Since you need to be in good health to qualify for life insurance, you may want to purchase a policy while your child is healthy. You never know what might happen. You can buy child life insurance online today and know that the coverage is in place before it is needed.

Since whole life insurance rates are largely based on the age at the time of issue, a younger person can lock in a good rate. This can keep costs down over a life time.

Whole life insurance on children can be a good idea, but it is much more important to insure the parents of the child. If a parent who is uninsured dies, the life of the children left behind can be doubly damaged.

The death of a child is certainly a tragedy, but it is not nearly as impactful on the finances of the rest of the family as the death of a parent typically is. The only thing that life insurance can replace is money. The loss of a child is not a significant financial loss in most households.

If a child’s parents don’t have adequate insurance for life insurance, they should not be lured by the prospect of buying cheap child life insurance. Life insurance for the parents is paramount because their premature death is both a financial loss and a loss of a family member.

What Does Life Insurance Not Cover?

Filed under: life insurance — Alston @ 6:10 pm October 24, 2010

Life insurance has very limited exclusions in comparison to other types of policies. But, like just about every contract does have some limitations. Some of the exclusions and limitations follow.

Life insurance is governed by state laws which are slightly different in the different states. For this reason you may find different exclusions in your area than you will see in this article.

What Does Life Insurance Not Cover?

Life insurance will not pay when the death occurs from suicide in the first two years of the policy’s purchase. This protects both the insurance companies and society in general.

An insured would have an extra motivation to commit suicide if they knew that their loved ones would benefit financially. This limitation removes that motivation at least for the first 2 years after purchasing the policy.

It also reduces a potential murder’s motivation for staging a suicide. There have been many cases where insurance was a motivation for murder. This at least reduces this temptation for a period of time.

Insurance policies will not pay if there was a material misrepresentation on the application. This means that if a person said that they never had a heart attack, but did the insurance company will not pay if that person dies during the contestability period. This also means that if the only thing applicant forgot to list was a doctor visit for the flu, the policy will pay per the contract.

Both are misrepresentations, but the latter isn’t material. This is because the insurance company would have still offered the applicant a policy if they know about the visit for the flu.

The first 2 years after a person purchases a policy is referred to as the contestability period. An insurance company has the right to withhold payment for cause if the person dies during that period.

The contestability clause isn’t invoked very often. This is for several reasons. Applicants are usually truthful on their applications. Insurance companies are able to verify much of the information before they issue a policy. Most people don’t die in the first 2 years.

Modified benefit policies will not pay a full death benefit if the insured dies within the first couple of years. This period is spelled out in the contract. These policies are designed for those who have significant medical conditions and who would not qualify for more robust coverage.

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