Category Archives: Life Insurance
If you are young and healthy, you may not worry too much about visiting a doctor. As such, you may feel that signing up for health insurance is a waste of time and money. While you may not necessarily feel that signing up for health insurance is needed right away after reading this piece, it may give you a slightly different outlook on things. There are many advantages of signing up for health insurance and some may not be obvious.
You Will Save on Taxes
It may not be the most popular measure implemented in the Affordable Care Act, but the tax penalty has certainly been a motivator for many people to sign up. The tax penalty for not signing up for health insurance will be $695 on 2016 taxes per individual. With the elections looming, there is no telling whether the penalty will be in effect next year, but if it is it will probably be even more expensive. You can make your tax filing a little easier and put some money back in your pocket by signing up for insurance.
Preventative Care Is Covered
Preventative care like annual check-ups, womens’ wellness exams, and some types of screenings for medical conditions are covered by health insurance. Many of these are paid for outside of the deductible, so it is important to make sure you understand how a policy works before signing up for it. By going for these simple tests and visits, you can establish a relationship with a doctor and stay on top of your health.
You Have an Emergency Plan
If you break your arm, become very ill, or develop a chronic condition, health insurance can help to mitigate the expenses associated with these issues in a real way. You may save thousands of dollars paying for treatments. You may also expedite your recovery so that you are able to return to work and your favorite activities faster. In some cases, you may prevent the issue from worsening and causing lasting damage in your life.
You Help Society to Stay Healthier
When people that are generally healthy pay into the insurance system, it helps to provide a cushion for those that have medical conditions and rely more heavily on insurance to help with regular expenses. By paying into this system when young and healthy, you help to keep society healthier overall and work to ensure that the same cushion will be available for you when you need it. In this way, signing up for health insurance can actually help to improve society in small ways.
Call your local health insurance agency today to find out about signing up for insurance. Open enrollment is just around the corner, or you may even be eligible for a special enrollment period.
What is Life Insurance?
Life insurance is a legal contract between two parties, namely the insurance company, and the policyholder. It ensures that the beneficiary receives financial support in the event of the insured’s death or accident. The terms of the insurance policy state that the policyholder agrees to pay the specified premium at regular intervals. Life insurance depends on a host of factors, including the age, income, expenses, outstanding loans, number of dependents, health, etc. It is mainly of four different types, universal life insurance, term life insurance, whole life insurance, and endowment life insurance. Described in detail below are the advantages life insurance offers.
Benefits of Life Insurance
-Life insurance provides monetary coverage to the family members in the event of the policyholder’s demise.
-It acts as an excellent investment, protecting your assets. Life insurance provides custom-made investment options that are suited to one’s changing financial needs at different ages. Planning for your children’s higher education, marriage, a home, and even retirement options can all be taken care of by investing in life insurance. For a young couple with kids, life insurance can provide education as well as wealth insurance. Whereas for an elderly couple, the same can offer retirement and mortgage plans. Whatever money you saved when you earned, now serves as a source of income when you retire.
-After the demise of the insured, life insurance can be a constant source of income for the bereaved family members, making it easier to fund children’s education and pay bills on time. If the policyholder has incurred any debt during his lifetime, a policy cover will help his spouse/family to repay the debt.
-Funeral expenditure nowadays is costly. Paying for the services, at a time when you are still numb and reeling from the sudden loss of a loved one can be hard, to say the least. In such cases, a life insurance policy can come to your aid, by taking care of the funeral expenses.
-You can add riders or health insurance plan to your life insurance policy, and have guaranteed protection against the increasing hospitalization costs and critical ailments.
-When you apply for a policy, you need to pay the stipulated premium at regular intervals. This practice gets you into the habit of saving a certain amount of money for long-term use, which is essential to satisfy your financial needs.
-Life insurance is non-taxable, and hence makes for a great source of savings.
-In case of a cash crunch, when the policyholder needs a loan, he can avail of one through the insurance policy, without having to worry about the hassles of repayment. The insurance carrier deducts the loan amount from the life insurance policy upon maturity.
-If the policyholder owns a piece of land, he has to pay estate taxes. If he intends to transfer the possession to his heir, a life insurance policy can help by offering the required funds.
Thus, you have seen how essential it is nowadays to opt for a life insurance policy. If you haven’t yet applied for one, do it without delay. Do it at a time when you are young and healthy, with no major ailments. The sooner you apply, the lesser the premium amount you have to shell out. Compare insurance quotes from several companies. This way you can make a wise and informed decision based on what’s best for you and your family’s requirements. In case anything happens to the breadwinner of the family, life insurance can come instantly to rescue. It can be your ally in the worst of times, working like a protective blanket, offering monetary assistance and peace of mind.
-It is possible to pay the premiums and obtain the required coverage
-The savings in the life insurance policy won’t be required for minimum ten years
-The policy is affordable and has good rates
-There is a need of more tax deferred savings
Some of the major advantages are described below:
1 – Constant or Fixed Premium
In term life insurance, the premium increases on renewal. In case of whole life insurance, the premium remains constant. It does not increase with time. Also, if dividends are used, the premiums that have to be paid are minimized.
2 – Death Benefit
The death benefit does not decrease in case of whole life insurance. When demise occurs, this death benefit is not subjected to federal income taxes. As per the requirement, the death benefit can be accepted as a lump sum amount or a monthly income.
3 – Cash Value
In contrast with other life insurance policies, the whole life insurance policy accrues usable cash. As the policy holder pays premiums, this cash goes on increasing. In case the policy is surrendered, the policy holder gets the cash values. This cash value is tax deferred.
4 – Dividends
A participating whole life insurance policy has a feature of dividends. These are received as cash. They can be used to minimize premiums, to generate interest or purchase paid up additions.
-The policy guarantees a high degree of safety.
-This insurance provides coverage for a lifetime.
-It generates tax deferred cash.
-Some withdrawals and loans are tax favored.
-A non-participating insurance has relatively less out-of-pocket premium payments.
-In participating insurance, the dividend can be used to purchase paid-up additional insurance, and this results in increasing the face value of the coverage.
-In limited payment insurance, the premiums are paid for a limited number of years, while the coverage is for the entire lifetime.
-In single premium insurance, there is only one large premium, and hence, the policy has an immediate cash value.
-In indeterminate premium insurance, the premium is adjustable, but never more than the maximum value stated in the policy.
-The policy holder can borrow a loan using the cash value as collateral.
Types of Whole Life Insurance
As is obvious from the above information that these benefits can be gained through different types of whole life insurance. Now, let us take a look at the major types, and understand their features in brief.
In non-participating whole life insurance, the premium and face value remains constant for the insured’s entire life. The costs of this policy are fixed, but it does not pay any dividends.
A participating whole life insurance has a feature of paying dividends. These dividends are a consequence of favorable mortality, excess investment earnings and expense savings. However, it is not warranted that these dividends would be paid to the policy holder. They may be used for a variety of purposes.
The above-mentioned categories have a variety of options which are mentioned below:
-Level premium whole life insurance
-Limited payment whole life insurance
-Single premium whole life insurance
-Indeterminate premium whole life insurance
The final decision to opt for insurance should depend on what sort of coverage you want and your current physical and fiscal health.
Many of us believe that people who are healthy and fit, pay the least premium. However, this is not always true, because our current state of health or fitness is not the sole deciding factor. So, which factors decide the premium?
10 Factors that Influence your Life Insurance Premium
In this article, we shall focus on the many factors that determine your premium amount, so that you don’t end up paying a higher premium than what you should be paying. The bottom line is that the higher the risk of the applicant’s death, as assessed by the insurance company, the higher the premium he/she is asked to pay.
1. Your Age
The biggest deciding factor when it comes to determining your premium amount is your age at the time of applying for the policy. The younger you are when you apply for insurance cover, the lower your premium will be. This is because someone who is young is less likely to die a natural death during the time of coverage, as compared to someone who is in their 60s or 70s. A young person has many years to go before the company has to make payouts, and till then, he will have paid a lot of money as premium. This reduces the risk incurred by the insurance company, which automatically translates to lower premium amount.
However, old people are asked to pay a higher sum as premium to compensate for the risk incurred by the insurance company, as the probability of claim being filed after a few premiums, is higher. To avoid paying high premiums, it is recommended that you apply for a policy when you’re young.
2. Your Current Health
Along with your current age, your current physical health also plays a key part in determining your premium. Your insurance provider either asks you to fill in a questionnaire, or conducts a medical examination. If you are found to be in good health, with no major health issues in the recent past, you’ll be eligible for a lower premium. However, if you’re diagnosed with any form of severe health problem, such as diabetes or high blood pressure, you’ll be asked to pay more.
3. Your Health History
Along with your current health, insurance companies also take your medical history into account. If your medical records indicate chronic illness or other severe health problems, you are required to pay a higher premium. This is because a chronic illness increases the chances of an early payout.
4. Your Family’s Health
The fact that insurance companies take account of your family’s health in order to determine your premium, can be disappointing, because it’s something that’s totally beyond our control. However, the sad truth is that if you have a parent or sibling who has died of cancer or heart disease before the age of 60, it is highly unlikely that you will be charged a lower premium. In fact, some insurance companies charge you with higher premiums even if a member of your family has been diagnosed with one of these conditions before 60, but has survived.
5. Your Occupation
If you didn’t know, your life insurance premium can be affected largely by your job because some professions are riskier than others, which increases the chance of a payout by the insurance company. Just compare the job of a software engineer and a firefighter. Which one do you think is more hazardous? Surely, that of the firefighter, and this means he has to pay a higher premium. Other high-risk professions include those of a stuntman, construction worker, airline pilot, police officer, soldier, mine worker, etc.
6. Your Lifestyle
Do you smoke or enjoy your drink often? People who are chain smokers and/or drink frequently, are required to pay more because smoking and drinking take a heavy toll on your health. A smoker or a drinker is considered a high-risk individual by the insurance companies. However, if you quit these habits, you can be eligible for lower insurance premium after one year. However, the insurance company will ask for blood test results as evidence. Now, isn’t that reason enough to quit?
7. Your Recreational Activities
Not only does a high-risk job cause your insurance premium to go up, but also a recreational activity with substantial amount of risk involved. In other words, your love for extreme sports can translate into a higher premium, because getting involved in such dangerous activities can increase the risk of untimely death. Here’s a list of such activities.
Note that different insurance providers have different opinions regarding which activities are riskier, as compared to the others. Also, your experience, level of skill, and how often you indulge in these activities, are taken into account.
8. Your Credit History
This factor has to do with your ability or willingness to pay the premium on time, and not any risk that could cause an untimely death. Before they decide on how much premium you would pay, insurance companies check your credit score and credit history, to determine if you’re financially responsible. People with a bad credit score are required to pay higher premiums, just to compensate for the risk involved.
9. Your Driving Record
Road accidents are one of the leading causes of death and severe injuries, and being a reckless driver only adds to the risk of an untimely death. Insurance companies ask for your driving record when you apply for an insurance cover, to verify if you are an irresponsible driver. If you are, you are required to pay a higher premium. However, most companies are only interested in your recent driving record, and do not raise the premium if you haven’t committed any major violations in the past five years.
10. The Type of Policy
Are you planning to apply for a policy for whole life or a fixed term? How much is the amount you want as death benefit? All these factors can influence the premium you pay for your life insurance cover. The premium is higher for whole life insurance because in that case, the insurance company has to pay you the money, sooner or later. In case of a term insurance, the premium you pay is less, because there is little or no chance of a payout by the insurance company. Also, opting for a group insurance is a good idea, because the premium amount is inversely proportional to the number of members in the group.
Some insurance companies also consider your gender when calculating your insurance premium. This is because statistics show that women have a higher life expectancy as compared to men, and hence, are required to pay less.
There are several such insurance providers operating in the market, and selecting from among them can be quite perplexing. To add to the misery, the plans of all these providers have several differences between them.
Here are some things to keep in mind when looking for the best deal:
Tip 1 – Search in the right places
It is recommended to begin by checking with your own bank, and see if they are affiliated with any such providers. If you are connected with a financial institution in any way, then you can check there too. But the problem is, because of their affiliations, banks and financial institutions will generally try to push those products onto you. Also, their variety will be quite limited. The best option is to search on the Internet. You will find several options, and there will be no excess baggage of someone hard-selling these products to you.
Tip 2 – Ask for quotes
Once you have begun your online hunt, you will need to ask these providers for quotes. Many of the companies provide their quotes for free. Try to benefit from these. Since there are vast differences in the structure of the cover provided by various companies, their costs will vary too. In fact, some of the top providers can have a difference of as much as USD 300 in the amount of premium. The idea is to take at least ten to twelve quotes before you can compare them.
Tip 3 – Compare the quotes
It is absolutely vital that you compare the quotes in the right way. It is not enough to compare them just by the premium, but also check what they have to offer. Some of these policies will take lesser premiums, but will pay less too. Then there are other services, too, that need to be taken into account. The best thing to do is a like-to-like comparison, comparing every feature and not just the cost. If you are not sure about making the right kind of decision at this point, ask someone who knows about finance, to help you out.
Tip 4 – Be truthful
Your application will have several things to be filled in, and you must be absolutely truthful about these points. Common facts like age and gender cannot be fabricated, but there are things like smoking, alcohol intake, and medical conditions that people tend to lie about. However, this is a very foolish thing to do. When the claim is made, all these points are easily verifiable. If factually incorrect information is found, the policy payouts would be forfeited and the cover declared null and void. For example, the premium amount for a smoker would be a little higher than one who is not, but the benefits will be paid out on death. However, if you lie about it, your beneficiaries will not get that amount too, and the premiums paid will be forfeited leading to financial loss. Honesty is really the best policy here.
Tip 5 – Do not procrastinate
With the advancements in medical treatments in recent times, the cost of life insurance is going down. Prices are already much lower than they were about a decade ago, and they are still going lower, as more inventions are being made. But that does not mean that you should wait any longer. Accidents can happen anytime, and this cover could be a big boon if anything untoward were to occur.