Term Life Insurance: Why It’s the Most Preferred Choice
Posted by admin | Posted in Life Insurance | Posted on 28-07-2009
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Life insurance can be of two types-whole life insurance and term life insurance. As the name suggests, whole life insurance covers the whole life, as long as the policy is held and is beneficial only on the demise of the policy holder. Obviously, the benefits of whole life policy depend upon the value of the policy at the time of death of the policy holder. A cash value on the tax defer basis is also accumulated. The dividends are paid throughout the life of the policy.
On the other hand, term life insurance, is evidently purchased for a certain period or term. If the death occurs within that period, an agreed upon amount to the beneficiaries is paid. The payment is not paid if the premiums are not paid or if the death occurs after the expiration of the term. Also, term life insurance has no cash value.
The premiums for term life insurance are low in the beginning of the policy and increase over time. It is not feasible to borrow against the cash value since cash value does not exist in term life insurance, unlike in whole term life insurance. The coverage for a term life insurance varies from five to thirty years and the longer the term, the more expensive the policy will be.
Term life insurance quotes can be obtained from multiple agents and there are lead generating websites that help in getting the quotes. Term life insurance quotes can be obtained instantaneously through websites from companies that vie with each other and alleviate the need to approach the agents for different quotes. Monthly premiums that suit the budget can be obtained for a term life insurance policy and it offers the feasibility of switching over to whole life insurance policy after a period of time.
Universal life insurance that covers everything can also be accomplished. Some of the companies may issue a policy without any medical examination depending upon the answers given to questions relating to the age of the policy holder, occupation and health and evidently, younger age gets a better quote.
Normally, term life insurance is cheaper than whole life insurance and more often than not, the difference between the two values in permanent life insurance and term life insurance is utilized to invest and make a profit. Hence, term life insurance is considered to be profitable and cheaper.
Term life insurance can be bought in increments of ten year term and twenty year term and the premium paid goes directly towards paying for insurance and nothing else and is rightly known as pure life insurance. The objective of term life insurance is to reduce financial risk for a fixed period and is a temporary life insurance.
Watch the video related to life insurance
Life Insurance terms and definitions.
Help answer the question about life insurance
What happens to the Life insurance policy if the petitioner gets a death sentences?I'm just curious about the following scenario
Lets say someone has a life insurance and get a death sentences.
Would the life insurance policy be automatically void?
There are two types of Insurance; Permanent and Term.
Permanent Polcies remain at the same monthly cost for the rest of your life.
Term policies remain fixed for a set number of years. After the set number of years the policy either terminates or can be rewriten for the same length of time, but you'll now be evaluated at your new age, not the age you are now.
Permanent Policies are similiar to buying a home. The policy builds Cash value and could potential increase your death benefit. You can take a loan out against your own cash value or should you cancel the policy at a later time, you will get the cash value paid out to you at that time.
Term policies are like renting. After the set term (5, 10, 20, 30 years) each party walks away. You don't get any money back, but you'll have paid less over the course of the 10 years.
If you were to get a 20 yr term policy now, at age 50 your policy would end (unless you had already died). You could then get another policy, but they'd rate you as a 50 year old, not a 30 year old. and at each of these 20 year renewals, you'll have to go through medical screening again.
If you were to get Permanent Policy now, you'll have a higher premium now, but at age 50 you'll still be paying the same amount as you are now. At age 70 you'll still be paying the same amount as you are now. At age 90? Same amount.
To figure out how much coverage you'll need, here's a handy tool: L.I.F.E.
L: Liabilities: mortgage, car note, student loans, credit cards
I: Income replacement: 5 to 10 times your annual income (though in your case, each of you have another 30-35 years working life in you, you might want more)
F: Final Expenses: Typically $10-25 k
E: Education: Education for your spouse, should they need to change careers to maintain their standard of living after you pass and/or college tuition for any childre you may leave behind.
So, with a $200k mortgage, $25k car loan, and $15k Student Loan, your "L" is $240k.
If you're making $50k annually, you'll need $500k for "I."
Let's call "F" at $15k
"E"? Well, 2 kids at $20k per year for 4 years each translate to $160k.
This mean you'll need $915,000 worth of Life Insurance.
I have my Life with State Farm. It's also giving me a discount on my car insurance.
Life insurance is insurance on your life. If you die the insurance company pays money to your beneficiaries. they could be family, friends, the company you work for even a charitable organization. as long as there is an insurable interest.
If you are dead the money from the insurance can pay for your funeral, your debts, mortgage, medical bills, car payments, children's college education, your families survival if you are no longer here to provide for them, as well as pay for inheritance taxes, probate taxes (life insurance is tax free)
if you are single, no family, no responsibilities and don't mind being buried by the state then you probably don't need life insurance. Try this site to find the best life insurance
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Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
Hope this help,
You can buy a separate life insurance policy on your own, in addition to requesting life insurance from your employer, if they offer it.
To get your own life insurance policy you can contact a local life insurance agent, or visit a life insurance quote service to request free life insurance quote comparisons online from several insurers. You can learn about term life insurance at http://www.term-life-online.com
Term life insurance offers you temporary life insurance for 1-30 years. It costs much less than permanent life insurance, because it is temporary, and builds no cash value within the policy.
Many young families choose 10, 20, or 30 year level term life insurance because it offers the most coverage at the lowest cost.
Level term life insurance provides coverage and premiums that remain the same each year for up to 30 years.
If you want, you can request life insurance from your employer, but you may have to pay for it, and if you leave your company, or get laid off, the group term life insurance plan ends. You may be able to convert it to a permanent life insurance plan, but it would cost you a lot more. And, if you waited until later to get your own life insurance policy, you may not be able to qualify for coverage if you develop a health condition.
You may want to consider a term life insurance policy for you and your husband. Imagine what it would cost to replace everything you do for your family, and will be doing for your growing family once you have a child.
Bets of luck to you and your husband. And, Congratulations!!!
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Best Wishes,
Agencies make their money from First Year Commissions (FYC) on new policies, and renewal commissions and service fees on policies which have been on the books beyond the first year.
If an agent works for an established agency, he/she will get paid a percentage of the total FYC. The total FYC could be anywhere between 40%-120%, depending on the insurance companies the agency represents, and what type of policy is being sold. Health policies pay a lot less than life insurance policies.
Of the total FYC, the appointed sub-agent would receive anywhere between 50% and 90%, depending on the sub-agents contract with the agency. Most agencies will pay advance commission on 75% of the sub-agent's FYC.
Example:
Let's say that the sub-agent writes a life insurance policy, and the annualized premium is $1200. ($100.00 per month). Let's assume that the agency's FYC is 100%, and the sub-agent's FTC is 80%. The agency's FYC would be $1200, and it's advance would be $900 (75%). The sub's FYC would be $960, and the advance would be $720 (75%). The balance would be paid as earned on the final 3 last payments of the first policy year premium. If the total ANNUAL premium was paid initially with the application for the same policy, it would be a little less than $1200, around $1162 give or take. ALL FYC would be advanced in this case.
Once the policy is in force for 12 months, renewals and/or service fees will be paid, 2-20%, depending on the carrier, and the sub-agent would get his/her percentage of that. (I had a company that paid $100% FYC and 20% renewals)
Some companies pay bonuses, based on your total production and persistency rate, the percentage of business that stays on the books.
If you work for an insurance company as an employee/captive agent, your commission rate will be somewhat less, but your benefits will make up the difference, such as company-paid retirement, 401K, health and life insurance. In this case, your commissions would be put in a commission pool, and you would draw from that on a weekly or bi-weekly basis. When you initially start selling for one of these companies, you are on a guaranteed salary for a specified period of time, while you build your commission pool. Some of these types of companies will guarantee your salary, (based on production quotas), for up to three years, on a depreciating basis.
After the first year, you start earning renewals/service fees. Let's say that over time, you build up your book of business to $500,000 of life insurance annualized premium, and your renewals are 3%. Your base pay would be $15,000, plus your FYC and bonuses.
Some of the captive companies will offer you an established book of business, with renewals and service fees. It's possible to be offered an agency which is paying $300-$500 or more per week, which would either go into your commission pool, or be paid as part of your initial guaranteed salary. If you are assigned to an existing book of business, you have all those policyholders as potential prospects for new business, along with their family members and other people they know.
Here are some names of companies that have guaranteed starting salaries: (Not in any particular order)
New York Life, Met Life, Monumental Life, American General, American National, Western-Southern Life, Prudential, Liberty Life.
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Allstate is by far the best. They are ranked in the top 50 employers book.
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Hope this help,
Basically insurance only works when a large groups of people own that particular insurance. Everyone pays to protect their income, but not everyone is going to use their insurance. So that's how basically insurance companies stay in business, unless something extraordinary has happen in this country where there's lots of people are filing for claims and the insurance company can't pay them all (such as the Hurricane Katrina event).
What is whole life insurance?
1) Its a level term insurance to a specified age (usually to age 95, 98 or 100) plus cash value.
2) It is very expensive when compared to term insurance
3) Cash value grows at a very low rate of return. In the first 10 years, you see a negative return on your money. But long term average is anywhere between 1-4%, depending on the company.
4) If you want to take money out, you have to borrow it and pay loan interest of 5-8%.
5) If you die someday, the insurance company pay the face amount of the policy (minus loans and missed premiums) to the beneficiary, but they keep all the cash value.
6) If you do get to live by the end of policy date (when you around age 100), the insurance company pay you the cash value, but you lose the insurance.
There's only one reason why that agent is trying to sell you whole life insurance: MONEY!
Next thing you'll know, that agent would try to sell you universal life insurance, a product that is more horrible than whole life, but it pays out more commissions.
Go with your instinct and find a different company who would listen to your needs. Try this site
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Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.