life insurance help Archives - Page 16 of 22

The A-Z of Basic Life Insurance Terminology

Actuary, grace period, face amount, death benefit, riders: if you’re researching life insurance, you will come across a lot of terms that you might be unfamiliar with. Learning what all of these terms mean can be overwhelming, and doesn’t make the process of searching for the best policy for your family any easier. But it doesn’t have to be overwhelming! Once you learn the following basic life insurance terminology, it will all make more sense, and will make the search process easier.

Actuary

This is the person, typically an insurance industry math expert, who gathers and evaluates your data. They will determine your risk classification, and set your life insurance premiums based on the analysis of your information.

Beneficiary

This is the person who will receive your policy’s benefits when you pass away. You can select one or more beneficiaries, and can add or change them at any time.

Burial Insurance

A type of life insurance that only pays for the policy holder’s burial. Normally these policies will pay out between $5,000 and $25,000 in benefits. If your burial expenses are less than the benefit amount, your beneficiary gets to keep the rest.

Contingent Beneficiary

This person will receive the policy’s benefits in the event that the primary beneficiary is no longer living when you pass away.

Cash Value

With some types of life insurance, like whole life insurance and permanent life policies, you accumulate a cash value along with your death benefit. If you access your cash value, it may affect the amount of the death benefit your beneficiary will receive, or you might have to make additional premium payments to keep your policy up to date.

Cash Surrender value

This is the amount of money the insurance company pays you if you voluntarily terminate a life insurance policy that earned cash value before your death, or before your policy matures.

Conversion

Some policies have a provision that allows you to exchange your current policy for another life insurance policy, without any underwriting requirements. For example, you can convert a term life insurance policy into whole life insurance.

Death Benefit

This is the amount of money your beneficiary will get in the event of your passing. Typically they have the freedom to determine how to use that money for your things like funeral expenses, debts, and more.

Face Amount

This is the amount of coverage purchased, and paid out to your beneficiary in the case of your (the policy holder’s) death or at maturity of the policy.

Grace Period

This is the amount of time between your premium’s due date and the day that your policy will get canceled, or lapse.

Insurable Interest

This is when individuals who are related to you have to prove that they would suffer financially if you died, so they can be listed as a beneficiary on a policy.

Lapse

This is when your life insurance policy becomes inactive and coverage terminates due to non-payment past the grace period.

Paid-up Insurance

Only available with whole life insurance policies, this is the amount of life insurance available with no premium payments due, after the surrender value accrues enough to cover the premium payments.

Premium

The payment you make to the life insurance company for your coverage. You can opt to pay monthly, semi-annually, or annually.

Rate Class

You will be assigned to a rate class during the underwriting process, which will dictate what you will pay for your life insurance coverage.

Rider

Also sometimes called an endorsement, a rider is add-on coverage to your policy that provides additional benefits or exclusions.

Suicide Clause

medical record written on a paper — *When you apply for permanent life insurance, you will have to undergo an underwriting process, which includes information about your medical record.*

An agreement in life insurance policies that define the life insurance company’s liability in the event that you die by suicide. Typically, you will need to have held the policy for 2 years for your policy to cover death by suicide.

Underwriting

The process used by insurers to review each new policy application. They will gather your medical and driving records, and assess your risk, so they can determine how much your premiums will be.

Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. The best way to understand how it all works, and find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Should You Have Life Insurance for Your Children?

We know what you’re thinking: life insurance for children? That’s not something I even want to think about! And why would I even need it? We understand that it’s not easy to think about the death of your child, because we all want our kids to live long, healthy lives, but as a parent you always need to think about the unexpected in life. That’s why purchasing a life insurance policy might be a wise financial decision – but is it necessary? Well, it depends: you will need to consider your family’s needs, and if it makes sense to purchase life insurance for your child/children.

What Is Child Life Insurance?

young girl hugging a man — *You can purchase a permanent life insurance policy for your child/children.*

Child life insurance is exactly what it sounds like: policies that cover the life of a minor, typically purchased by a parent or grandparent. Generally, these policies are a type of permanent life insurance, which means the policy will be in effect for your child’s entire life, and your child can take ownership of the policy when they turn 18 (or in some cases, 21). In addition, a portion of the premiums you pay grows over time, so your child’s policy will be building a cash value that they can use later in life.

Pros & Cons of Life Insurance For Children

If you’re considering life insurance for your children, and are unsure whether one of these policies is right for your family, think about the following pros and cons before deciding to buy a policy:

Pros

Guaranteed insurability for your child, which will be beneficial if your child develops a pre-existing condition, such as diabetes or high blood pressure, or if they choose to have a risky occupation later in life. If your child already has life insurance, they won’t have to worry about being denied by insurance companies when they’re adults.
The money that builds cash value over time can be used towards college, or for a down payment for a home when your child is grown up.
Children’s life insurance is helpful in covering unexpected funeral costs and grief counseling if necessary.

Cons

Your child can find affordable life insurance when they are in their 20s, and the chances that they will develop health issues are low until they are much older. Therefore, life insurance for your child might not be necessary.
Cash value takes time to grow based on your premiums paid, so it’s not necessarily a reliable investment for them in the future.
It is uncommon that a child will die when they are young, so the risk of going without life insurance for them might outweigh how much the policy accumulates over time. You can opt for a child rider in your life insurance policy instead if you want extra coverage for them.

Do You Need It?

If you are considering life insurance for your child or children, you should consider why you might need it, as well as assess your budget and determine if the benefits outweigh the costs. Can you cover final expenses if the unexpected happens? Do you want a policy that your child can carry with them for the rest of their lives, and will give them cash value for college, buying a car, or other expenses? Does your family have a history of hypertension or diabetes and you worry they will not be able to find affordable life insurance when older? Or do you think they will be okay and will be able to get an affordable plan when they are older?

If you are interested in providing your family with financial stability when you are gone, or are looking for coverage for your children, life insurance is the right choice for you. For low monthly payments now, you can make sure your children are taken care of later. Picking a life insurance policy is an important decision, but you have multiple coverage options, some with added benefits. To make the decision-making process easier, consider using online tools, or speaking with an agent. We have provided the top Life Insurance companies in the nation that offer hassle-free assistance and the most competitive rates below. Always check multiple sites to make sure you have bargaining power and know the different advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Is Residual Disability Insurance Enough?

Approximately 20% of Americans are living with some form of disability, and that can mean being unable to work, and dealing with a lot of financial strain. But if you can no longer work due to a disability, and you have disability insurance benefits through your job, you might get some financial help, depending on your policy’s definition of disability. And if you can return to work part-time, you can still receive partial disability, or residual disability benefits – this is great, but is it enough? And if your job doesn’t offer insurance with residual disability benefits, should you buy it on your own, or should you consider purchasing a life insurance policy with disability riders?

Definition of Disability

black and white picture of handicap sign — *Life insurance companies have different classifications of who can receive what benefits for how long.*

When it comes to receiving disability insurance benefits, it all depends on your insurance policy’s definition of disability: the definition of disability can differ between different insurance companies. Their different classifications of who can receive what benefits for how long include:

Total disability– You are completely disabled and you can’t work, and can receive your insurance benefits because you have lost your income source.
Partial disability– You can still work, but perhaps only part-time or on reduced duties, so you have lost part of your income. In most cases, you will still be able to receive benefits.
Extended partial disability– When your partial disability benefits run out, you might be eligible for extended partial disability, which is essentially the same as partial disability, but lasts for as long as you need with reduced benefit amounts.
Presumptive total disability– This is a form of total disability, meaning you will never recover from your disability due to loss of limbs, deafness, etc. There is no elimination period.

What Are Residual Disability Benefits & How Do They Work?

As mentioned above, when you are facing partial disability, meaning you can perform some of your duties at work part-time, you will receive residual disability benefits. Typically, you will get full disability benefits that last for 6 months and will then be reduced to a percentage of your monthly income, which will be based on how much income you have lost. Depending on your insurance company, though, a life insurance policy with a residual disability benefit rider could cover more.

Life Insurance Disability Benefits

So the question is: would the residual disability benefits on a disability insurance policy be enough for you or should you invest in a life insurance policy and add disability riders? Life insurance can be very affordable, and will be active for the rest of your life, not only while you are working, and can provide you with help if you become disabled. It will also leave your family with benefits in the event of your passing.

There are multiple long-term disability insurance riders available to add on to your life insurance policy, and many of them are free! In fact, this type of rider usually comes standard on a policy or can be added at no extra cost. Some different riders to consider include:

Waiver of premium– If you become totally disabled, and can no longer work or pay for your life insurance, this rider will cover your premiums until you’re no longer disabled, or until you reach a certain age, typically between 65 and 70.
Disability income rider- This type of rider provides monthly income payments if you are permanently disabled. Payouts are typically a percentage of the policy’s total coverage amount.
Long-term care rider– The money from this rider can help with living expenses if you have a chronic illness and are unable to complete daily tasks on your own.
Accelerated death benefit rider– You can get part or all of your policy’s death benefit while you’re still alive if you have a terminal illness. There are no restrictions on how the money can be used, which is great because you can use it to pay for medical care and treatments.

If you want extra protection, you can always have both disability and life insurance if you can afford it. If you cannot, though, consider looking more into life insurance and speaking with a licensed agent who can help identify which life insurance policy will suit you best, as well as which rider would be best in case of disability. Each company offers different rates and policies, which is why it is important to compare all of them.

Want More Information?

Before purchasing a life insurance policy, you should consider any additional riders you want to add on: riders are a great way to add coverage for unforeseen circumstances. If you need help finding a policy, or with reviewing your current policy, it’s in your best interest to speak to a local agent, who will help you compare plans and see which is the right fit for you. Consider also using online tools to see what is available. To get you started, we have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Set It & Forget It: Single Premium Whole Life Insurance

Let’s face it, there are a lot of different life insurance policies out there to choose from – in fact, there are so many that it can become overwhelming trying to find the right one for you. How do you choose? Start by narrowing it down this way: if you want life insurance for a specific amount of time, you can choose a term life policy, but if you want a more permanent policy, whole life insurance is the way to go.

Whole life insurance is the most common type of permanent insurance policy, and rightfully so- there are so many great benefits to these policies. If you decide to go the whole life insurance policy route, the next step is to check out all of the different whole life insurance policies that are available. You can choose from policies like level premium whole life, limited payment whole life, and single premium whole life insurance, which is the type of policy we will focus on below, so you can decide if it might be right for you.

Single Premium Whole Life Insurance

hundred dollar bills in a large stack — *Single premium whole life ,gives you the opportunity to pay for your policy in a single upfront lump-sum.*

Single premium whole life is permanent life insurance that covers you until you die. But unlike with other types of whole life insurance, with which premiums can be paid on a monthly or annual basis, with single premium whole life, you can pay for your policy in a single upfront lump-sum. In return, you receive a guaranteed death benefit amount; these policies also have a cash value that will grow over time, and that you can borrow against.

For example, a single premium whole life policy might have one $25,000 premium at the start of the policy and no more payments will be needed after that. When it comes to how much the death benefit will be, it will depend on the amount of money invested, as well as your age and health when you purchase the policy.

The Benefits

Having the ability to pay your premium off at once and not having the hassle of monthly or annual payments is a great plus, since you will not have to worry about forgetting or being unable to make a payment and losing your policy forever. Not only that, but there are tax benefits to whole life: you can pass on death benefits to your family tax-free without the time delay and expense of probate. In addition, in some cases, you will have tax-free access to the death benefit to cover any long-term care costs (although there are cases when you might have to pay some tax, more on that below), which can protect your other assets so you do not have to dip into them. If you do choose to use part of your death benefits for long-term care expenses, the death benefit remaining in the policy when you die will pass income-tax free to your beneficiaries. And if you don’t use any of it, the money will go to your loved ones just as you had originally planned.

Another benefit to making one upfront premium payment is that the cash value of the policy will be larger than with other types of policies, because the policy is fully funded from the start of coverage, so the value can grow more quickly. For example, if your premium is $30,000, some of this will go to fees, and some of it will go into the cash value: if the cash value is $20,000 (after the fees are paid), and you were guaranteed a 3% interest rate, the policy will grow $600 in the first year.

How You Can Withdraw Money

atm machine — *If you want to withdraw money, you have to take out a loan that can be up to 90% of the policy’s cash surrender value.*

The only way to withdraw money from the cash value of a single premium whole life insurance policy is by taking out a loan. The loan amount can be up to 90% of the policy’s cash surrender value (cash surrender value is the sum of money an insurance company pays to the policyholder or account owner upon the surrender of a policy/account). Insurance companies usually have a minimum amount that you can take out, so be sure to check that out. You can typically withdraw 10% of the premiums paid, or 100% of the policy’s gains (whichever is higher) in each calendar year without having to pay a surrender charge.

It is important to note that if you withdraw cash from the policy, either as a loan or partial surrender, there will be some tax implications. Because this type of policy is considered a modified endowment contract (MEC) by the IRS, meaning that it has been funded with an amount of money that exceeds federal limits on policy funding, withdrawals are subject to income tax on the earnings. Typically there is a 10% IRS penalty on all gains withdrawn or borrowed before age 59½. You will also have to pay income tax on those profits, and if you cash in the policy, the insurance company might hit you with a surrender charge.

Is This Type of Policy Right For You?

Single premium whole life insurance is best for someone who has the ability to pay their premium all in one shot, and who wants a tax-sheltered legacy that their family can receive when they are gone. These policies are a great way to maximize your cash value growth so you can use that money as you get older and possibly require long-term care. If you are considering a single premium whole life insurance policy, you should first consider if you can afford it, how much coverage you will need, and any riders you would like to add on.

The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

Should You Pay Your Life Insurance Premiums Annually, Quarterly, Or Monthly?

When it comes to purchasing life insurance, you’ll have a lot of decisions to make, including how much coverage you need, who your beneficiary will be, and which carrier to buy a policy from. But you will also have to consider how you are going to pay for it: depending on the life insurance policy, you will have the option to pay your premiums annually, quarterly, or monthly. Each method of payment has its own advantages, and you’ll need to consider the following factors when deciding how frequently to pay your premiums.

Paying Life Insurance Premiums Annually

discount symbol in gold with a character in front of it with a calculator — *One of the benefits of paying your premiums annually is that you can get a discount from your insurer of up to 8% of your total premium.*

When deciding on how often to pay for your life insurance premiums, you will need to take into consideration your individual circumstances, including your budget and income. If you choose to pay your premiums annually, you will have to pay one lump sum every year, which can seem like a lot of money at once. But this method can be more convenient, since it eliminates the worry of having to pay your premium on time every month, and will free you from having to budget for your premium each month.

While paying a whole year’s worth of premiums in one lump sum is not in everyone’s budget, if you are considering this option and are unsure whether it makes sense for you financially, you should know that you can get a discount from your insurer of up to 8% of your total premium when you pay annually. These discounts can add up, and you could end up saving a lot of money, especially if you plan on keeping your policy for a long time.

If paying your premiums annually sounds like a good option for you, make sure you shop around and compare multiple life insurance policies, since different companies will offer different discount rates for paying annually.

Paying Life Insurance Premiums Quarterly

Some policies will also give you the option of paying semi-annually or quarterly, but this is less common, and is usually not ideal for most people, since you’ll have to make a large payment but will not receive the benefit of a discount like you would if you paid annually. But if you’re worried about missing monthly payments and can’t make one large lump-sum annual payment, a quarterly or semi-annual payment might be worth it.

Paying Life Insurance Premiums Monthly

hand holding a cell phone with the other pressing a button with a bank on the screen and money next to it — *Setting up autopay, or electronic fund transfer, from your savings or checking account will help you not miss a monthly payment.*

Paying your premiums monthly is the most common payment option for life insurance premiums. Depending on your income, it might be easier to fit smaller monthly premiums into your budget than it is to come up with one large annual lump sum. If you’re worried about missing a payment, you can use an autopay option, or electronic fund transfer, from your savings or checking account – in fact, many insurance companies will require that you do this.

When it comes to deciding how to pay your life insurance premiums, you have to take into consideration your income and monthly budget. If it is possible to pay your premium annually, this is your best option; however, if that’s not possible, monthly payments are your best option. In the end, the most important thing is that you never miss a payment, so you can prevent your life insurance policy from lapsing. And if you choose to make your payments annually and find out that you cannot keep up with it, you can always contact your insurance company and request a change to your payment schedule.

If you are looking for the best way to save money on your life insurance policy, work with a trained agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.

The Different Types Of Life Insurance Policies

Shopping for a life insurance policy can feel a little bit overwhelming, because there are so many different types – but the upside is that, with so many options, you’re sure to find a policy that fits your needs and budget. If you’re not sure where to even begin, we have listed multiple types of life insurance policies, how they are different from each other, and what you can expect from each, in order to make the process a little easier and less stressful for you.

Term Life Insurance

illustration of a person walking with 3 arrows in front of him — *Term life insurance is great because it offers you insurance for a duration of time, and there are different options to choose from.*

Term life insurance is one of the most affordable types of life insurance available, but these policies only cover you for a limited period of time (or term), generally anywhere between 5 and 30 years. This type of life insurance is best for people who want coverage for large expenses such as mortgage payments, college tuition, and other debts, usually those who are younger or middle-aged and want to be able to replace income in case of an unexpected death. One of the great things about term life is you can convert your policy to permanent life insurance before it expires without having to go through medical underwriting again.

There are different types of term life insurance policies to choose from including:

Level term life insurance: Your premium stays the same for the entire term
Decreasing term life insurance: Your death benefit decreases as the debt amount decreases
Annual renewable term life insurance: Allows you to renew your term policy for one year at the end of the initial term
Return of Premium life insurance: All premiums paid will be refunded if the policyowner outlives the policy term

Whole Life Insurance

Unlike term life, a whole life insurance policy lasts for the entire life of the policyholder, as long as you keep up with the premiums payments. With this type of policy, premiums will remain the same throughout the life of the policy and cannot be raised for any reason. One of the best things about this type of policy is that it has a cash value component, meaning your policy will build tax-deferred cash over time at a guaranteed rate of interest.

Whole life insurance is best for people who want a longer policy with a cash value that they can borrow from. Be aware that you must undergo a medical exam to qualify for a whole life policy, and that these policies are more expensive than term life policies.

Universal Life Insurance

coins in a row growing, with the last one with a branch on top of the stack — *Universal life insurance has a cash value that grows over time.*

Universal life is similar to whole life insurance in that it is also a type of permanent life insurance with a cash value that grows over time. This type of policy will not only provide you with lifetime coverage, but the premiums are flexible, meaning that you can modify your monthly premium when needed, as well as increase or decrease your death benefit to accommodate different life events.

Premiums for this type of life insurance policy are generally higher than those for term life, because of the above features. It is best for people who prefer affordable permanent life insurance and want the ability to accumulate cash over time. With this type of policy you will need to undergo a medical exam, as well.

Variable Life Insurance

Variable life is a type of universal life insurance that also builds up cash value over time, but instead of earning a fixed rate of interest determined by your insurance company, the interest it earns is based on the performance of an investment account. You can withdraw cash from the policy through policy loans that are considered tax-exempt, but you can lose your cash value if the market performs poorly. This type of life insurance is best for people who are looking for permanent life insurance that builds up cash that can be used as a tax-exempt income. Premiums are based on your medical history, so you will have to undergo a medical exam.

Simplified Issue Life Insurance

With this kind of life insurance policy, you do not have to undergo a medical exam, meaning policies will typically be more expensive because the insurer is taking a risk by insuring you without knowledge of your medical history. On the other hand, though, you don’t have to worry about being approved, and you will be able to get a policy in a matter of days as opposed to weeks or months. This type of policy is best for people who need coverage quickly, as well as for those who have pre-existing medical conditions and are afraid they might get denied any other type of coverage.

Guaranteed Issue Life Insurance

Like simplified issue life insurance, guaranteed issue life insurance is a whole life policy that will provide insurance without requiring a medical exam. As long as you are within the eligible age requirements, you can purchase one of these policies, but it will cost more than traditional life insurance because of the risk the insurer is taking, and will generally only provide $25,000 to $30,000 in coverage.

hourglass with blue sand in it dripping down — *Guaranteed life insurance has a 2 year waiting period before the death benefit is paid.*

There is one other caveat to this type of policy: there is a two-year waiting period before the full death benefit is payable to the beneficiary. This means that, if the policy owner dies within 2 years, the insurance company will only pay out 110% of premiums paid (as long as the insured dies from natural causes), instead of the agreed-upon death benefit. Guaranteed issue life is best for people who cannot qualify medically for traditional life insurance, but would like the opportunity to cover their loved ones when they are gone.

Final Expense Insurance

Final expense insurance is generally bought to cover funeral expenses, burial expenses, and any other medical debts you may have. There is no medical exam required, and it is relatively affordable, but the death benefits are usually capped at $35,000.

Joint Life Insurance

Joint life insurance will provide coverage for you and your spouse. You can choose from a universal or whole life policy, but the death benefit is usually not paid out until both policy holders have passed away. A lot of couples will choose this option because it is cheaper than purchasing two separate policies, and the underwriting and rates are based on the younger and healthier partner.

Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable life insurance options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance policy for you and your specific needs is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.