How To Buy Life Insurance

Life Insurance Buying Guide

Many people decide they need a life insurance policy, but really don't understand the different types of life insurance. Actually, I've talked to many people who already had life insurance, and they didn't even know what they had! It is important to understand what you are buying before you sign a contract, and also to understand what you need.

If you look at the Life Insurance Guide, you will find three basic types of life insurance. Term insurance is probably the most popular, especially with people who are in their earning and child raising years. Since you buy the insurance for a specific number of years (term), it is the cheapest type of insurance, and you can get a larger death benefit for your money. Simple term life insurance does not accrue any cash value though, so if you outlife your life insurance policy (and we hope you do), you will not have any value left in your policy.

A popular rider to life insurance is Return of Premium (ROP) Life Insurance. This rider will give you back the value of all of your premiums if you keep the policy until the term ends, and of course, if you survive the policy. This option costs a little more, but may be a valuable way to get a nice check back for outliving your life insurance policy.

On the other hand, whole life insurance is permanant insurance, so it will cover the insurance until they die, as long as premiums are paid. It will also grow a cash value, though rates are probably not competitive with other investments. Whole life insurance is more expensive than term.

A third type of insurance is called Universal Life Insurance. It is also a permanant life insurance policy, does have a cash value, and may pay a more competitive return rate than whole life. If you are considering Universal Life Insurance as an investment, however, be aware that a substantial portion of your monthly payment will go towards the cost of insurance.

Zero Premium Life Insurance - Hot or Scam?

There's a hot new product being promoted to life insurance agents, called zero premium life! Trusted MD has posted a cautionary article in the "looks to good to be true" category. The idea behind this product is that a group of investors will pay the insurance premium for senior between the ages of 65 and 85. The face value of the policy would be $50,000, and when the senior dies, their beneficiaries would get $15,000. The investor, who paid the premium, would collect $35,000.

Life Insurance Calculators.

This sounds like a win-win situations for seniors, especially those on lower incomes. They have enough life insurance to pay for final expenses like debt settlement and funerals, and they don't have to burden their kids with problems after they pass away.

However, the big problem with this whole plan is a central concept to legally selling life insurance, and that is INSURABLE INTEREST. This means that the beneficiary of a life insurance policy must have something to lose if the insured passes away. A business partner might lose an essential person in their company, a child or spouse may have to settle debts and plan a funeral, etc. Typically, beneficiaries to life insurance policies are spouses, siblings, children, or business partners of the insured. These types of relationships are usually considered legitimate. And in fact, the relationship of each beneficiary must be specified on every life insurance application.

Now, consider a life insurance policy where the beneficiary does not have an insurable interest. Wouldn't this give that beneficiary an incentive to hasten the insured's passing of the mortal coil. They have nothing to lose if the insured dies, and everything to gain.

Now, I'm not saying that the investors behind zero premium life insurance are planning mass murder. I'm just saying that the test of Insurable Interest has a Very GOOD REASON for existing. Anyway, so far it doesn't look like any state insurance commmissions have actually approved zero premium life. Find State Insurance Departments for The US.

If you are a consumer and have been approached about a product like this, do not sign anything until you check with your state insurance department! If you are an agent, you should know enough to do this anyway - but insurance agents are human too.

Look for approved, affordable Life Insurance Online at the Life Insurance Calculator Page.

Zero Premium Life ?????

InsureBlog posted a warning about a new product called zero premium life that is being promoted to agents right now, mostly for sale to seniors.

On the surface it sounds great! Here is the scenario. A company will pay for the premiums for a life insurance policy with a face value of $50,000. The applicant for the life insurance policy (i.e. a senior citizen) will have coverage for $15,000 upon death. This is a good amount to cover funeral expenses, settle debts, etc. The company that pays the premiums will get $35,000 in return for paying the premium.

The only problem here is something called insurable interest. Any new life insurance agent learns that a beneficiary of a life insurance policy must have an insurance interest. In other words, you can leave your life insurance to your wife, kids, business parter, etc....somebody who will be affected by your death. You cannot leave your life insurance to a complete stranger on the street. Imagine if you could!

I would imagine the number of 'accidents' or murders would increase. Now I'm not saying that zero premium life fronts a bunch of murderers or anything, but I'm am saying that it looks illegal in the US!

Now go find out how much life insurance costs. It's not that expensive. Pay for it, and know that it's real!

ROP Life and Mortgage Life Insurance - What Is It????

Lots of people get approached about ROP or Return Of Premium Riders on their life insurance. This rider will refund your premiums if you survive the life insurance policy, which makes it sort of nice. If you die, your heirs get the face value of the policy. If you live (which is what we all want), you get your premiums back in one nice chunk. If you have a 20 or 30 year term policy, it may not seem like much when you write a check every month, but after decades pass, you can get tens of thousands of dollars back!

So how much can you get back? I'm glad you asked. I have a Return of Premium Life Insurance Calculator here.

I also have a neat little Life Insurance Guide Here!

Buying Life Insurance When You Are HIV +

I felt the need to comment on a question I saw on another website, because I thought the answer was incomplete. A visitor disclosed that she was HIV positive, and wondered if it would be possible to purchase life insurance. Even though this question related to HIV positive or AIDS, it could be applied to other serious diseases like cancer.

The 'expert' replied that it would be impossible unless the applicant could be included on a large group life insurance plan. Now a group life insurance plan may be a good choice, but it is not the only solution.

Guaranteed Issue Plans are quite popular, and they can be written on HIV Positive individuals. They usually come with lower face amount, but they work like this: If an applicant does not choose to answer the health questions: they just say NO. Then the policy switches to one that pays out on the face value after 2 or 3 years of survival. If the applicant passes away before the 2 or 3 years then the insurance usually refunds the premiums paid, plus some interest rate like five or ten percent.

All In All this type of life insurance is not a bad deal, and gives the applicant a no-lose situation. If they survive the set term of 2 or 3 years, they will have a full life insurance policy. If they pass away before the term, premiums are refunded with interest.

Life Insurance Calculator to Determine Your Needs and Rates!

How To Get Cheaper Car Insurance

The Car Insurance Blog gives great tips on reducing car insurance rates by using online tools to compare local plans. As you know, car insurance rates vary by zip code, driving history, age, and even your credit report.

However, different national companies will value these factors differently, so it is important to get quotes that are individual for you, and the drivers in your family. It's like assurance or essurance - that you are getting the cheapest rates on auto insurance.

However, when you are looking for cheap rates make sure that you are also getting the coverage you need. Many people save $15 a month by terminating their comprehensive coverage - and only keeping liability insurance - however, if you are at fault in a wreck - you won't have any help repairing your car - so is that worth it????

You can also look for lo cost commercial car insurance at the businessinsurancestore.com - If you have a small business your personal policy may not cover you for business use. That's a pretty big gample.

Smoker Supported Health Plan

I picked this up on the InsureBlog. Apparently smokers will subsidize (via taxes) a state supported health insurance plan for lower income residents of Indiana.

It seems like a step in the right direction. Money will be available for preventative car and medical treatments. The income levels of about 20k for individuals and 40k for families are fairly low, considering those with pre-existing conditions are usually at the most risk for being uninsured. A great program would take that into consideration, but it's a step.... a step.....

Does Your Business Have Group Health Insurance

Many businesses are doing without Group Health Insurance, or they are scaling back their benefits. As a small business owner, I understand the expense of providing group health insurance. I also know that it is one benefit that quality employees desire, and it helps to attract and keep good people!

The Business Insurance Store has an article on reasons to have a group health insurance policy, and also ways to keep it more affordable.

If you need to shop for group health insurance, here's an easy way to get quotes online!