life insurance policies Archives - Page 4 of 8

Level Term Life Insurance: What It Is and How It Works

Term life insurance policies are a popular pick for many Americans, because they are generally the most affordable and convenient type of life insurance policy. Not only that, but there are multiple kinds of term life insurance policies to choose from, so most people will be able to find one that is right for them. Among these many options, level term life insurance is probably the most popular, because with one of these policies you can get a large amount of coverage for a very low premium. If you want to ensure that your loved ones are financially secure when you pass, level term life insurance might be one of the best options to consider.

What is Level Term Life Insurance?

a family of four walking on the beach smiling — *Level term life insurance is great affordable life insurance for families who have accumulated debt.*

Just like other types of term life insurance policies, level term life insurance is a pure life insurance product, meaning there is no cash value component. You purchase a policy for a specific term, or time period, typically 10 to 30 years, and if you pass away during that time, your family will receive the agreed-upon death benefit. The name “level term” simply refers to the fact that your premiums and death benefit will remain the same throughout the policy’s entire duration. This type of policy is a great choice for people who require a lot of coverage at very affordable rates, like young families who have accumulated a lot of debt.

How Does Level Term Life Insurance Work?

When you apply for level term life insurance, you will be asked about your current health and your health history; depending on the insurance company, you might need to undergo a medical exam to determine your eligibility and rates. The exam is always paid for by the insurance company and will include checking your height and weight and answering questions on a health questionnaire.

Once you’re approved, you can choose the length of your policy, and the death benefit you would like to leave your family when you are gone. Again, the death benefit will remain the same over the life of the policy, as will your premium payments.

When your policy reaches the end of its term, you will have the option to either renew your policy, buy a new one, or convert it into a permanent life insurance policy. If you choose to renew it, your rates will be based on your current age, which means your premium rates will be higher than they were when you purchased the policy. If you choose to convert your term policy into a permanent life insurance policy, you might not have to undergo another medical exam, but the rates will be more expensive for a permanent policy than for a term policy.

The Difference Between Level Term & Whole Life Insurance

illustration of a scale — *Level term life insurance and whole life are similar, except whole life is permanent and more expensive.*

Term life and whole life insurance policies are very different from each other; the only thing that they have in common is that once the policies are issued, the premiums and death benefit will not change for the life of the policy.

One of the main differences between the two is that whole life insurance is a type of permanent life insurance, meaning that the policy remains in effect for your whole life, as long as you pay your premiums. The other major difference? Whole life policies come with a cash value component that will earn interest over time. Once you accumulate enough cash value, you can use the cash value to buy additional coverage, or even to pay your premiums. It’s important to note, though, that whole life insurance costs anywhere from 5 to 15 times more than level term life insurance, which is why level term life insurance tends to be a much more popular choice.

How Much Does It Cost?

Just as with any other life insurance policy, premiums for a level term policy are based on a number of factors including your age, health, medical history, and other risk factors like your hobbies and driving record. That means the younger and healthier you are, the lower your rates will be; your rates will also be affected by the amount of life insurance you’re applying for and the length of the policy term you require. The best way to find the most affordable policy is to compare policies from different life insurance companies in your area.

Pros & Cons Of Level Term Life Insurance

Level term life insurance is very popular, and it has some great features, but it also has its drawbacks, so you have to weigh your options carefully. For example, if you want coverage as a replacement for your income in case of your passing, level term life insurance is ideal, but it wouldn’t be a great option if you wanted lifelong coverage. Consider the following pros and cons before purchasing a plan:

Pros

one hand putting money into another hand — *Level term life insurance is the most affordable life insurance plan that is easy to manage.*

Cheapest form of life insurance for most
Predictable financial protection
Premiums and death benefits remain the same throughout the policy term
Easy to manage and understand

Cons

It is not lifelong protection so when it expires you might need to buy a new, more expensive policy
No cash value component
Premiums are not refunded if you outlive the policy

If you are considering a level term life insurance policy, you should first consider how much coverage you will need, how long you need the policy for, 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.

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.

Key Tax Benefits of Your Life Insurance Policy

Most people don’t think that taxes and life insurance have anything to do with each other, but in reality, nothing could be further from the truth. One wrong move when purchasing your policy, and you and your beneficiaries could face large tax consequences, resulting in lost money. But on the other hand, if you play your cards right, you could actually see some tax advantages to your life insurance policy. For example, policies like whole or permanent life insurance can not only provide your family with financial security when you are gone, but can also help you avoid the taxes that come with stocks or retirement accounts. Find out just what tax benefits you could get from your life insurance policy.

Tax-Advantaged Growth

coins stacked in rows getting larger each time — *Not only do you get tax-deferred cash value with your whole life insurance policy, but there are other tax benefits.*

First things first: you should be aware that, if you have a whole life insurance policy, the cash value that comes with your policy will not be taxed while it grows. Your cash value is tax-deferred, meaning your money will grow more because it is not being eaten away by taxes each year.

Tax-Free Exchanges For Other Policies

Did you know that you have the option to change your life insurance policy if it no longer works for you? Not only that, but if you decide to switch plans or buy a new one, you will not have to face any tax consequences: you will be able to do what is known as a tax-free 1035 transfer on your cash value, which is similar to rolling over a 401k.

Accelerated Death Benefits

If you are diagnosed with a terminal illness, or have to surrender your life insurance policy early, notify your life insurance company of your condition: if you meet the requirements of your policy, you could receive tax-free accelerated death benefits.

Early Distributions Are Tax-Free, Depending On Your “Basis”

If you have a whole or permanent life insurance policy, you will have a cash value that continues to grow tax-free over time, and if you decide to take an early distribution, or withdrawal, from your cash value, you will only owe taxes on any amount that goes over your what is known as you basis, or the amount you have paid in premiums.

So, let’s say you have a policy for which you have already paid around $10,000 in premiums, and your cash value is around $40,000. If you withdraw $5,000, you will not pay any taxes on your withdrawal, because it does not exceed the $10,000 premiums-paid basis. But if you choose to take out $30,000 from your cash value, you will owe taxes on the $20,000 that exceeds your basis.

Tax-Free Loans

Sometimes the unexpected happens, and you could need to borrow a large sum of money – if you do, you will be able to borrow from your life insurance policy, tax-free! You have the option to borrow an amount that exceeds the amount you have paid in premiums without facing any tax consequences by taking out a loan up to the amount you have in cash value. Just be aware that your insurance company will charge you interest until you pay the loan back, and each insurance company has its own rates; you will also have the choice to not repay the loan and have it deducted from your death benefit, or pay your loan back to keep your death benefits larger for your family. It is important to note, though, that if your policy lapses, you could owe taxes on the loan you have taken out.

Looking For A Policy?

Life insurance is a great way to protect your family and continue to help them financially when you are gone. They will need your help more than ever with their expenses after you pass, and the last thing you want them to worry about is money while they are grieving. There are many great affordable options to choose from that will provide tax benefits for your family, for a low monthly premium. 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.

Life Insurance for HIV Positive Applicants

While some of the focus has been taken off of HIV these days, the sad reality is there are still many people contracting and living with this virus in the U.S.: according to HIV.gov, about 1.2 million people in the U.S. have HIV. Fortunately, we have made great strides in controlling the virus with medication, and those living with HIV can now go on to live long and normal lives, which brings up the question of life insurance. Will life insurance cover people who are HIV positive?

risk gage with green, orange, and red lines — *Life insurers will provide a policy to people who are HIV positive, but they will first assess your risk.*

HIV & Life Insurance

Because life insurance companies offer policies based on how risky it is to insure you, many life insurance companies will not insure you if you are living with HIV. With that being said, there are life insurance companies who will consider applicants who are HIV positive, and will offer traditional life insurance policies like term life, whole life, and even universal life insurance, with some limitations.

For example, insurers will generally not consider an applicant who was diagnosed less than a year before applying for coverage, and there are often age limits on applicants. In addition, you will have to go through the underwriting process, which will determine your rates; living with an illness like HIV will usually mean that your premiums will be higher than other people’s.

What To Expect During The Underwriting Process

When applying for life insurance, you have to disclose any health issues, including if you are HIV positive. Insurance companies will require that you provide information regarding:

The date of your diagnosis
Current CD4 count and viral load
Medications you have been prescribed and the dosage of each
Whether you are currently symptomatic or whether you have ever been symptomatic

In addition, during the underwriting process, life insurance companies will need to know what stage of HIV you have:

Acute HIV, which is considered the earliest stage of the virus, extending from two to four weeks from the initial infection.
Chronic HIV, meaning that your number of CD4 cells is decreasing, leading to damage to the immune system.
AIDS, which is the most advanced stage of HIV.

Insurers will also ask your age, because most insurance companies that will consider an HIV positive applicant will require that the applicant be no older than 50 years old. They will want to know your overall health, including anything that could raise a red flag for them, as well as if you are following a treatment plan prescribed by a doctor, including managing the virus by taking prescribed medications and regularly having your CD4 levels checked.

Once you have disclosed all of the above information, you might have to wait a few weeks to a few months while the insurance company sifts through your medical records and the statements that they will request from your doctor.

Life Insurance Options For HIV Positive Applicants

If you are unable to qualify for a traditional life insurance policy, you do have other options, most of which you can be approved for in a matter of days. These policies include:

Final Expense Insurance

This type of insurance is usually bought to cover funeral and burial expenses, as well as any medical debts. A final expense policy is ideal for you if you are living with a chronic health condition like HIV, because you are guaranteed approval.

Simplified Issue Life Insurance

This type of policy will not require a medical exam, although there will be some medical questions on the application. Premiums are usually higher for simplified issue policies than for traditional term life insurance because there is no medical exam, and those purchasing these policies might be riskier to insure.

Guaranteed Issue Life Insurance

light bulb standing in front of 3 white doors with blue question marks on them — *You have many options for life insurance, and if you are denied, then you can opt for a no medical exam plan.*

This type of life insurance policy does not consider your health or health history during the underwriting process, which means anyone is eligible for it. The two downsides of guaranteed issue, though, are that your insurance company will cap the death benefit at $35,000, and your premiums will be higher than with traditional term life insurance, because you will be approved no matter how much of a risk you are to insure.

Term Life Insurance

If you are following a treatment plan, some life insurance companies will approve you for term life insurance.

Need Help?

Just because you are living with HIV does not mean you won’t be able to provide for your family when you are gone. Finding a life insurance plan that is affordable and will provide enough coverage for your family, though, means that you will have to do a lot of research and compare different insurance companies and their plans: some companies have strict underwriting guidelines, while others have looser guidelines, and they will all price plans differently. 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.

Endowment Life Insurance Policy Explained

Are you looking for a life insurance policy that offers you a little something extra? If so, you might be interested in endowment life insurance, which is a specialized insurance product that doubles as a life insurance policy and an investment or a savings account. This type of policy is often misunderstood and therefore overlooked, but learning about it can help you determine whether it’s worth the investment for your family.

What Is Endowment Life Insurance?

Endowment life insurance insures your life like a traditional life insurance policy, but also offers a maturity benefit at the end of the policy term, like a savings account. With this type of policy, you will have an account that you can put any amount of money you like into; part of that money will be used to pay your premium, and the rest will be put into an investment fund. After the policy has matured for a specified amount of time, the money (called an endowment) will be paid to you, or if you pass away before the policy matures, your beneficiaries will receive the payout as your death benefit.

There are a few restrictions to this type of policy: for example, you can only receive benefits after you have paid premiums for at least two years. In addition, if you cancel your policy, you will receive a surrender value that is less than the total amount of premiums you’ve paid into the policy.

Benefits of Endowment Life Insurance

Endowment life insurance is a great choice for many families because this type of policy is two products for the price of one: you get a savings account that you can access once the policy matures, and a life insurance policy. The longer you let your plan mature, the more money you accumulate to use in the future; you then have the option to use that money however you choose: you can spend it, reinvest it, or use it for retirement.

The benefits of this type of policy include:

Maturity benefit– The amount you receive at the end of the term when your policy matures.
Death benefit– The money your family/beneficiaries get after you pass.
Tax benefits- The premiums you pay can reduce your taxable income.

Is Endowment Life Insurance Right For You?

Endowment life insurance policies are beneficial to those who would like the option of money that they can access before they pass away. This kind of policy will work for you if you:

Are looking for a low-risk plan with the dual benefits of insurance and investment.
Want a long-term investment that gives you a lump sum at maturity.
Want accessible money for your children’s college tuition, retirement, or long-term care.

Endowment life insurance is not the most well-known type of life insurance, but you should know that it is an option – and if you are interested in this option, you can find a great plan that meets your needs. 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.

Replacing A Life Insurance Policy

In some cases, when you purchase a life insurance policy, you might be set for life. But, in other instances, you might have a change of circumstances or obligations in your life that require you to replace your life insurance policy. Replacing a life insurance policy requires some thought and knowledge before moving forward; there are some important factors to take into consideration before replacing a policy, so you can get the most value.

Reasons To Replace A Policy

Sometimes people buy a life insurance policy and then never really revisit it after the initial purchase, but that could be a mistake: as you age, your financial obligations will change and it’s important that you keep up with your family’s financial needs. Take a good look at your current policy – you will need to replace your policy if:

The coverage is insufficient or is too much
You are retiring
You have had a career change
You have found a cheaper policy
You have remarried
You want a different type of life insurance policy
You have quit smoking or improved your health and can get better rates
Your policy is about to expire

Before Replacing Your Policy…

You should not cancel your old policy until you have a new one in place, because you never know what will happen. In addition, before you cancel your policy, there are some factors to consider, including:

Surrender Fees

If you have a permanent life insurance policy, such as whole life, universal life, or variable life, that you want to replace, the cash value that you have been accruing will be subject to a surrender fee, or a fee that is charged when you surrender your policy within a certain period of time. Any amount of cash value accrued over a certain amount, such as 10% of the account value, will be subject to the surrender fee; the fees will be highest during the beginning of the surrender period, and are then reduced each year until they reach 0. If you are still within the surrender period and are looking to replace your policy, be ready to pay the fee to transfer your cash value from one policy to another.

Churning

Finding a reliable life insurance agent is very important when you are looking to purchase a new policy, change policies, or replace a policy, since there are some unscrupulous agents who engage in the practice of “churning,” or trying to persuade you to replace your policy so they can earn a new commission. It doesn’t happen often, but it is something to be aware of, so make sure that you have a good agent on hand to help guide you. They might be able to help you add riders to your policy for extra coverage, or find a way to add another policy that will benefit you more than replacing your current one.

Your Waiting Period Starts All Over

hourglass filled with sand on the top sprinkling down — *When you replace your policy, your 2 year waiting period starts all over again.*

Life insurance contracts generally have a waiting period, or contestability period, of 2 years. If you pass away during the contestability period, your insurance company can investigate whether you gave accurate information on your life insurance application and deny the claim if you lied. When you replace a policy, your waiting period will start all over again, including the suicide exclusion (life insurance covers suicidal death only after an initial 2-year exclusion period).

You Might Need A Medical Exam

Depending on the type of policy you have, you most likely underwent a medical exam to help determine your premium rates. If you want to replace your current life insurance policy, you will need to have a new medical exam, and if you have developed any medical conditions since purchasing your current policy, you could face some challenges when trying to replace it. You will find that you’re probably not qualified for some life insurance policies, or that a new one will cost you more money.

When To Consider Renewal & Conversion Options

If you have a term life insurance policy, you will sometimes have the option to convert it into a permanent life insurance policy. Know that if you are diagnosed with a serious illness, replacing your term life insurance policy will not be possible, so it is in your best interest to try and renew or convert your current plan.

It is important to review your life insurance policy from time to time, especially if you have experienced any major life events. If you do decide to replace your current life insurance policy, you should always take the time to compare plans from different insurance companies, because each carrier will offer different premiums, coverage options, and pricing. 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.