The Importance of Having Life Insurance

There are several considerations and benefits to choosing a whole life insurance policy over other different types of life insurance policies. With so many options in the insurance marketplace, it is certainly confusing to choose the best insurance plan for you. However, here are a few advantages of whole life insurance plans to help you decide why this might be the right one for you.

Benefits of Whole Life Insurance

• Lifelong Insurance Coverage: The term whole life insurance is no misnomer! As the name implies, whole life insurance plans are designed to provide insurance coverage for your whole life, unlike term insurance policies, which only offer coverage for a specified period of time.

• Fixed Insurance Premiums: Premiums for other types of insurance policies generally increase over time to reflect the rising cost of protecting older policyholders. But for whole-life insurance policies, insurers average the entire cost so that you pay a predictable and level premium throughout your time. Having a fixed insurance premium can be easier for people to plan around the budget.

• Cash Value: One of the distinguishing features of a whole life insurance policy is “cash value”. It means that the insurance premiums you pay towards your plan accumulate in a cash balance that you can use even when you are still alive! If you do decide to discontinue paying your premiums, your insurance plan may still be worth something to you. This, however, depends on how much cash has accumulated. On the contrary, term insurance premiums (pure insurance policies) only pay out upon a death.

• Encourages Savings: For those who require additional encouragement, paying a compulsory policy premium forces them to set aside cash that can be used at a later date.

• Flexible Money Options: The accrual nature of your whole life insurance plans will offer you several flexible options in the future – should you decide to discontinue paying premiums. There may be a waiting period before you can borrow against your cash value. You can also opt to stop paying new premiums, and stretch your accumulated cash value and existing premiums towards a reduced benefit protection.

• Possible Dividends: If you have a participating whole life insurance policy, you can receive dividends from your company. However, they’re not guaranteed and are only paid out when your agency has excess investment earnings, favorable mortality statistics, or savings on expenses. You can choose how you want the dividends to be used: reduce your premium payments, paid out in cash, accumulate interest, or pay for paid up Additional insurance.

• Tax Deferrals: There are added tax benefits of whole insurance policies. The growth of interest in whole life policy is tax-deferred! In addition, if you have a basic participating policy, any dividends you receive will be considered a return of premium. They will not be taxed for until your total dividends exceed your total premiums.

• Certain Death Benefit: Policy holders are usually guaranteed a death benefit no matter when the holder dies, so long as the plan is active. This assumes the plan wasn’t surrendered, and that premiums were continued. In comparison, under term insurance policies, beneficiaries only receive a benefit if the policy holder passes away within the period covered.

Use the above points to determine if whole life plans are suitable for you and make the right choice!


How To Count Your Cost Life With Insurance

Although you may get used to seeing advertised rates for life insurance that show monthly premiums “starting at” or “as low as” $9 per month, it is important to understand that these are simply put advertised rates. Just as you may be able to go into the grocery store and get a single can of soda for 75 cents, you would still be paying over $5 if you wanted to walk out with a 24 pack of sodas.

This line of thinking can be followed when you are looking at the advertised rate for a 20 year-old female that is looking to secure a 10 year term life insurance policy with a limit of $100,000 at a monthly premium of $9. The same 10 year policy term for a 50 year-old male, in good health, could easily be twice the rate.

It is also important to keep in mind that the advertised rate for the 20 year-old would generally be that of one in great health and likely rated on the best classification, “Preferred Plus”. For most of us, a lot changes between age 20 and age 50. Whether it be gaining a little bit of weight, having high blood pressure, or high cholesterol, these types of factors need to be taken into consideration when trying to understand what the average cost are that you can expect to pay.

To help get a better understanding of the rates that are available and what the expected rates would be, it is best to look at a few examples of a male rated on “Preferred – Plus”, “Preferred”, “Standard Plus”, and “Standard” rate classifications.

Age 40 – $250,000 in coverage – 15 Year Term

  • “Preferred Plus” – $17.50 per month
  • “Preferred” – $21.44 per month
  • “Standard Plus” – $27.56 per month
  • “Standard” – $32.16 per month

Age 50 – $250,000 in coverage – 15 Year Term

  • “Preferred Plus” – $37.41 per month
  • “Preferred” – $46.16 per month
  • “Standard Plus” – $57.53 per month
  • “Standard” – $72.84 per month

Age 60 – $250,000 in coverage – 15 Year Term

  • “Preferred Plus” – $96.69 per month
  • “Preferred” – $118.12 per month
  • “Standard Plus” – $150.94 per month
  • “Standard” – $182.88 per month

As you can see, the rates will vary significantly between the consumers rated age at the time of the purchase and the rated classification affiliated with the policy. It is also important to keep in mind that the length of policy term play a factor in the age and availability as well. Overall, advertised rated are simply put, not likely.


Can We Get Life Insurance Without Medical Insurance

There are big differences between a term life insurance policy that does not require a medical examination and a guaranteed acceptance whole life insurance policy that guarantees eligibility based upon a few medical questions. Although there may be no physical or paramedic examination required in order to secure coverage with particular term life policy there will still be an underwriting process that needs to take place after applying for coverage with most carriers.

Although many assume that these policies that do not require a paramedic examination are purchased as in the same way that you would purchase an off the shelf product from a retail store, it is important to understand that insurance carriers will a series of double checks referred to as the underwriting process prior to issuing a policy.

For these term life insurance cases these review include:

  • Driving Record Verification – With the majority of insurance companies the application process includes a consent to check and review driving record activity. Depending on the company selected there will be requirements in place to ensure eligibility. Most commonly these would be no driving under the influence of alcohol or drugs within the last 7 years, no other major violations within the last 5 years, no more than 2 standard moving violations, and no driver’s license suspensions within the last 5 years.
  • Prescription History Check – When applying for a policy the insurance carriers will review the prescription history of the applicant to ensure that there are no prescriptions that had been prescribed to the applicant that are typically reserved to those of whom have medical conditions that would make the applicant be ineligible for coverage.
  • M.I.B. Check – M.I.B. check is a reference of the medical information bureau that reviews the history of the applicant to review for any other outstanding or recently applied for coverage.
  • Although some consumers may see this additional review to be intrusive and counterproductive, it is imperative that the insurance carriers do their part to protect the rates of those whom qualify for coverage and ensure that the appropriate clients receive coverage from these policies.

It is important to remember that most carriers structure these policies to offer rate based upon a simplified issue concept and create rates structured to appeal to those whom prefer to purchase a simplified issue policy with a limited underwriting process, as opposed to, those with significant pre-existing conditions that a guaranteed acceptance policy would be best suited.


Protection For Future Generation

Do you really want to spend your money on the next silly fad for your children or grandchildren? Something that will be broken in a week and soon forgotten. Or would you rather invest in their future by creating a legacy that will make you worthy of having your portrait over their fireplace?

By purchasing a permanent life insurance product for your young children or grandchildren you can produce a significant estate for them for a relatively small investment. The cost of a good whole life policy can be prohibitive for an adult but by setting them up for a child it is very cost-effective.

There are several advantages to setting up a permanent policy for your children or grandchildren other than the low-cost. For example, the application process is drastically simplified with less restrictive medical questions. Also, the family history questions are based on their younger parents and siblings.

By insuring your children and grandchildren at a young age you are protecting them from becoming uninsurable later in life. With 1 in 3 people being diagnosed with a critical illness at some point in our lives doesn’t it make sense to have some kind of permanent insurance in place before that happens? Even if your children remain healthy, they may end up in a high-risk profession or occupation down the road making them hard or very expensive to insure.

Many of these policies have features that allow them to be fully paid up in 20 years or less. You only need to commit to a small payment for up to 20 years and you provide them with growing cash values and protection for life.

There are some that think cheap term insurance is all we need; however, I believe that the term insurance we have paid so much for throughout our lives won’t be there for us when we really need it because it will be just too expensive and we will cancel the policy. I don’t think you want that for your family.

Also, with the advantage of time on their side, the cash portion of a whole life policy can become quite significant by the time they are ready to retire.

In Proverbs 13:22 of the good book it says “A good man leaves an inheritance to his children’s children.”

Just think for a moment, when you purchase a permanent life insurance policy for a grandchild and their children become the beneficiaries, you are leaving an inheritance to your children’s, children’s children! That kind of loving long-term thinking just might get you that portrait over the fireplace.