Coverage Insurance

Posts Tagged ‘Term’

If you are in the market to buy a home or already have a mortgage account, you are probably looking for ways to protect your loved ones from future mortgage debt, in the event of your death. The most common options are mortgage life insurance policy and term life insurance.

Term life insurance
A term life policy is an insurance policy that you independently take out with a life insurance company, with the idea that a part or all of the proceeds be used to pay off your mortgage. You name a beneficiary, usually your dependants, who are instructed to use the money to settle your mortgage account. Your beneficiaries can retain any left over amounts.

Mortgage life insurance
A mortgage life insurance policy is not offered by a life insurance company, but by banks and other financial institutions that have your mortgage. The financial institution is the beneficiary, and the product is designed to have level premiums with decreasing death benefits. Usually mortgage life insurance doesn’t require a medical exam.

Disadvantages of mortgage life insurance

1. Mortgage life insurance coverage decreases with time:
   The amount of cover decreases in parallel with the amount outstanding on your mortgage. However, your premiums remain level, and you end up paying more for less coverage over the years. Of course, the way it is designed, you don’t receive any benefits on it if you outlive the term. The bank retains any left over amount.
2. A minimum stipulated time period to qualify for a payout:
   Usually, mortgage insurance doesn’t payout in the first six months of the policy. That exposes the mortgagor to a lot of risk.
3. Excludes pre-existing medical conditions:
   Though mortgage life insurance doesn’t require a medical exam to determine premium rates, any pre-existing medical conditions are excluded from the policy.
4. If you wish to refinance, you need to take out a fresh mortgage policy
   If you decide to refinance, your existing mortgage life policy ceases, you will have to take out a fresh policy. This can prove to be quite a bit of extra trouble.

Why term life insurance is better

1. Term life is more affordable:
   Because the underwriting process in mortgage term life insurance is not as precise as that of a term life insurance policy, the premiums can be quite high for mortgage life insurance. Term life is generally more affordable, with its economical premiums.
2. Death benefits in term life go to the insured’s beneficiaries:
   When you use a term life policy to cover your mortgage dues, your beneficiaries are in total control of the money. If you die many years into your term policy, your mortgage dues would have gone down considerably, which means that your beneficiaries get to retain any leftover cash.
3. Term offers a choice of policy formats:
   While mortgage life insurance has a decreasing term format, with term life you can opt for either decreasing term insurance or level term insurance. A decreasing term insurance policy will provide your beneficiaries with only enough money to clear your mortgage. A level term insurance policy on the other hand has a fixed death benefit amount, and therefore can be used to clear off more than just your mortgage amounts. For higher premiums you can also add more protection for other reasons, such as to replace your income, take care of your kids’ college fees, etc.
4. Doesn’t require a fresh policy if you decide to change
   As mentioned earlier, if you decide to refinance, your mortgage life insurance policy ceases. However, with term, even if the underwriting process requires your mortgage documents, the life insurance can’t be revoked each time the structure of your finances change.

Make sure you are covered adequately
When you use a term life policy to cover your mortgage, remember that you need to take out additional term life insurance to cover your other financial obligations in the event of your death. Look at riders such as critical illness and disability to cover every possibility.

Life is uncertain. With the right mortgage life cover coupled with comprehensive life insurance planning, you can be sure that your loved ones are taken care of when you are no longer around to provide for them.

Individuals are frequently confused about the type of life insurance policy that is correct for themselves and their family. There are a lot of different sorts to look at, and they are all different. Term life insurance and whole life are the most regularly purchased kinds of insurance coverage. This will provide you with a brief summary of what the differences concerning term and whole life insurance actually are. Understanding the differences between them may help to make it less mystifying when you decide to purchase your own coverage.

The easiest to understand type of coverage is term life insurance. Term life insurance only provides coverage for the term of the policy. This means that term life is strictly life insurance coverage and does not build any cash value. Term life will only be paid to your beneficiary if you die within the duration of the policy coverage. You can buy this coverage for a specific amount of years, and once the term is over, you may either renew the policy for another set time period or simply let it go.

The main advantage of term life insurance is that you will have coverage during the set time frame, and it is often less costly than whole coverage. Its only function is to pay your beneficiary in the event of your death, which will of course, give you peace of mind knowing that they will be taken care of. It is life insurance in its most basic form.

For insurance coverage during your entire life, you should choose whole life insurance. Whole life insurance builds a monetary value, as well as covering you for the entire time you live. Unlike term life coverage, whole life policies build cash value. To access the money your whole life insurance policy has acquired, you will have to wait for a long time, but it never decreases in value. There are certain advantages to buying whole life insurance. If the insured outlives the initially established term, they will be reimbursed at least some, if not all or more than, the amount set on the original policy.

Also, whole life insurance policies are commonly known as the flexible kind of policy. As well as being able to change the value of coverage, you can also vary the amount of the monthly premium payments. Don’t forget that you cannot let the cash value of your payments go below the amount of the coverage, so don’t set your premium payments too low. The more money you put into this account, the higher your cash value will be for future use. Once can expect whole life insurance rates to be higher than term life, since they operate as a money building investment for your future.

By now, you may be asking yourself exactly how one selects between term and whole life insurance. Don’t rush to purchase an insurance policy until you have given careful consideration to which type is best for you. The best policy for you will depend on your family’s financial obligations, as well as your own personal finances. Some serious consideration should be given to the details and circumstances surrounding your life.

If the cheapest monthly premium is going to be the deciding factor, you will want to go with a term life policy. It is often a good choice for the elderly, who may not outlive the end of the policy. Younger people often choose term life insurance because they have a lower risk of dying in the immediate future, and have more limited funds. They can use the money they saved, by not paying for more expensive whole life premiums, for other bills and obligations.

Although term life insurance would seem to be designed as an option for a relatively short time frame, generally 10 to 30 years, whole life insurance coverage is more beneficial for the long term. Rates are locked in at a lower price the younger the insured is when they purchase the policy. It can also be a good choice for people who have already managed to make a lot of money and have assets to protect. One of the benefits of whole life insurance is that part of the money gained on the policy can be used during their retired years. Compared to term life, the coverage amounts of whole life are usually much higher.

Thanks to the internet, it’s easy to find out about different coverage amount and monthly premium rates for potential policies. All one needs to do is fill out a litte information about yourself and you can receive a free quote in a matter of minutes. It’s not a complicated process at all. Use this to your advantage to make certain you aren’t going to be over charged before buying or renewing your next protection plan.

Are you searching for the right insurance policy to secure your family and their future, but at the best rates possible? Where can we compare term life insurance rates? The solution to compare term life insurance rates is to use the ‘power of your internet’. How do we go about using the internet to compare insurance rates? It’s very simple.

- COMPARE QUOTES QUICKLY: as we all know life insurance is a pre requisite especially if you want to stabilize your family’s future. But at the same time you want to ensure that you purchase the best term life insurance at the best rates possible. In order to do this, you must first ‘compare rates and plans’ from the different insurance agencies and companies that are present in the market. Just by doing this you would be able to compare all the differing rates since all companies vary according to their different rates.

- It is wise for you to go to an ‘insurance comparison site’ to compare the available term life insurance rates that would suit you perfectly. These insurance comparison sites are connected to numerous insurance companies worldwide. You have hundreds of insurance companies that you can choose from. Then all that is required is for you to complete a simple online questionnaire and you will receive the available quotes from insurance companies that is adherent to your needs. And that’s it! Basically insurance comparison sites assist you in finding best term life insurance rate for your policy.

The advantages of using these insurance comparison sites when comparing term life insurance rates are as follows:

- You are ensured of getting fast quotes from hundreds of insurance companies. This means that you would be able to pick a term life insurance policy that offers overall security for your dependents and family;

- You can also change the amount of your insurance just to see how that would affect your rate;

- You can have chat conversations on numerous insurance web sites with highly qualified insurance professionals who by all means are prepared and awaiting your questions. These insurance professionals would be more than happy in assisting you in choosing an ideal insurance company on your behalf;

- Another reassuring factor is that insurance comparison sites are not given commissions from these insurance companies who sell the policies. So they basically have no aim or reason to sell you any particular policy on behalf of any insurance company. You are thus certain that they will not try to eke away your money with the intention of satisfying their own financial needs.

- Overall these insurance comparison sites are free of charge to everyone.
To compare term life insurance rates, it is important that you visit these insurance comparison sites so you will receive required quotes that are available from hundreds of insurance companies. Once you receive your quotes, you then compare term life insurance rates and choose the policy that matches your needs perfectly.

You can take advantage of the Term life insurance online by surfing the internet. Various online sites offer access to term life insurances, all you have to do is to select your insurance company and sign up. They will process your application immediately. Do not sign up unless your preferences are met. You have several options to choose from. Choosing a term life insurance online is relatively easy with the help of online sites that provide you with the list, descriptions and specifications of each term life insurance.

IntelliQuote is one site, which allows you to compare rates of term life insurance online and the select your own policy. Within a few minutes, you can obtain insurance quotes that match your need and insurance preferences. Customers attest to the fact that it is a one-stop site for insurance quotes because of the organized and efficient presentation of insurance quotes.

AccuQuote is one too. This site offers a free quote and several term life insurance online options for you to choose one. They provide all the legitimate companies objectively and you will be the one to decide which insurance is best for you. A hotline is available in the site where you can talk to experienced professionals who know the ins and outs of term life insurance online.

Efinancial offers the same services too. You can browse over top insurance companies and determine which works best for you. You can browse between the list and then click to see the specifications of each term life insurance online. You can easily pick from the insurances presented in your screen. There is no hotline however for direct questions from customers but the site provides complete data on term life insurance online.

Instant Quotes has a hotline where you can questions from professionals about term life insurance online. You can get term life insurance quotes free. You can have a 24-hour service for your insurance needs. They ensure your privacy and they will not display your information publicly. They can find you an insurance tailored to your lifestyle and need. If you are a smoker who is non-insurable by other companies, they will find a term life insurance online policy specifically for you. They can simplify data very quickly to help you in your search.

Term life insurance online have the following advantages:

It is less expensive than other types of insurance. You just pay up to a certain period, depending on your choice. You can renew it every year, but make sure this renewal option is stated in the policy before you sign up. Select for “renewable without proof of insurability.” This clause will allow you to renew your insurance policy without undergoing intensive physical examination.

Term life insurance has the same death benefits as the permanent life insurance. These include among others the financial aid to cover debts, mortgages, education, and care of the beneficiaries. The insurance company attends to all of these. The death benefit is also income tax free.

The renewal of the term life insurance online maybe every year, or after 5, 10, 20, or 30 years. These options provide you with a lower insurance premiums and a better way to spend your money. You could invest your money in another endeavor that could earn you more, instead of putting all your money in one basket when you select a permanent insurance policy.

Surfing for a term life insurance online is an easy and practical way of searching for an insurance company that has all the terms you would like to have in your policy. The choice is yours. Select the best insurance policy that fits your needs.

Love The Suze Orman Show? You may know what Suze thinks about Term Insurance vs Whole life insurance. The conversation below is one Suze had with a guest caller who asks her advice on a whole life policy a friend is trying to sell him.

Deepak: Hi Suze! We love your show. My wife and I watch it every week. It’s such an honor to talk to you.

Suze Orman: Oh. Thank you! What can I do for you?

Deepak: Well Suze, a friend has recommended that we buy a whole life insurance policy as an investment.

Suze Orman: Stop! Stop! There isn’t a friend in the world. Not one friend in the world that if it is a true friend that would recommend you buy a whole life insurance policy. A snook, somebody who wants to take you, somebody who in my opinion is not a friend maybe. But there is no way a friend would do it. Does that answer your question already?

Deepak: It gives me a good sense of what you are thinking.

Suze Orman: Alright, how old are you though Deepak?

Deepak: 31

Suze Orman: How much of an insurance policy? What was the death benefit?

Deepak: Um, I think 50…$500,000.

Suze Orman: $500,000? Alright how much was it per year?

Deepak: Fourteen

Suze Orman: Fourteen Hundred?

Deepak: $14,000

Suze Orman: Fourteen Thousand dollars a year?!?!

Deepak: …and the idea was largely use it as an investment to put money away to save on taxes.

Suze Orman: Ok, just out of curiousity…made my nose itch. I have to tell you whenever my nose starts to run I feel like Samantha…where I
wanna…you know on Bewitched? I don’t know if you were even born back then where I want to twinkle my little and get that guy out or whoever that friend is and off the face of this Earth.Listen, insurance is not an investment. Does this friend of yours happen to sell whole life insurance?

Deepak: Boy it seems like you’re reading my mind here.

Suze Orman: Oh sweetheart that’s not a friend that a sn….I don’t even know %#*#)$! You know, it gives me dandruff I think. Listen, you can get a half a million dollar term policy for 20 years at your age for approximately $25 or $30 per month. OK? That’s $300 per year. Now, if you really want to make an investment you could take all those other $1000s of dollars and take that money and invest it where? In a retirement account, a piece of real estate, in stocks, bonds, whatever it may be where it absolutely makes sense to you.

Do you know that I am a licensed insurance agent. A life insurance agent and I am licensed in every single state in the United States except Hawaii because I don’t want to go to Hawaii right now to take the exam.

So I have been licensed everywhere. Very few people can tell you that they have that type of insurance background. I can tell you that if you
put $14,000 into a whole life insurance policy, my friend, how much commission do you think I or your friend would make off of that $14,000 deposit?

Deepak: Like atleast a thousand or two.

Suze Orman: Oh, are you sitting down?

Deepak: I am.

Suze Orman: Are you? What don’t you try about $10,000. Ok?

Deepak: Wow.

Suze Orman: So yeah, he could buy you…just forget it. Here’s the bottom line. Don’t do it. Do what I said. Buy a term insurance policy. You can get a half million dollars that way. $300 a year and tell your friend why doesn’t he go and make some real enemies.

Suze Orman does not like Whole Insurance (also known as Variable Life Insurance / Permanent Life / Universal Life)? Why Not?

For the amount of death benefit one can purchase Whole Life, as life insurance is way overpriced.

• $500,000 worth of Whole Life Coverage = $14,000 per year

• $500,000 worth of Term Coverage = $300 per year

Difference of $13,700 extra you are paying to get Permanent Life coverage.

Is there a difference between Whole Life VS Term life insurance?

You can purchase 1 year term to a 30 year term of Term Life Coverage.

Permanent Coverage is Whole Life Insurance + Investment (held within the life company) and you are supposed to have the policy for the rest of your life.

With Term Coverage there is no investment portion. Like car insurance it is pure insurance. That’s it.

It does not make sense to try to combine life coverage with an investment but with whole life coverage it is sold as such. Why would insurers combine insurance and investing?

With Whole life coverage it is Term Ins + Investment Portion with you paying premiums for the rest of your life.

First of all we need to understand the reason for life insurance?

You need it to protect your family that depends on the breadwinner’s income whether it be the husband working, the wife working or both parents working to bring money in to take care of the family. If something happened to the breadwinner then the life insurance is there to protect the family financially.

Once the children are grown up and making their own income they are no longer dependent on the parent(s) income. At that time you no longer need it for that purpose.

Do you really want to keep paying premiums for your whole life?

Do not fall into trap of making anyone rich by buying life insurance. It is not likely to happen but it is important to have. Don’t throw away your money like that. You are better off buying term coverage only for the time period for which it is needed.

As you get older your term life rates will go up but they lock the monthly rate as soon as you start your policy. Only get it when you need it.

Put your money in savings or invest it wisely.

What is good about the investment portion when you buy whole life ins?

Whole life is sold to you with the added benefit of the investment and the salesperson will tell you that it’s wonderful because it gives you the benefit of saving for retirement, putting money into an emergency fund, saving for the children’s education, etc. You can borrow it from the insurer but pay it back with interest.

BORROW from my investment? Isn’t it my money?

If you have a whole life policy you can only borrow it and you will be obligated to pay the insurer back with interest. The money that sits in your whole life policy is called CASH VALUE which sounds great but it’s really not great at all?

Worst thing is that you have NO CASH VALUE from paying premiums for your first year. No doubt about it. You get nothing the 1st year of paying premiums. Majority of your 1st year premium payment goes to your life insurance agent. Your money? Yeah right. Their money.

BOTTOM LINE? Purchase Term Coverage when you have dependents / children because that’s when you need it the most

Skip the Whole Life Policy and put the difference in savings into your bank account or a retirement account. You control it 100%. Have full control of your money and stay away from Permanent Life / Whole Life / Variable Universal Life / Universal Life Insurance or any type of life insurance that has you putting extra money in for investing.

Take your savings a step further by comparing Term Rates online.