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Term Life And Whole Life Insurance

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August 27, 2010 at 1:23 pm

life insuranceWhich type of policy is best for you, term or whole life? The answer depends on several factors, including:

Your Needs. If you need coverage only until your children graduate from college, for example, you might be better off with a term life policy.

Cash-value insurance is better suited for long term needs, such as planning estate taxes and providing lifetime security for your spouse. Some term policies cannot be renewed past age 70 or 80 and can become costly to renew as you approach that age.

The Cost. If term life insurance is more suited to your budget and you want life time coverage, consider a term life policy which can be converted into a whole life policy. Then you can convert the policy whenever your cash flow or needs dictate. You can also purchase a combination of term life and whole life insurance and gradually shift into whole life insurance over time.

Your Savings and Investment Goals. Whole life insurance can be a good long term investment vehicle, especially because the cash value has the potential to grow tax-deferred. Should you no longer need the insurance but want some extra cash, you may surrender the policy and collect the accumulated cash value. Be sure to discuss the tax consequences with your tax advisor first.

As an alternative, you could purchase term life insurance and invest what you save on premiums on your own. Compare the returns you can expect, and remember to take taxes into consideration if you plan to select taxable investments.

So, Should I Buy Term Life or Whole Life Insurance? Term life and whole life insurance both have advantages including immediate family protection. Deciding which type of policy and which features are right for you takes careful consideration and, most times, a comprehensible look at your financial plan. To discuss your life insurance needs and financial requirements, contact your financial professional.


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Term Insurance

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August 20, 2010 at 1:23 pm

Term insurance is a level term life insurance product that pays out a lump sum when the insurance policyholder dies or becomes terminally ill. It provides peace of mind to the insurance policyholder that loved ones left behind after their death will be financially secure. Term life insurance can be configured to pay off all existing loans – including the mortgage – and leave a cash sum in the bank to support your spouse and children. If you don’t want your family to have to cope with financial pressures during their bereavement, or struggle to find the funds to pay for your funeral then term insurance is the life product to have.life insurance

Term insurance is different to mortgage insurance
It is important to realise that term insurance is a different life product to mortgage insurance. Term insurance is a long-term insurance product that can be taken out over a lifetime of 50 years. During this time the insurance premium remains the same as does the amount paid out in the event of death or terminal illness.

Mortgage insurance on the other hand mirrors the life of your outstanding mortgage loan. The insurance premiums remain the same throughout the life of the product, but unlike term insurance the amount paid out upon death or terminal illness reduces in line with the outstanding mortgage loan. So, if you were to die at the point that you owe only 2000 on your mortgage, then the mortgage life insurance product would only pay out 2000.

Terminal illness
Terminal illness cover generally comes as standard with term life insurance polices. The terminal illness clause tends to trigger pay out if the insurance policyholder is diagnosed with a terminal illness named on the term policy and is given 12 months or less to live. Pay out in these circumstances allows the policyholder themselves or someone with power of attorney for the policyholder to receive the full lump sum from the term life insurance policy. They are then free to enjoy the final months of their life with their family free from financial constraints.

When a term life insurance policy pays out for terminal illness the policy will end. Therefore the life insurance company will not be liable to pay anything further upon death of the policyholder.

Term life insurance restrictions
As with most insurance policies there are restrictions and exclusions that apply to term life insurance policies. The main restriction is on pay outs to term life insurance policyholders who become critically ill, yet are not diagnosed as terminally ill. In this case, a standard term life insurance policy will not make a payment, unless a critical illness policy has been added to the term life insurance.



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Shopping Around For Term Life Insurance

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August 6, 2010 at 1:23 pm

life insuranceComparison shopping for term life insurance coverage is just a click away. However, before you go around clicking on websites, there some basic information you should be prepared to provide to get preliminary quotes:

Aside from the obvious underwriting information such as your name, age and gender, you will have to provide more detailed information such as:

Weight: If your height weight ratio is not within certain limits (in other words you are overweight) it may affect your rate.

Do you smoke? Smokers pay a higher rate than non smokers. Rates can be as much as three times higher. However if you have quit smoking for at least a year prior to submitting your application, you may save some money.

Health: Companies want to know how much you exercise and what type of lifestyle you live. Do you participate in risky activities like racing, scuba diving, sky diving, rock climbing?

Type of work: Is your job hazardous? For example, if you work in underground mining, high-rise construction or work with explosives, you’ll carry a higher rate.

Driving record If you’ve been convicted of reckless driving or DWI in the last 5 years will increase your rate.

Your familial history Have your parents or siblings had cancer or cardiovascular disease before the age of 60?

You may be tempted to tell the insurance company what they want to hear (even if it’s not exactly the truth), but don’t. Lying on your application may void your insurance coverage.

Once you’ve elicited quotes from several companies, compare your rates and make sure your insurance company will be around for the long haul. Check their AM Best rating. AM Best is a company that measures the financial stabilitysolvency of insurance companies. A very low quote from a financially unstable company won’t do you a lot of good if they’re not going to be around to pay the claim.


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Senior Term Life Insurance

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July 30, 2010 at 1:23 pm

life insuranceWe all know that purchasing life insurance at an older age is more expensive than purchasing it while very young. In an attempt to provide affordable insurance to meet the life insurance needs of older insureds, some companies are now offering Guaranteed Acceptance Life Insurance.

Guaranteed Acceptance Life Insurance policy rates are less expensive than the traditional term insurance policies. As the name implies, you are guaranteed to be accepted for this life insurance. There are no health questionnaires to complete and no physical exams to take. As long as you pay the premiums, the policies cannot be cancelled. Additionally, you may lock your premium rate for the policy amount you want. Your rates will not change for as long as you keep your insurance.

Where’s the catch you may be asking. Well, the policies are written for a limited period of time. For example, Colonial Penn’s policies are for a two-year limited benefit period. They are available for people between the ages of 50 and 85 (This age range varies depending on insurance company and state regulation).

Generally, if death occurs during the first few years, a reduced benefit is paid or the company may return the premiums paid plus interest. For instance, with a Gerber Life policy, if death occurs by natural causes within the first two years (during the limited benefits time), the beneficiary will receive all of the premiums paid plus 10%. However, if death was a result of an accident, or if death due to natural causes occurs after the two years, your beneficiary will receive the full benefit amount. In the event of suicide (with certain state exclusions), the beneficiary will receive the amount of premiums paid only.

Most life insurance companies offer a Guaranteed Acceptance Life policy for seniors. There may be variations from state to state, but the basic premise is the same. They all offer an affordable insurance option for seniors.

Please see our list of recommended insurance quote providers below to get free insurance quotes from many providers. These sites also offer pages and pages of free insurance information.


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Selling Your Life Insurance (Viaticals and Life Settlements)

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July 23, 2010 at 1:23 pm

Selling your life insurance is an option you might consider if you’re in a difficult financial situation for which you don’t see a close end. A terminal illness or old age could cause you to think twice about paying those hefty premiums at this stage of your life. Selling your life insurance carries with it complex implications and substantial risks, so it is important that you educate yourself regarding the big picture. If you’re interested in selling your life insurance, this is a good starting point to obtain some basic information.

Basics: Vocabulary

If you’ve already done any research on selling your life insurance, chances are good that you’ve come across two main terms: viaticals and life settlements. Both refer to the selling of your life insurance to a third party. So what’s the difference? “Viatical” is typically used to refer to the transaction involving a chronically or terminally ill insured, while a “life settlement” is a transaction involving a senior (generally over the age of 65) who is not terminally ill.

Even though you now know the difference, it does not mean that your state does. These terms might be used interchangeably, or your state might use one of them to refer to both transactions. For example, your state could use “Viatical Settlement” to refer to any type of transaction regarding selling your insurance. Be aware that this kind of ambiguity may exist in relation to the vocabulary used in the sale of your life insurance.

How it Works

The owner of the life insurance policy will sell it for a percentage of the death benefit a lump sum to a third party and, in exchange, receives an often substantial lump sum payment. The third party then becomes the new owner andor beneficiary of the policy and pays all of the future premiums and eventually collects the death benefit when the insured passes away.

Those considering selling their life insurance may either directly approach a viatical company or settlement firm, or they may choose to work with a broker. The broker will act as an intermediary and present the information to several different companiesfirms in an effort to find the highest price for the sale.

The settlement firms buy the insurance on behalf of investors. In this situation, the investors become the owners and beneficiaries, and the settlement firm pays the premium until the insured dies. The firm then collects the death benefit and either pays its investors a percentage of the annual return or repackages the policy for sale to another party.

Take comfort in know that the process of selling one’s life insurance is typically very confidential. Most viatical companies and settlement firms understand the discretion necessary to make the process run smoothly and easily. However, a company may act disrespectfully and become borderline intrusive by trying to keep track of the insured’s condition. For this reason, it is important to work with a respectful, experienced organization.

Who Considers Selling

Those with serious, life-threatening illnesses are most likely to consider selling their life insurance to provide cash for various expenses, such as mounting medical bills. For those who are not terminally ill, selling the life insurance might be a good idea for a number of reasons. If the owner’s beneficiary has died or if the owner can’t afford to keep paying the premiums, it would appear that they no longer have sufficient use for the life insurance. Seniors around retirement age may also consider selling their life insurance, even if they are free of debt, in order to receive a lump sum of money with which they may do whatever they please.

Keep in mind that different companies may have different eligibility requirements to be able to sell your life insurance policy.

Advantages to Selling Your Life Insurance

It might be easy to see some of these benefits, but others are a little less obvious.

  • You’ll receive a lump sum cash payment right now. As mentioned above, this is especially useful to the terminally ill who have mounting medical bills.
  • You will receive more by selling your life insurance than you would if you simply surrendered it to the insurance company. It is possible for an insured person who is 65 or older or who is terminally ill to sell a policy with little or no cash value for a 100,000.00 or much more.
  • You won’t have to pay any more insurance premiums. If your financial situation is becoming strained with no end in sight, eliminating premiums is a way to alleviate the burden.
  • You don’t have to repay the money, like you do when you borrow against your insurance policy.
  • Even though your life insurance benefits won’t be available once you die, you can still leave money to a certain person or organization it will just come from the money that is leftover after using the funds from selling your policy. So, selling your life insurance does not
    mean that you’re definitely robbing your beneficiaries of their gift.
  • In some cases, the money you receive is tax-free.
  • There are no regulations or restrictions on how you make use of the money you receive. You may spend as much of it or as little of it as you wish, however you please.
    • Risks of Selling Your Life Insurance

      Understanding the risks associated with selling your life insurance will help you make an informed decision. Be sure to consult a financial advisor or tax attorney to make sure you understand the implications of the sale.

    • You might lose your eligibility for some public assistance benefits, especially those based on your income and assets (such as food stamps, welfare, Medicaid and some Social Security benefits).
    • There could be tax issues. Selling the policy will
      result in a tax bill if the settlement amount exceeds your cost basis.
    • With improved medical care, the ill person may live longer than expected.
    • You might face unhappy heirs. This might not be a problem for you, but it could lead to a long road of (possibly legal) complications and battles. Some settlement actually companies require the beneficiaries to also sign off on any sale, which could be good or bad, depending on whether or not you’re dealing with a cooperative beneficiary.

      • Other Options

        If you come to the conclusion that selling your life insurance policy is not for you, there are other options (though none that would provide you with such a large lump sum). An insurance agent should be able to help give you more information on some of these ideas.

      • Borrow against your insurance policy
      • Cash out the policy if it has surrender value
      • Look into accelerated benefits or living benefits
      • life insurance
      • Borrow money (from family or friends perhaps) and use the life insurance policy as collateral
        • If you believe that selling your life insurance policy is the right decision for you, make sure you deal with a dependable, experienced broker or settlement company to ensure that you get the best service and results from your transaction.

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    Second to Die Life Insurance Policies

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    July 16, 2010 at 1:23 pm

    life insuranceUsually, the death benefit from a second-to-die life insurance policy is intended to go to the children , a charity or pay taxes owed after both spouses pass away.

    In the U.S. there is a marital deduction permitting you to leave an unlimited amount of assets to your surviving spouse with no taxes payable at your death. Those assets then become part of the estate of the spouse and if it includes a second to die life insurance polciy it could help pay any taxes. In Canada, there is more lenient tax treatment.

    There are also tax ramifications for small businesses, which is why business partners also purchase second-to-die policies.

    THE REASON TO BUY SECOND TO DIE LIFE INSURANCE POLICIES

    With a second-to-die life insurance policy your beneficiaries can pay debts with the proceeds of your policy, so they won’t be forced to sell your house or liquidate assets to pay the bill.

    A second-to-die life insurance policy can help to construct a financial plan reducing the tax burden of wealthy individuals by creating trusts and using second-to-die life insurance as part of the estate-planning process.

    ADVANTAGES TO SECOND TO DIE LIFE INSURANCE POLICIES

    1.Less expensive. Second-to-die life insurance is usually less expensive than life insurance but depends on the blend of the ages. The premium is based upon the joint life expectancy.

    2.Estate Preservation. A second-to-die policy appeals to individuals who feel strongly about preserving their estates with the life insurance paying the taxes.

    3.Easier to buy. It’s easier to qualify for a second-to-die policy than for individual life insurance. Since both insureds must die before the benefit is payable, the insurance company is less concerned that one of them might not be in good health.

    * Builds your estate. In some cases, second-to-die life insurance is marketed as a way to build an estate, not just insulate it from taxes. Much like individual life insurance, the death benefit of a second-to-die policy can ensure that certain people receive money, even if you spend every nickel.

    4.Second-to-die life insurance might make sense for people who don’t have a lot of money but want to leave an estate for their children.


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    Second to DIe Life Insurance

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    July 9, 2010 at 1:23 pm

    Usually, the death benefit from a second-to-die life insurance policy is intended to go to the children , a charity or pay taxes owed after both spouses pass away.

    In the U.S. there is a marital deduction permitting you to leave an unlimited amount of assets to your surviving spouse with no taxes payable at your death. Those assets then become part of the estate of the spouse and if it includes a second to die life insurance policy it could help pay any taxes. In Canada, there is more lenient tax treatment.life insurance

    There are also tax ramifications for small businesses, which is why business partners also purchase second-to-die policies.

    THE REASON TO BUY SECOND TO DIE LIFE INSURANCE POLICIES

    With a second-to-die life insurance policy your beneficiaries can pay debts with the proceeds of your policy, so they won’t be forced to sell your house or liquidate assets to pay the bill.

    A second-to-die life insurance policy can help to construct a financial plan reducing the tax burden of wealthy individuals by creating trusts and using second-to-die life insurance as part of the estate-planning process.

    ADVANTAGES TO SECOND TO DIE LIFE INSURANCE POLICIES

    1.Less expensive. Second-to-die life insurance is usually less expensive than life insurance but depends on the blend of the ages. The premium is based upon the joint life expectancy.

    2.Estate Preservation. A second-to-die policy appeals to individuals who feel strongly about preserving their estates with the life insurance paying the taxes.

    3.Easier to buy. It’s easier to qualify for a second-to-die policy than for individual life insurance. Since both insures must die before the benefit is payable, the insurance company is less concerned that one of them might not be in good health.

    * Builds your estate. In some cases, second-to-die life insurance is marketed as a way to build an estate, not just insulate it from taxes. Much like individual life insurance, the death benefit of a second-to-die policy can ensure that certain people receive money, even if you spend every nickel.

    4.Second-to-die life insurance might make sense for people who don’t have a lot of money but want to leave an estate for their children.


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    Save Money By Getting A Term Life Insurance Quote Online

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    July 2, 2010 at 1:23 pm

    life insuranceSave Money By Getting A Term Life Insurance Quote Online

    When deciding or choosing what life insurance is best for you, you can avoid feeling pressured into a policy by searching for a term life insurance quote online. The service is terrific and it can be a fast turnaround because you control how fast or slow the process can be. Getting a term life insurance quote online is as simple as the click of the mouse. With so many life insurance companies now operating on the Internet, all you have to do is log onto the various sites and check out the rates for term life insurance.

    When you check for a term life insurance quote online, you do not have to pay for the quote. This service is free and you should request quotes from at least three different companies. This way you can do a comparison of online life insurance quotes. Each of the companies has a form that you fill in and they will respond to you with the quote- usually in less than 24 hours.

    Some of the required questions you will have to answer to get a term life insurance quote online are your age, occupation, medical history and whether or not you smoke. All of these factors affect the price the online quote you receive. A younger person will certainly get a much lower premium than an older person because the likelihood that heshe will die within the term of the policy is much less.

    Your occupation is also a deciding factor in getting the best possible online life insurance quotes. This is because the life insurance company looks at the dangers involved. If you do work at a dangerous occupation, then it is possible the company will have to pay out a settlement on the insurance before the term runs out. One thing you do have to remember with getting term life insurance quotes online is that these quotes are for a specified term, such as 10 or 15 years. If you are still alive at the end of the term you do not collect any money from the policy.

    Whether or not the life insurance company needs you to have a medical depends on your medical history. If you have a record of heart disease for example, it will affect the term life insurance quote online that the company will give you. You many get a policy with a clause inserted saying that should you die of this illness, there not be any settlement paid out. You so have to be honest in answering the questions for the online life insurance quotes because it could result in cancellation of your policy down the road. Then you are left with no policy and you will have paid out money in premiums for nothing.

    However before getting a term life insurance quote online make sure you have found out exactly what type of life insurance you need.


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    Reliable Life Insurance Company Which Companies Are The Best?

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    June 25, 2010 at 1:23 pm

    Reliable Life Insurance Company Which Companies Are The Best?

    The life insurance industry is a carefully regulated industry. Every state has its own insurance department to monitor the activity of insurers. You very rarely hear of life insurance companies that dissolve because of financial problems. Insurance companies have to prove financial strength to operate in most states. Insurance commissioners have the authority to approve or deny rate changes. There are consumer guides that are available to help you compare companies. The AM Best Company is the most reliable resource in the industry. You can visit AM Best online and you will find all the information that you need about financial strength and product information.life insurance

    Life insurance companies distribute their products many different ways. The agent distribution system has been around a long time. The life insurance professional is a valuable resource for people that want an on going relationship with an agent. A lot of folks want the personal service that only an agent can provide. Life insurance can also be purchased through the mail. There are a number of companies that use direct mail as their distribution system.

    Insurance companies are also offering life insurance online. This is convenient for most folks that love to use their computer to make purchases. The online purchase can also lead you to an agent. That can give you the best of both worlds. You can begin the process by getting a quote online and finish the purchase with an agent from a company of your choice. The company best for you would be the combination of the financial strength and whether or not you prefer to be serviced by an agent.

    There is one more factor when selecting an insurance company. Do you want to purchase insurance from a stock company or a mutual company? Stock companies are owned by the stock holders while the mutual companies are technically owned by the policy holders. Mutual companies pay dividends. Stock companies do not. Compare the rates of a stock company with a mutual company first and then compare the rates of stock companies with stock companies and mutual companies with mutual companies.


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