Whole Life Insurance and Cash Value

A whole life insurance policy provides you with coverage for your entire life, rather than for a specified term (such as 10, 20, or 30 years). Whole life insurance provides your family with financial protection. In addition to insurance coverage, a whole life insurance policy has the added benefit of building cash value.

Cash value is considered the savings portion of your whole life insurance policy. Because of the cash value aspect, some consider whole life insurance an asset in an overall financial portfolio.

What Is Cash Value?

Cash value is the value that accumulates in your whole life insurance policy. Typically, cash value is determined when you purchase your whole life policy. Cash value grows as you pay your premiums, which are the payments you make to the insurance company to purchase and maintain your policy.

Growing Cash Value

So, how exactly does cash value increase in your whole life insurance policy? Cash value builds over time as you pay the insurance policy premium. A chunk of your monthly premium payment is above the actual cost of providing insurance coverage. This extra payment amount, plus interest, goes toward building cash value and in most policies the earnings grow tax-deferred. At first, cash value will increase slowly, but as you make additional premium payments the cash value will grow at a faster rate.

The Insurance Law sets a minimum amount for cash value, which reflects an accumulation of your premiums minus allowances for insurance company claims and expenses. Over the life of your policy, cash value grows and that growth may be tax-deferred.

Face Amount Versus Cash Value

Cash value is separate and different from the face amount of your life insurance policy. The cash value, like an investment, builds over time within your policy. The face amount is the dollar amount that your beneficiaries receive in the event of your death. It most cases the face amount of your whole life insurance policy is greater than your cash value, especially in first several years of your policy.

Cash Value Benefits

Cash value is a benefit of carrying a whole life insurance policy. As the policyholder, you can benefit from the cash value that accumulates in your whole life insurance policy in a few different ways:

• Dividends: Dividends are the difference between the premium charged and the actual earnings and cost of providing coverage. You can use the dividends in lieu of further premium payments, or you may choose to receive dividends in the form of cash. Another option for you is to purchase additional insurance coverage with the dividend
• Paid Up: When you accumulate enough cash value, you may decide to use it to cover premium payments--this is known as being paid up. However, if you make a withdrawal from your cash value at some point, you may have to begin making premium payments to keep the policy from lapsing
• Asset: As the policyholder, you do have the option to surrender the policy and receive the cash benefit amount or to borrow against the cash value. If you decide it is necessary to surrender your policy, the amount of money you receive is the cash value. However, a penalty may be applied if you surrender your policy. Whole life insurance can serve as an asset to both you and your beneficiaries. For you, this is true because you have a right to a portion of your cash value. For your beneficiaries, the asset comes in the form of the death benefit
• Loan: As the policyholder, you can borrow against the accumulated cash value through one or more loans. There is usually no penalty for taking a loan. However, any unpaid loans, plus interest, are subtracted from the death benefit, and the loan may slow the growth of your cash value

Remember that most benefits are contingent upon maintaining your policy, and making premium payments on time.

Cash value is an added benefit to an already valuable whole life insurance policy. Low cost whole life insurance policies are available to provide financial security to your family. Compare quotes from multiple insurance companies to choose the best policy for you and your family--just enter your zip code to get started.

Source:

http://www.ins.state.ny.us/ • http://www.ins.state.ny.us/que_top10/que_life_who.htm

N/A • Whole Life Insurance And How Cash Value Works • http://www.finweb.com/ • http://www.finweb.com/insurance/whole-life-insurance-and-how-cash-value-works.html

Aparna Iyer • Whole Life Insurance Cash Value • Sep 14, 2009 • http://www.buzzle.com/ • http://www.buzzle.com/articles/whole-life-insurance-cash-value.html

http://www2.iii.org • http://www2.iii.org/search.cfm

http://www.investorwords.com/ • http://www.investorwords.com/786/cash_value.html

Dee Wilhelmi • Life Insurance Expert

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I'm Single--Why Should I Get Whole Life Insurance?

When you think about life insurance, you may think about money bestowed upon a beneficiary after a policyholder's death. However, whole life insurance provides more than security for loved ones should something happen to you. Whole life insurance combines protection against premature death with a savings account.

The investment feature of whole life insurance is built through your premium payments. Part of your premium payments pay for insurance coverage, and the excess go toward the cash value, or savings portion of your policy.

Cash value is separate from the amount of coverage you choose to provide your beneficiaries, which is known as the "face amount".

With the added benefit of cash value, a whole life insurance policy actually serves as an asset, and its value increases over time. This is quite advantageous! How? You can cash borrow against your cash value if ever you have an urgent need or emergency.

Whole Life Insurance: How It Works

Before we get into additional benefits of whole life insurance, let's examine how whole life insurance works.

Whole life insurance provides you with coverage for your entire life, or until you reach the maximum insured age. The maximum insured age varies according to the state you live in, and can be anywhere from 80 to 100 years of age. The premiums you pay are fixed and cash value is guaranteed--as long as you keep current on your premium payments.

It is advantageous to purchase life insurance at an early age because the younger you are the cheaper your premiums are likely to be.

Here are a couple of points to keep in mind during the early years of your whole life insurance policy:

• Your premium costs are likely to outweigh the cost of insuring your life. This is especially true the younger you are when you purchase your policy. In the early years the extra premium amount, plus interest, makes up for insufficient premiums in later years
• The face amount of your policy is likely to be higher than your cash value, especially in the early years of your policy

If you pass away, your beneficiaries receive the face amount of your policy. Of course, it is wise to purchase whole life insurance after you verify that it fits into your budget long term. However, if you must surrender your policy, you receive only the built-up cash value, not the face amount.

Borrowing Against Your Whole Life Insurance Policy

One of the benefits of having a whole life insurance policy is the ability to build cash value. You can use that cash value as an asset against loans, as long as you maintain your policy by making your premium payments. And, as long as you have sufficient cash value to secure the loan, you can borrow money from your whole life policy--tax-free.

It is important to know that if you borrow against your cash value and let your policy expire, you have to pay taxes on the loaned money. However, if you keep your policy premiums up-to-date, the loan remains tax-free.

Additionally, any loans that are unpaid at the time of death are subtracted from the death benefit.

Using Your Cash Value

So, let's say you've had your policy for several years. You want to start a new business, or some other financial emergency arises. With a whole life insurance policy, you can borrow against the cash value. An additional benefit is that the interest rate, which is pre-determined in your policy, is typically quite low.

What if you don't have enough equity in your life insurance policy to borrow against your cash value? This is likely true if you've only had your policy for a few years. Although your whole life policy has a savings element, the cash value is not exactly like a savings account in that you cannot withdraw a deposited amount.

Only part of your life insurance premium actually goes toward your cash value, while the other part goes toward the actual cost of insurance. Any which way, it is possible that you can use your policy as collateral for a loan.

The best part about using your whole life insurance policy as collateral is that your loan is secured against a solid asset. This may give you the advantage of an attractive interest rate.

Other Benefits of Whole Life Insurance and Cash Value

Aside from being able to borrow against cash value, you can also use cash value to cover your premiums in later years or to purchase more insurance coverage. However, if you decide to withdraw cash value, you may have to resume payments.

In addition to cash value, whole life insurance may also pay you dividends. You can receive dividends as cash, to cover some or all of your premiums, or to purchase additional insurance coverage.

If you are single and curious about an affordable policy that best suits your needs, obtain whole life insurance quotes from qualified agents today. It's simple! Just enter your zip code to get started.

Source:

iii.org • http://www2.iii.org/index.cfm?instanceID=546

Advantages of Whole Life Insurance; Why Benefits Outweigh Costs • finweb.com • http://www.finweb.com/insurance/advantages-of-whole-life-insurance-why-benefits-outweigh-costs.html

Borrowing against Life Insurance • moneyinstructor.com • http://www.moneyinstructor.com/doc/lifeloan.asp

ins.state.ny.us • http://www.ins.state.ny.us/que_top10/que_life_who.htm

David Chandler • Advantages of a Whole Life Insurance Policy • Feb 16, 2006 • ezilon.com • http://www.ezilon.com/information/article_15936.shtml

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How Underwriters Determine Term Life Insurance Rates

There are many factors underwriters consider when determining term life insurance rates. As a rule of thumb, term life insurance premiums are primarily based on the age of the insured and the amount of the policy. However, many other aspects of your lifestyle also figure into the cost of life insurance.

Using the Internet to access a wide range of information, as well as sophisticated software tools that calculate risk, insurance underwriters look at medical records, family history, lifestyle, driving records and even credit scores.

Once these factors are assessed, underwriters assign you a health class or rating, and this determines your term life insurance premium.

Factor No. 1: How Your Age Determines Your Life Insurance Rate

Your mortality rate is a key factor for underwriters. If you are age 65 or older, you are much more likely to have serious health complications and you have a significantly higher mortality rate than someone in their late 20s.

Factor No. 2: Your Health and Your Insurance Rate--Factors Underwriters Consider

Your health is one of the most important factors that determine your life insurance cost. Your life insurance quote could be higher based on a history of:

• High blood pressure
• High cholesterol levels
• Mental health
• Diabetes
• Medication

To an insurance underwriter a history of high blood pressure means you are at risk for a variety of medical problems, such as kidney failure, heart attack or stroke. High cholesterol levels may indicate risk of stroke, coronary heart disease and other serious medical conditions. Diabetics may face a host of current and future health problems that also affect life insurance quotes.

Mental health history also forms a part of risk assessment. Applicants who are clinically depressed or take anti-depressants potentially pose a higher risk for suicide. Underwriters also consider any medications you regularly take and the underlying reasons for the medication.

Factor No. 3: Your Job and Your Term Life Insurance Rate

Your job determines the type of risks you take each working day. High-risk jobs pose a danger to your life and place you in a higher insurance bracket, whereas safer jobs mean lower term life insurance rates.

Factor No. 4: Your Lifestyle and Your Insurance Premium

Thrill seekers face higher life insurance rates due to increased risk of accidental death. Sky divers, bungee jumpers, hang gliders, auto racers--all pose substantially more risk for the insurance company. As a result, extreme sports athletes face higher insurance premiums.

Factor No. 5: Smoking and Your Term Life Insurance Rate

Insurance underwriters do not typically offer the best rates if you fall into the "tobacco user" category. After two or three years you can obtain a non-smoker rating on your policy, and if you haven't used tobacco in five or more years, you may qualify for the best term life insurance premiums--a savings of 20%- 30% over a "tobacco user" classification.

Factor No. 6: Your Credit Score

Many insurance companies look at your credit score to determine your insurance premium. The thinking? If you've been irresponsible with your credit, you also might be irresponsible in other significant aspects of your life and potentially pose a higher insurance risk.

Buying Life Insurance That Meets Your Needs

Finding the best life insurance coverage is easy with online comparison shopping. To obtain free insurance quotes just enter your zip code.

Source:

Factors that Affect Your Rate or Health Class • matrixdirect.com • http://www.matrixdirect.com/factors-that-affect-your-rate-class.html

Occupational Outlook Handbook, 2010-11 Edition--Insurance Underwriters • Dec 17, 2009 • http://www.bls.gov/oco/ocos026.htm • U.S. Bureau of Labor Statistics

What Factors Determine Term Life Insurance Rates • streetdirectory.com • http://www.streetdirectory.com/travel_guide/22149/careers_and_job_hunting/what_factors_determine_term_life_insurance_rates.html

Tobacco and Life Insurance Quotes • Dec 23, 2009 • lifeinsurance-pros.com • http://lifeinsurance-pros.com/blog/

The Influence of Credit Scores on Life Insurance • http://www.life-insurance-underwriting.org/credit_scores_life_insurance.htm • LIFE INSURANCE UNDERWRITING GUIDE

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What You Should Know About Medical Underwriting When Purchasing Life Insurance

Your age and sex are factors that determine the annual life insurance premium. Going through a process called medical underwriting, as opposed to guaranteed-issue life insurance, further analyzes your expected premium by figuring out which risk category you fall into.

Medical underwriting looks at the details of your health history, as well as that of your parents and siblings. It also considers lab results from a blood and urine sample, reviews your driving record history, travel plans and other information that contribute to how much of a risk you are to insure.

Every insurance company uses different terms for their various rate classes, and ultimately you want to compare insurance quotes with different insurance companies. By comparing rates, you can find the cheapest life insurance for your needs and situation.

An example of an insurer's risk categories from best health on down might look like this:

1. Preferred Select
2. Preferred
3. Preferred Plus
4. Standard

Followed by risk classes: Table B, Table C, Table D, Table E, etc.

Tobacco rate classes are also available for an additional premium.

You may get a better risk class offered to you on a whole life insurance policy compared to a term policy. This is sometimes referred to as table shaving, so it's important for you which companies do this.

Here are some of the criteria an insurance company uses to offer preferred risk classes:

• Build: Your height and weight must fall within underwriting guidelines. For example, someone that is 6'0" would get the best rate at 209-235 pounds
• Tobacco: To qualify for a non-tobacco rate, the insurance company typically wants to see that you have no tobacco use in the past 12-36 months. This includes cigarettes, cigars, pipe and chewing tobacco, and nicotine surrogates such as gum, patch or medication
• Cholesterol: Cholesterol level of 220-260 or less, and cholesterol/HDL ratio must be less than or equal to 5.0-7.0
• Blood pressure: Must be better than, or between, 135/85-145/95 with or without treatment
• Personal History: If you have a history of diabetes, heart disease, cerebrovascular disease, or cancer (except certain types of basal cell skin cancer) it is unlikely that you would receive a preferred rate class
• Family History: No more than the death of one parent or sibling before age 60, due to diabetes, heart disease, or cerebrovascular disease
• Alcohol/Substance Abuse: The best rate requires no history of, or treatment for, alcohol or substance abuse, lower risk classes may allow for no abuse or treatment within the past 5-10 years
• Aviation: No student or private pilots unless aviation coverage is excluded; however, there are private pilot and commercial pilot guidelines
• Avocations: No ratable avocations are typically allowed for the best underwriting classes. Scuba diving below 150 ft or BASE jumping could result in a decline of coverage
• Driving Record: No DWI, DUI, or reckless driving in the past three to ten years. No more than two moving violations in the past two to five years

Now that you have information on what underwriters look for in your medical exam, compare whole life insurance rates. Just enter your zip code to get started.

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Term Life Insurance Return of Premium Rider: Pros and Cons

Term life insurance is known as the cheapest insurance coverage available--allowing policyholders to get the most life insurance coverage for their premium dollars. This is because term life insurance has a calculated risk, and you are only charged for the cost of insurance coverage.

Although term life insurance is affordable, this type of life insurance does not provide a return on investment. However, in recent years, a new add-on feature called return of premium (ROP) has been made available to change this. With ROP, if you outlive your term life insurance, you get your money back.

Depending on your financial needs and goals, ROP can be a great add-on to your term life policy. However, there are both advantages and disadvantages to this particular term life rider.

The Birth of the Return of Premium Rider

With a traditional term life insurance policy, if you outlive your policy, you do not receive a refund for the premiums paid. Some term life insurance consumers wanted an opportunity to have their insurance payments returned. Thus, insurers developed the ROP rider.

What Is the Return of Premium Rider?

A rider is an attachment to your life insurance policy that can alter the terms or coverage for your policy. If you outlive your term life insurance policy, and do not allow the policy to lapse, the ROP rider alters the policy terms to provide a refund for all or some of the paid premiums at the end of your term.

The parameters of the ROP rider differ from policy to policy. ROP might be a provision within a term life policy, or it can be a rider added to a term policy for an additional cost.

Return of Premium: Advantages

You might be hesitant to purchase life insurance because you believe that you are more than likely to outlive your policy. If this is the case, the possibility of receiving a refund from your term life insurer may sound like a pretty good deal.

ROP might be thought of as a safety net for your safety net. If you pass away, your beneficiaries receive a lump sum death benefit. If you outlive the term policy, the insurance company returns all or some of your premium payments.

Return of Premium: Drawbacks

The biggest drawback of the ROP rider is the cost. With an obligation to pay you back at the end of your policy term, insurance companies charge higher premiums for this feature. A term policy with the ROP add-on feature can cost 25%-50% more than standard term life insurance.

Additionally, you must hold on to your policy for the full term of the policy to receive the refund. A lapse in your insurance policy occurs when you are unable to make your premium payment within the policy grace period, and as a result, your policy is terminated. If you allow your policy to lapse, you may receive only a partial refund, or no refund at all.

Also, if pass away, your beneficiaries are still paid the policy's face value--just like a standard term life insurance policy--but with the ROP rider your have paid higher premiums for the same death benefit.

It should be noted that many insurers offer a pro-rated return if you hold on to your policy for a few years. Also, some policies return the base premium, but not the extra return benefit premium--others return both.

Decision Factor

Term life insurance with the added ROP feature is not intended as an investment. If you are looking for a life insurance policy that provides an investment element, you might consider whole life insurance.

Although the ROP rider has both advantages and disadvantages, the rider can be beneficial. Life insurance coverage is important, especially if you have dependents. If the ROP rider makes you more comfortable with term insurance, the higher premiums may be worth the money.

If you are considering a ROP rider for your term life insurance policy, compare quotes from multiple insurance companies. Just enter your zip code to get started.

Source:

ins.state.ny.us • http://www.ins.state.ny.us/que_top10/que_life_ter.htm

iii.org • http://www.iii.org/articles/What-are-the-types-of-term-insurance-policies.html

Leonard Wiener • Getting a payback: Return-of-premium term life insurance policies reward you for staying alive • Oct 17, 2004 • US News • http://www.usnews.com/usnews/biztech/articles/041025/25insurance.htm

themoneyalert.com • http://www.themoneyalert.com/terminsurance.html

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Enhancing Your Whole Life Insurance with Riders

While shopping for life insurance you may have come across the term rider. You may have asked, "What is a rider?" Essentially, a rider is an addition to your life insurance policy that alters your policy's coverage or terms. Riders added to your life insurance coverage usually increase your premium.

There are many different types of riders. Based on your needs, some riders could be beneficial to you and your family. Following are a few of the most common life insurance policy riders available:

• Waiver of Premium. Ever wonder how you would be able to continue paying your life insurance premiums if an accident left you disabled, and you were unable to work? This rider provides the peace of mind you need for just such a scenario. Depending on the terms of the rider, your benefit begins with either permanent or temporary disability, or both
• Accidental Death and Dismemberment. Sometimes called "double indemnity" this rider may provide your beneficiaries double the amount of death benefit if your death is the result of an accident. It provides the basic death benefit of the policy, plus an additional amount based on the terms of this rider. The accidental death and dismemberment rider is also payable if you (as the insured) lose two limbs, or the sight of both eyes due to an accident
• Family Income Benefit. Also known as "dependent life insurance" and "spouse and children's insurance rider." This life insurance rider provides your family with a continuous, reliable source of monthly income after your death--that's in addition to the death benefit on your policy. When you add this rider to your life insurance policy, you can specify the number of years you would like to provide continuous monthly income
• Accelerated Death Benefit. Aside from the emotional and physical strain of a terminal illness, there is the financial stress and worry of health care costs and medical bills. The accelerated death benefit rider provides the option to collect all or some of your death benefit to pay medical expenses should you be diagnosed with one of the terminal illnesses covered under the plan

Deciding what rider or riders might be a good fit for your family's needs is a unique decision. Each rider has extra costs, which vary. It's important to evaluate your needs and your budget carefully. The peace of mind that the right rider provides can certainly be worth the added cost to your premium.

To compare life insurance quotes from multiple insurance companies, and to choose the best policy and best riders for you and your family, just enter your zip code to get started.

Source:

Whole Life Riders - Which Rider Best Meets Your Needs? • New York Life • http://www.newyorklife.com/newyorklife.com/General/FileLink/Static%20Files/Whole%20Life%20Insurance%20Riders.pdf • Fact Sheet

http://www.iii.org/

Denise M • Life Insurance Riders Can Enhance Your Existing Coverage • Dec 18, 2009 • ezinearticles.com • http://ezinearticles.com/?Life-Insurance-Riders-Can-Enhance-Your-Existing-Coverage&id=3445788

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Secure Your Child's Future With a Child Whole Life Insurance Policy

Some of the wonderful thoughts that come to mind as you think of your children are their innocent smiles, sweet laughs, and unlimited energy. Do you often wonder who they may become as adults, and whether they will have the financial capability to fulfill their dreams?

Child whole life insurance is a way that you can provide a foundation for your child's future and help them realize their dreams.

Child Whole Life Insurance Is a Gift

Child whole life insurance is a gift for life, a gift that your child cannot not outgrow. The policy, which is typically owned by a parent or grandparent, can build substantial cash value, tax-deferred, at a guaranteed annual interest rate.

If a future need should arise, your child has the option to either take a loan from, or surrender the policy for the accumulated cash value. The cash value might be used to pay for educational expenses, a down payment on a first home, a wedding, or even to help supplement retirement.

Lock in a Low Premium Rate

The whole life policy annual premium rate that you start with today should be the same annual premium amount for life. Regardless of your child's age, occupation, or health condition the rate should always remain the same.

By obtaining whole life insurance for your child now, you can have the peace of mind to know that regardless of a future illness you secured the lower premium while your child was in good health. Once the policy is issued, and as long as the premiums are paid, the policy cannot be canceled.

What if Your Child Is Not in Optimal Health

Some life insurance companies offer guaranteed-issue child whole life, which does not require a health history review. However, if your child is healthy, it might make sense to go through the health questions because the policy premium may be significantly lower.

Secure the Future Insurability of Your Child

Many child whole life policies offer guaranteed future insurability options, which kick in around age 22 and typically allow for periodic increases up to a certain age.

For example, a $100,000 whole life policy may allow for a $50,000 increases at age 22, and every 3 years until age 40. Over time, this may allow your child to go from a $100,000 to $450,000 of death benefit without a health review. Keep in mind that the premium payments would increase for the additional insurance added.

Consider Insuring Your Child By Adding a Child Term Rider to Your Own Policy

As a parent, you might also consider adding a child term rider to your own life insurance policy. This is term insurance coverage on your children that can be converted to a child whole life policy at a later date. Typically, this coverage is based on the youngest child's date of birth, and provides protection for all of your children.

This strategy ensures that your child won't have to worry about health issues later on when converting the term policy to a whole life policy.

Consider whole life insurance for child today. The annual premium for a 25 year old is a higher than premiums for a one year old--you and your child could be missing out on 24 years of compounding cash value growth.

Obtaining competing quotes from can be simple, just enter your information in the form above to get started.

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How Life Insurance Fits Into Your Financial Planning Process

When determining how much life insurance you need, it's a good idea to put the decision into the context of an overall financial plan.

A Road Map To Financial Security

Think of your financial plan as laying out a road map to reach the goal of financial security for you and your family.

First, Find Out What You're Worth

With any journey, you should start from a known point. In financial planning terms, this would be your personal balance sheet, which tells you what you're worth today.

You can create one by adding up the value of all of your assets, then subtracting any liabilities. For example, your home is an asset, but the remainder of your mortgage is a liability.

Where Your Money Goes

The next step is to develop an income statement. This spells out what you earn, less what you spend.

A good way to see how much you spend is to take all of your bills for a typical month, and then sort them into categories. For instance, you might group your expenses into the following categories:

• House payment
• Utilities
• Taxes
• Food
• Entertainment

Once you have taken inventory of your expenses, you can see how much you spend and where your money goes. This process makes budgeting easier. You now know how much you have available to spend--and perhaps what you can afford in terms of life insurance premiums.

Think About Your Goals

Now that you've determined your net worth and how much you can afford to spend, take some time to think about your financial goals. You should separate your goals into three separate categories:

1. Short-term Goals: Saving for vacation
2. Intermediate Goals: Putting your children through college
3. Long-term Goals: Saving for retirement

Protecting Your Assets

A key part of financial planning is protecting your assets. This includes insuring your home or auto against damage or theft, shielding your savings in case you are sued for liability damage, and having disability insurance to protect your income. Life insurance is another tool that can protect your assets and your family's standard of living.

Protecting Those Who Depend On You

Financial planning is about safeguarding those who depend on you if you can no longer provide for them. You can do this by having enough life insurance to meet their needs.

The Minimum Life Insurance Amount

To determine the amount of coverage you should purchase, add up your obligations, such as the cost of a college education. Next, subtract your savings from your obligations. The difference, between your savings and your obligations, is the minimum amount of insurance coverage you should purchase.

Start With the Worst Case Scenario

When calculating the amount of insurance you need, always start with the worst case scenario. Meaning, think of how much your loved ones may need should you pass away today--not sometime in the far off future. If your spouse works, and your family depends on both incomes, the worst case scenario is that you both die at once--leaving your children with no support at all.

Other Obligations to Consider

Remember to anticipate rising costs when determining how much insurance you need. If your children are young, your insurance needs may be much greater than if they are ready to start college immediately.

Don't forget to provide enough money for living expenses, as well as sufficient money for your family to set aside in case of an emergency. Finally, the insurance should also be able to pay your final expenses, such as burial costs and any estate taxes.

Purchase Just Enough Life Insurance

Once you've determined the amount of life insurance you need, subtract any existing permanent insurance that you have. You might also have insurance through your employer, but if it is based on your continued employment, it may be wise to discount it. Job loss or changes in employment may end this coverage.

The Value of Term Life Insurance

Term life insurance, which covers you for a set period or term, fits very well into your financial plan for two reasons:

1. It is the most affordable life insurance coverage
2. You can match the term of a policy to the length of your obligations

For example, if your children should be out of college within 10 years, you can select a policy that provides coverage for that specific period, rather than for the rest of your life.

When To Purchase Term Insurance

The younger you are when you purchase term insurance, the cheaper your life insurance premiums may be. The premiums you pay for term insurance are based on your expected mortality. Therefore, the younger and healthier you are when you purchase term life insurance, the less likely it is that the insurer has to pay a death benefit. Thus, your premiums are lower than if you apply when you are older and possibly less healthy.

Estate Planning

The final step in any financial plan is to create an estate plan to ensure that the maximum amount of your assets are passed down to your heirs.

If taxes may diminish your heirs' inheritance, life insurance can be used to pay your estate taxes. It can also be used to create a legacy for your heirs, or to provide funds for a charitable cause that you supported throughout your life.

When you're ready to purchase term insurance, it's best to compare quotes from multiple insurance companies. Enter your zip code and you can get competing quotes to choose the best policy for you and your family.

Source:

How Much Life Insurance Do You Need? • SmartMoney • http://www.smartmoney.com/personal-finance/insurance/how-much-life-insurance-do-you-need-12949/

The Role of Insurance in Your Financial Plan • Yahoo! Finance • http://finance.yahoo.com/how-to-guide/insurance/13308

What You Should Know About Buying Life Insurance • pueblo.gsa.gov • http://www.pueblo.gsa.gov/acli/

Do I Need Personal Financial Planning? • pfp.aicpa.org • http://pfp.aicpa.org/Resources/Consumer+Content/Do+I+Need+Personal+Financial+Planning

money 101 Lesson 20 ; Life insurance • CNN Money Magazine • http://money.cnn.com/magazines/moneymag/money101/lesson20/

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Whole Life Insurance Riders: Add Benefits to Your Base Policy

When you buy whole life insurance you may be offered the opportunity to add various riders to your policy. Most riders add benefits, at an extra cost, to the policy. However, riders may also put a restriction on your policy, such as refusing a death benefit claim if the insured engages in certain occupations or hobbies.

The Cost Of Riders

The cost for each rider is calculated individually, and is usually expressed as a percentage of the base premium. Since the exact price of any policy remains unknown until all medical underwriting, or a review of your health has been completed, only an estimate of the cost can be made until the policy is issued.

Measure Cost Versus Benefit

The decision to add any or all riders should weigh the need for the extra benefit, as well as its cost. If you are considering a rider you should consider the additional premium cost, the amount of the additional payout, and the possibility of receiving the benefit.

When Riders Can Be Added

Riders are usually added when the policy is issued, but an insurer may allow one or more riders to be added at a later time--subject to the terms of the individual policy.

The Most Common Riders

There are a variety of riders available, here are several of the most common riders:

• Accidental Death. This rider is sometimes called accidental death and dismemberment (AD&D), or double indemnity. This rider adds an additional benefit to the face value of the policy. It usually doubles, but sometimes triples, the payout if the insured dies because of an accident--rather than death due to natural cause such as an illness. Although it can be very helpful for the family to get a much larger benefit, the additional cost of the rider must be consider along with the possibility of the insured dying of an accident (defined by the terms of the policy). You might balance the cost of this extra benefit against how much additional permanent life insurance could be bought for the same amount of money

• Family/Child Benefit. This rider allows for other family members to be insured when the policyholder is issued a policy. Through this rider, additional policies that are issued for family members are usually term policies that may be converted to whole life policies at a later time

• Monthly Family Income. In addition to the death benefit, this policy provides a monthly income to be paid to the surviving family members for a set period of time. This can be extremely beneficial if the insured is the sole source of support for the family

• Waiver of Premium. This rider allows the policy to be kept in force, without paying premiums, if the policyholder is considered disabled, under the terms of the insurance policy. This can be very important if the breadwinner cannot work due to disability and cannot keep up the policy payments. Without this protection, the policy might lapse due to non-payment. If the breadwinner then dies, the family is left without his or her income and without the proceeds of the insurance policy

• Automatic Premium Loan. This rider ensures that if you do not make a scheduled premium payment a loan is made by the insurer, against your policy, and used to pay your premium. As long as there is enough cash value to guarantee loan payments, your policy should remain in force

Living Benefits Riders

These types of riders, particularly the accelerated death benefit and long term care riders, are relatively new and recognize that the policyholder or the family may need money while the insured is living. These riders might allow for payment from the policy while the insured is still alive, based on meeting certain guidelines. Any benefits paid before the insured dies typically reduce the death benefit.

• Accelerated Death Benefit. With this rider a portion of the death benefit is paid if the insured is disabled or diagnosed with a terminal illness. This rider may make funds available to take care of the insured, rather than running up large bills to be paid off from the death benefit

• Long Term Care. This rider allows the funds in the policy to be accessed before the insured dies, should the insured be certified as needing care in a long term facility, such as a nursing home

• Guaranteed Insurability/Guaranteed Issue. These riders vary by issuer, but generally allow you to purchase additional permanent insurance, without having to prove medical insurability. This can be valuable if your insurance needs increase in the future and you have changes in your medical condition

These are only some of the more common riders available, so always ask what other riders may be offered with your policy.

Shop Around Online

It's always helpful to shop around when choosing a policy. You can compare life insurance rates and get competing quotes by entering your zip code here. Then you can make the selection best suited to your family's needs.

Source:

lifeinsuranceindepth.com • http://www.lifeinsuranceindepth.com/riders.html

Some Insurance Riders • finweb.com • http://www.finweb.com/insurance/some-insurance-riders.html

Here are the top five life insurance riders we think most policies can?t do without • Jul 07, 2009 • http://www.insuranceagents.com/life-riders.html •

Whole Life Insurance • wordnetweb.princeton.edu • http://wordnetweb.princeton.edu/perl/webwn

Pooja Dave • Let Life Insurance Riders Drive Your Coverage • Investopedia • http://www.investopedia.com/articles/pf/07/life_insurance_rider.asp?viewed=1Let Life Insurance Riders Drive Your Coverage

Life Insurance riders can enhance your existing coverage • http://www.articlesbase.com/insurance-articles/life-insurance-riders-can-enhance-your-existing-coverage-1617631.html

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Safeguard Your Retirement with a Whole Life Insurance Policy

Whole life insurance can be one of the most attractive financial products you can consider.

You may know of friends or family members that have suffered market losses in their investment portfolios over the past few years, which got them to rethink their investment strategies. In today's economic environment, people are looking for ways to safeguard a percentage of their assets from a future market downturn. This may become particularly important when you consider retirement.

Whole life insurance enjoys many tax benefits that make it an attractive asset to add to your overall investment plan, and receives favorable tax treatment under the law. Section 101 of the Internal Revenue Code provides that the proceeds of a life insurance policy maturing as a death claim, subject to the exceptions stated in the law, are not subject to income tax when paid.

Tax Benefits of Whole Life Insurance

• A life insurance policy owned individually pays a death benefit claim tax-free to beneficiaries

• The cash value in the policy grows tax-deferred

• Withdrawals and loans are tax-free provided that the policy remains in-force. If the policy is surrendered, the gain in excess of the cost-basis is taxable

How Whole Life Insurance Works

Whole life insurance has an annual premium payment that is based on keeping the death benefit in force to age 100 or 120. The policy has a guaranteed annual interest credited to the cash value, and the insurance company can also pay dividends, which are not guaranteed but act to increase your cash value and death benefit if you choose.

For example, a healthy, 39 year old male with a $1,000,000 death benefit might have a whole life annual premium of about $13,000. The guaranteed annual cash value growth, estimated at 6%, may grow to $389,831 at age 65, and the non-guaranteed cash value might grow to $678,478. You can request a quote to see what the exact numbers might look like for you, remembering of course that your health, age, and other factors play a role in the final figures.

Additional advantages of using whole life insurance as a part of your investment strategy include:

• Cash value grows at a fixed rate, and can be improved by company dividend payments (the non-guaranteed cash value)

• The cash value is creditor protected in many states

You want to make sure that your policy doesn't become a Modified Endowment Contract (MEC). The major drawback to a MEC is a 10% federal penalty for early withdrawal prior to age 59 ½, and the fact that distributions are taxed as earnings. Your life insurance agent may be able to help you know what would or wouldn't be classified as a MEC.

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Term Life Insurance: What is the Free-Look Provision?

Are you considering a term life insurance policy, but are worried that you may purchase the wrong policy? If so, the free-look provision may make you feel more comfortable with your life insurance decision.

How the Free-Look Provision Works

The free-look provision can be thought of as a kind of safety net for your life insurance policy. The free-look provision is a part of every life insurance policy, and provides you with a grace period to review and evaluate your policy. If you experience buyer's remorse, or decide that the policy is not right for you, the free-look provision allows you to get your money back within the grace period.

Each state mandates a free-look period for life insurance policies; however, that length of time varies from state to state. You can find out what your state's particular free-look period is by checking the National Association of Insurance Commissioners (NAIC) website.

If you have already received your final policy, you can find the length of your free-look period on the cover page of your policy.

What to Expect When You Purchase Term Life

When you have been approved for term life insurance, there are a few things that happen:

1. You are notified of the rating you have received from the insurance carrier, and any change in premium (should your rating be different from your initial quote)
2. You are sent a copy of your policy, and the insurer asks that you sign and return a delivery receipt
3. You send in your first premium payment (if you didn't pay up front with your application)
4. Once you have signed and returned the delivery receipt, your policy is in force

The date you sign the delivery receipt is important because this is the date that your free-look provision begins.

You should read the contract thoroughly to make sure that everything makes sense, and that the policy you received is the same policy you applied for.

The free-look period is a good time to have an attorney review your new life insurance policy. If your attorney finds anything that could be erroneous or deceptive, you can cancel your policy and continue searching for the right insurance.

You should also contact your agent or the insurance company with any questions you may have after reading the contract.

Affordable Life Insurance

When you shop for term life insurance you want to make sure you are getting the most coverage for your money. Some carriers weigh certain factors more heavily that others, this may include information found during your medical exam or in your medical records.

If you do not receive the rating that you expected, you should continue to shop around for life insurance. By continuing your search for term life insurance, you may be able to get a better rating, with a lower premium from a different carrier.

There are many reasons why a life insurance policy may not be right for you. The free-look provision is there to give you peace of mind in the life insurance process.

Source:

What is a ?free-look? provision? • http://www.iii.org/Articles/What-is-a-free-look-provision.html

NAIC • http://www.naic.org/index.htm

Life Insurance - General - Top Ten Questions • http://www.ins.state.ny.us/que_top10/que_life.htm

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Term Life Insurance: What is the Free-Look Provision?

Are you considering a term life insurance policy, but are worried that you may purchase the wrong policy? If so, the free-look provision may make you feel more comfortable with your life insurance decision.

How the Free-Look Provision Works

The free-look provision can be thought of as a kind of safety net for your life insurance policy. The free-look provision is a part of every life insurance policy, and provides you with a grace period to review and evaluate your policy. If you experience buyer's remorse, or decide that the policy is not right for you, the free-look provision allows you to get your money back within the grace period.

Each state mandates a free-look period for life insurance policies; however, that length of time varies from state to state. You can find out what your state's particular free-look period is by checking the National Association of Insurance Commissioners (NAIC) website.

If you have already received your final policy, you can find the length of your free-look period on the cover page of your policy.

What to Expect When You Purchase Term Life

When you have been approved for term life insurance, there are a few things that happen:

1. You are notified of the rating you have received from the insurance carrier, and any change in premium (should your rating be different from your initial quote)
2. You are sent a copy of your policy, and the insurer asks that you sign and return a delivery receipt
3. You send in your first premium payment (if you didn't pay up front with your application)
4. Once you have signed and returned the delivery receipt, your policy is in force

The date you sign the delivery receipt is important because this is the date that your free-look provision begins.

You should read the contract thoroughly to make sure that everything makes sense, and that the policy you received is the same policy you applied for.

The free-look period is a good time to have an attorney review your new life insurance policy. If your attorney finds anything that could be erroneous or deceptive, you can cancel your policy and continue searching for the right insurance.

You should also contact your agent or the insurance company with any questions you may have after reading the contract.

Affordable Life Insurance

When you shop for term life insurance you want to make sure you are getting the most coverage for your money. Some carriers weigh certain factors more heavily that others, this may include information found during your medical exam or in your medical records.

If you do not receive the rating that you expected, you should continue to shop around for life insurance. By continuing your search for term life insurance, you may be able to get a better rating, with a lower premium from a different carrier.

There are many reasons why a life insurance policy may not be right for you. The free-look provision is there to give you peace of mind in the life insurance process.

Source:

What is a ?free-look? provision? • http://www.iii.org/Articles/What-is-a-free-look-provision.html

NAIC • http://www.naic.org/index.htm

Life Insurance - General - Top Ten Questions • http://www.ins.state.ny.us/que_top10/que_life.htm

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The Accidental Death and Dismemberment Rider Can Enhance Your Life Insurance Policy

Whole life insurance can provide the peace of mind you need by providing financial protection for your loved ones should you pass away. A whole life policy provides insurance coverage for your lifetime, as long as you maintain your policy by making premium payments on time.

Whole life insurance also has a saving benefit called cash value. The savings benefit has a variety of advantages, including the ability to borrow against cash value (note that any outstanding loans are subtracted from the insurance benefit at the time of the policyholders death).

In addition to your basic life insurance coverage, you can enhance your policy with one of many riders, including the accidental death and dismemberment rider (AD&D).

What Is a Rider?

A rider is a clause that amends the terms or coverage of your life insurance policy. There are many different types of riders available, which can be added for an additional fee.

The AD&D rider, sometimes called double indemnity, provides additional benefits should the policyholder be involved in an accident. In the event that the insured passes away because of an accident, the insurance company may provide beneficiaries an additional benefit, sometimes in an amount equal to the face value of coverage, potentially doubling the policy value.

Some life insurance companies offer triple indemnity. If this option is available, beneficiaries may receive three times the face amount of the whole life insurance policy if the policyholder were killed in an accident.

If the insured were to survive an accident, but lost limbs or vision, some or all of the benefit would be payable the policyholder. Each insurance company provides different benefits, or a proportion of benefits, depending upon the bodily loss suffered. Consult the terms and conditions of the AD&D rider you are considering for specific details.

What Accidents Qualify?

Many insurance companies define the type of accidents that qualifies for the AD&D rider. Typically, accidents are unexpected happenings, such as car accidents, plane crashes, train derailments, machinery malfunctions, etc. The key point being that an accident is not related to a body malfunction, such as a heart attack, asthma attack, or stroke. To find out what events are considered accidents, review the policy and rider or consult your insurer.

Non-qualifying Events

Perhaps it might be better to explain what does not constitute an accident. Accidents that involve any illegal or crime-related activity are typically not covered. Suicide is not considered an accident either. Also, if an accident is the result of a body malfunction, the AD&D rider is usually not applicable.

To learn more about the AD&D rider, and to compare quotes from multiple insurance companies just enter your zip code.

Source:

iii.org • http://www2.iii.org/index.cfm?instanceID=9

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Beneficiaries of Life Insurance Policies: What You Should Know

A life insurance policy is not for you, the policyholder, it is for your loved ones who may outlive you.

When buying life insurance, you designate who or what should receive the related benefits upon your death; those that you name are the beneficiaries.

Beneficiaries can be:

• One or more people
• A business or corporation
• A legal entity, like a living trust
• A nonprofit organization
• Your estate

Generally, if you do not name any beneficiary, or if none of your assigned beneficiaries survives you, then the proceeds of your life insurance policy become an asset of your estate.

Your insurer may require that you assign both primary and contingent beneficiaries. Any primary, or first, beneficiaries listed on a term life insurance policy would receive the insurance benefit, provided they could be found and were living. Should the primary beneficiary predecease the policyholder or is unable to be found, the benefit would then revert to those you had designated as the contingent, secondary, or successor beneficiaries.

How to Designate the Beneficiaries of Your Term Life Insurance Policy

The purpose of having term life insurance is to ensure that financial resources are available to your beneficiaries, traditionally a spouse and dependents, after your death. People typically obtain a policy with one or more specific reasons in mind, including:

• Replacing lost income
• Covering medical or funeral expenses
• Covering child care and education costs
• Creating savings or an inheritance
• Paying off a mortgage or personal debt
• Protecting an estate
• Providing for retirement
• Giving to a charity

When selecting beneficiaries, consider who would be affected financially by your passing and which of those people you would like your policy's benefits to assist. Also, determine what financial obligations you would like the proceeds to cover, and the assets you would like to protect. Decide whether you want to give some or all of your death benefit to a specific cause or company. Then, prioritize your chosen recipients.

For instance, you may name your spouse or life partner, so that they may continue in the current standard of living. You may designate your children, so they can pay for college tuition. You may list one or more business partners to keep your company operating.

Periodically Update Your Life Insurance Policy Beneficiaries

If, after you obtain a life insurance policy, your life circumstances change--you have or adopt additional children, you get divorced or remarried, or your spouse passes away, be sure to update your beneficiaries.

As the policy owner, you may amend beneficiaries--unless the policy has an irrevocable beneficiary designation. In that situation, you must obtain permission from the existing beneficiaries to do so.

A term life insurance policy is a surefire way to protect your family and/or assets after your death.

Source:

Your Life Has Changed Over the Past Year; But Has Your Insurance Kept Up? • iii.org • http://www.iii.org/media/updates/archive/press.749561/index.html

Why should I buy life insurance? • iii.org • http://www.iii.org/articles/why-should-I-buy-life-insurance.html

Married • iii.org • http://www.iii.org/services/life_stages/married.htm

What Is A Beneficiary? • iii.org • http://www.iii.org/articles/what-is-a-beneficiary.html

VA Life Insurance Handbook • Jan 01, 2009 • http://www.insurance.va.gov/inForceGliSite/GLIhandbook/glibooklet.htm

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The A to Z of Issuing a Whole Life Insurance Policy

You've determined the amount of life insurance coverage you need, decided on the type of policy you want, and you've shopped around for life insurance quotes. You've even selected a carrier and completed an application--now what?

While each carrier has its own procedures, most insurers review applications and issue policies using similar methods.

Initial Review

Once an insurer receives your application, it is reviewed to make sure you have completed all the questions and signed all the necessary forms. A representative from the carrier may then call you to go over your application, and ask you a few follow up questions.

Underwriting

After the initial review, your application is then sent to the underwriting department. An underwriter, who is trained to measure risk, then evaluates your application. The underwriter takes into consideration many factors and then assigns you a rating. The rating is used to determine the premiums you pay for your policy.

Medical Exam

While your application is under review, a medical exam is ordered. The medical exam, conducted at your convenience, is completed by a paramedic. During the medical exam your blood pressure and heart rate are measured, urine and blood samples are taken, and your height and weight are verified. You may also be asked about any medications that you are currently taking.

If the underwriter feels it is necessary, you may also be asked to take a more extensive exam by a physician. The costs of all examinations, related to your life insurance policy, are covered by the insurance company.

Attending Physician Report

While your medical exam is being arranged and completed, an attending physician report (APS), is ordered from your doctor. The APS report contains your medical records.

The underwriter reviews the APS, and may request additional reports should your records indicate that you were referred to other doctors or specialists. Obtaining the APS and follow up reports can take additional time, so several weeks may pass.

Factors Used in Underwriting

Besides assessing your APS and your family medical history, several other factors are considered when determining your risk. These underwriting factors include:

• Tobacco and alcohol use
• Occupation and lifestyle, such as any potentially hazardous hobbies or travel destinations
• Driving record, an applicant without moving violations may indicate less risk
• Credit report, a good credit history may indicate that you are likely to pay your premiums

Underwriters also take into account your annual income to verify that you are within the insurer's guidelines of the amount of life insurance you can carry relative to your income. Annual income may also indicate whether or not you can afford the life insurance premiums.

Rate Classes

Once all the reports have been received, the underwriter reaches a decision and you are assigned a rate class. Each carrier has its own specific ratings, but generally there are three rating classes:

• Preferred. For applicants in the best health
• Standard. For applicants with average health
• Table. For applicants who have medical conditions that may make them more of a risk to insure

Your Policy Is Issued

Your life insurance premium is then calculated, and your policy issued. Your policy is sent to you by mail, along with any additional forms you may be required to sign.

Your life insurance premium is then calculated and your policy issued. The insurance company mails your policy, along with any documents that require your signature.

You should thoroughly review your policy to make sure you understand the terms of the life insurance contract. If you agree, sign the required documents and return them along with your premium payment. Once you have returned the documents and premium, your life insurance is considered in-force.

Compare life insurance quotes and get the whole life insurance policy that meets your needs.

Source:

Katie Adams • What to expect when applying for life insurance • http://investopedia.com/ • http://investopedia.com/printable.asp?a=/articles/pf/08/what-to-expect-insurance-application.asp

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Work As a Logger, Long-haul Trucker, or Miner? When Applying for Life Insurance, You May Be Categorized As High Risk

High-risk jobs carry a price when it comes to life insurance policies. Dangerous occupations represent much greater risk for insurance companies, and you are likely to pay for that risk with a higher insurance premium. Despite higher rates, it's still possible to buy life insurance if you work in a hazardous profession.

Most Dangerous Occupations

The US Bureau of Labor Statistics (BLS) ranks dangerous jobs in two ways: fatality frequency count and fatality rate.

Fatality Frequency Count

Fatality frequency count looks at the total number of worker deaths in a given occupation. Truck drivers involved in highway deaths rate among the highest in this category.

Fatality Rate

Fatality rate divides the number of job-related fatalities for a group of workers (in a set time frame) by the average number of workers in that occupation. Using this method, trucker deaths fall behind other high-risk occupations.

Some of the most dangerous jobs include:

• Fishermen
• Construction workers
• Miners
• Truckers
• Pilots
• Underwater welders
• Loggers
• Electrical linemen
• Farm workers

The BLS reports that motor vehicle operators recorded 908 deaths in 2008, and construction trades recorded 720 deaths the same year. The New York--Northern New Jersey--Long Island, NY--NJ--CT--PA metropolitan statistical area had the most work-related deaths in 2008 with 201 fatalities.

Buying Term Life Insurance for High Risk Occupations

When applying for life insurance, underwriters assess a number of factors in order to issue risk classification, including:

• Your health and medical history
• Family history
• Hobbies
• Driving record
• Occupation

These factors determine if you pose a high risk to the insurance company. Because occupations such as mining, logging, deep-sea fishing, and other treacherous jobs pose greater potential for a claim to be filed than a typical office job, underwriters classify people in these occupations as high risk. If you are classified as a high risk applicant, it's possible to get life insurance coverage but it may be more costly.

By nature, high risk life insurance policies tend to be whole life in design. With a whole life insurance policy the policyholder pays an increased insurance premium to the carrier. The surplus insurance premium is used to generates funds through investments to mitigate the insurer's risk.

How to Save on High Risk Life Insurance

When comparing life insurance quotes, make sure the company you are choosing has an A or A+ rating, and inquire about the kind of mortality table the carrier is using to determine your rate. Some companies use outdated statistical data. Companies using the latest statistical information use a clinical medical underwriting method, which takes into consideration advances in medicine and lifestyle choices.

Another factor that could influence your term life insurance premium is standard in the insurance industry--a good credit score. A clean credit record indicates responsibility and could help you get lower premiums.

There are several companies that specialize in high risk life insurance. This policy certainly isn't the cheapest, but for many it may be the only option for life insurance coverage.

Source:

Fatal occupational injuries by occupation and event or exposure, All United States, 2008 • Aug 20, 2009 • http://www.bls.gov/iif/oshwc/cfoi/cftb0236.pdf • U.S. Bureau of Labor Statistics

Fatal occupational injuries by metropolitan area, 2008 • Aug 20, 2009 • http://www.bls.gov/iif/oshwc/cfoi/cfoi_msa_2008.pdf • U.S. Bureau of Labor Statistics

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How You Can Choose the Right Life Insurance Company

The Insurance Information Institute (III) reports that there are more than 1,000 life insurance companies in the United States--so how do you pick the right one?

Let's examine some of the main factors to consider when buying life insurance to try and winnow out the company that's best for you.

Choose a Company That's Licensed in Your State

Purchasing life insurance from a company licensed in your state has many benefits. For example, if a significant problem arises that you can are unable to settle with your insurer, you can access your state's insurance commissioner for remediation. Another reason to choose an insurer licensed in your state: should the company go bust, your state's life insurance guaranty fund only helps policyholders of state-licensed companies.

You should also check with your state insurance office to see if there have been a spate of consumer complaints against the companies you are considering.

Financial Solvency

Buying life insurance is a long-term financial commitment--for you and the insurance company. When selecting an insurer you should choose a company that's been in business for a while, and that is likely to be financially sound in the future.

There is no federal guarantee for insurance, as there is for banks and credit unions. Fortunately, there are four organizations that provide ratings on the financial health of major insurance companies:

• A.M. Best Company
• Moody's Investors Services
• Fitch Ratings
• Standard & Poor's Financial Services

Life Insurance Premiums

Not all insurance policies are underwritten equally. Premiums for different types of life insurance vary greatly, so it's best to get life insurance quotes from at least five agents or companies.

When gathering quotes and making life insurance comparisons, be sure that you are comparing apples to apples--coverage amounts and term limits should be the same for each quote. You should also examine the insurance coverage for features that may cost big bucks down the road. Some life insurance policies offer a guaranteed renewable feature, while other policies may require you to pass a medical exam to renew your term life insurance policy.

Cost Indexes

When making life insurance comparisons, ask your agent about the net payment cost index and the surrender cost index. If you are considering a term policy, insurance coverage for a specific period of time, use the surrender cost index. If you are considering a whole life policy, life insurance meant to be held indefinitely, use the net payment cost index. According to the III, a lower cost index is usually a better option.

Service and Claims

If you need advice, want help filing a claim, or want to make changes to your life insurance policy, you want your questions and needs addressed in a timely and efficient manner. Make sure your life insurance agent is someone with whom you feel comfortable and confident.

Just like any business decision, it pays to do your due diligence when gathering life insurance quotes. You should research and carefully consider the benefits of different life insurance companies. As a result of your investigation, you should get accurate life insurance quotes from reputable companies that may serve your life insurance needs.

http://www.compuquotes.com/how-you-can-choose-right-life-insurance-company.html

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Enhance Your Whole Life Insurance Policy with the Accelerated Death Benefits Rider

Life insurance is meant to provide financial security for loved ones when the policyholder passes away. But under certain circumstances it might be beneficial to access the insurance policy benefit while you are living.

Accelerated Death Benefits Rider

In the event of a terminal illness, the accelerated death benefits provision, also known as living benefits, allows the policyholder to access the insurance policy benefit. The accelerated death benefits provision is sometimes provided within your whole life insurance policy. However, the benefit is typically added as a rider, an attachment to your policy that changes the terms or coverage of your policy, to a new life insurance policy.

How It Works

Many serious medical conditions require costly care. The accelerated death benefits rider can take funds from the whole life insurance benefit to pay for certain medical conditions outlined within the terms of the rider. There are a number of medical circumstances that this rider may help cover:

• Terminal Illness. Limited life expectancy, usually 6 months or less
• Catastrophic Illness. This may include, but is not limited to, cancer, stroke, and paraplegia
• Extraordinary Medical Intervention. Such as an organ transplant or the continuous need for life support
• Long-Term Care. Needed when you are unable to perform basic day-to-day tasks such as bathing, dressing, eating, etc.
• Permanent Nursing Home Confinement. In the event that round-the-clock medical care is needed that only a nursing home can provide

With an accelerated death benefits rider added to your insurance policy, you can collect between 25%-100% percent of the death benefit to pay for medical care costs.

Cost of an Accelerated Death Benefit Rider

Typically, the accelerated death benefits rider is figured into your whole life insurance policy as a percentage of its base premium. Some insurance companies do not charge you for this rider unless you use it. If this is the case, the death benefit, the amount of money beneficiaries receive at the policyholder's death, is reduced when the policyholder passes away. The reduced death benefit provides compensation to the insurer for lost interest because of an early payout; insurance companies may also add on a nominal service charge.

Accelerated Death Benefits Rider versus Viatical Settlement

If you are faced with major medical expenses because of the diagnosis of a terminal illness, a viatical settlement is another available option. As a policyholder and terminally ill patient, you can sell your whole life insurance policy to a viatical settlement company for anywhere between 55%-80% of the policy's face value.

Should you decide to sell your policy to a viatical settlement company, your loved ones will not receive the financial benefit from the insurance company. This is because the viatical settlement company becomes the beneficiary once you sell your policy. By adding an accelerated death benefits rider to your policy, you may not have to resort to a viatical settlement.

Accelerated Death Benefits Limitations

Medical care--especially when it comes to continuous treatment--can be costly. Additionally, health insurance coverage may not cover all the expenses incurred throughout a terminal or critical illness. However, it is important to keep in mind that the accelerated death benefits rider is not a replacement for health insurance or long term care.

The accelerated death benefits rider may provide you and your family with more options in the event of a terminal illness. However, before deciding to use your accelerated death benefits rider, you should consider how the reduced death benefit may affect your survivors.

Compare Quotes

If you are shopping for a whole life insurance policy, you should consider enhancing your coverage with an accelerated death benefits rider. Obtain several quotes and compare whole life insurance rates.

http://www.compuquotes.com/enhance-your-whole-life-insurance-policy-accelerated-death-benefits-rider.html

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What to Do If You Are Denied Term Life Insurance

If someone in your life depends on you financially--to make the mortgage payment or to pay college tuition--it's likely that you have considered term life insurance.

Term life insurance is a policy that covers you for a set period of time, with coverage periods ranging from one to 30 years. Term insurance is designed to cover needs that slowly disappear over time--such as your mortgage--and is different from whole life insurance, which covers you for your lifetime.

But what if you are turned down for term life insurance? Don't worry, there are steps you can take to get insurance coverage.

Why Are Some Applicants Denied Life Insurance?

While auto insurers look at your driving record, life insurance underwriters look for factors that suggest a potential policyholder has a high mortality risk. Underwriting, the process of evaluating an insurance application, uses strict, objective standards for approving or denying an application. So if a risk factor shows up while your application is in the underwriting process, such as an odd liver reading on a blood test that might suggest you have hepatitis, you could be denied coverage.

What's Considered Risky?

Here are several reasons some applicants are turned down for term life insurance:

• Age
• Diagnoses of an incurable disease, such as cancer
• A family history of a medical condition, such as Huntington's disease
• Dangerous occupation
• Frequent travel to dangerous destinations
• Dangerous hobbies, such as hang gliding
• A history of drug use or drunk driving

What to Do When You Are Denied

If you're turned down for term life insurance, ask the insurer why. It's possible there was a mistake made during your medical examination. Many insurance companies collect health information from the Medical Information Bureau, which maintains a database on 16 million US and Canadian insurance customers. If the bureau has made a mistake, you can demand that it be corrected.

It's also possible that your doctor can explain the abnormality to reassure the insurance company and convince them that you're healthier than they thought.

You can also try another insurance company--obtaining competing life insurance quotes from qualified agents can be simple. Some insurers are more willing to accommodate certain medical conditions than others. You can also consult an independent insurance agent who works with many different insurers, rather than an agent that works with just one company.

You can also seek help from an "impaired risk specialist," an agent who specializes in finding insurance for applicants with uncommon medical conditions.

Applying the Second Time Around

It's important not to hide the fact that you were turned down by another insurance company. That kind of misrepresentation could get your policy rescinded in the future.

You can also wait and apply for coverage again at a later date. If the medical condition improves and tests reveal that you are healthier, the underwriter may give you the green light.

If you do try again, make sure you're adequately prepared for the medical examination. Go in well hydrated and rested, and skip the coffee and alcohol in the days leading up to the exam. Some medications--such as aspirin or ibuprofen--can also affect the results, so avoid them before your exam.

What Other Options Do I Have?

Many large employers provide life insurance for their employees, often with the option to increase coverage at an additional cost. Because the risk is spread out over many employees, these policies usually don't require a medical examination.

Another option is guaranteed issue life insurance, which requires no medical exam. Most people within a certain age range can get this type of policy--provided your answers to questions about height, weight, smoking, and other basic health questions don't raise any red flags.

However, premiums for guaranteed issue policies are higher and the face amounts tend to be lower. Additionally, this type of policy may not pay out the full benefit right away. For instance, should a policyholder pass away within the first year of coverage, the beneficiaries may only receive what was paid in premiums.

Keep in mind that it is illegal to refuse to sell insurance to anyone due to their race, color, sex, religion, national origin, or ancestry. Many states have added to this list by saying marital status, age, occupation, language, sexual orientation, physical or mental impairment, or the geographic location can't be used to deny coverage.

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