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!

Compare Life Insurance - Term Life, Mortgage Life, Whole Life, Universal Life

Quick Comparison of Life Insurance

Term Life Insurance

- Generally, term life insurance is the most affordable life insurance option because it is purchased for a specified term of years. It may the best choice for a growing family because it will be in effect while it is needed the most, and because it is usually the cheapest!

Mortgage Life insurance is a popular term life insurance product, and it is advertised to be "easy issue" soon after a home is purchased, and is designed to cover the loan amount.

Term Life can have optional riders attached to it to provide for disability, critical illness, etc., but of course, these riders will drive up the cost. Some term life has a Return Of Premium Option (ROP). Normally, term life insurance does not build up any cash value, which is one of the reasons it is usually the most affordable option. The Return of Premium rider will return all premiums paid after a term policy expires, but of course, it will cost you more in premium dollar.

Whole Life Insurance

Whole Life Insurance is the original insurance, and it is meant to be permanant insurance, though some policies can be paid up over a span of ten or twenty years. Nowadays, many people buy a smaller amount of whole life insurance to make sure they will give their heirs money for final expenses, debt settlements, etc. It is also used to transfer wealth.

Universal Life Insurance

Universal Life insurance is another form of permanant life insurance that usually pays a more competitive return on the excess premium paid into it. It may be considered as a financial or savings vehicle, as well as an insurance policy.

Shopping For Life Insurance

If you are shopping for life insurance, you have many online life insurance tools available

GTL DIRECT - Quick Quote, Buy, and Print Online From The Source - You can purchase GTL Online, and your policy will have rates that never go up, benefits that never go down, and a quick approval process, usually without needed in exam or anything. This is for very affordable, basic term life, which may be all you need!

If you are still not sure what you need, I suggest using InsureME Life Quotes from www.247QuoteUS as an online tool. You can get competitive quotes from many different companies, and use their service to find a local life insurance agent to assist you.