How To Get a Life Insurance Quote
Life insurance is a policy that works as a means of financial stability and protection for beneficiaries, after the owner of the policy dies. It offers an option of contributing regularly if you purchase a plan and is a form of long term future savings. With a life insurance policy in hand, it becomes a security for your family; protect your home mortgage, take care of your estate planning needs, and offers retirement savings benefit.
About life insurance
What is “term” life insurance?
In term life insurance you can purchase a specific amount of coverage by signing a contract for a specific time period. If you stay regular in paying the premiums for the purchased policy, your survivors will be paid the agreed upon amount if you die within this period.
What is cash-value life insurance?
Cash value life insurance is also called whole life insurance which provides your survivors with benefit upon your death. Your paid premiums go into a reserve fund and build up over the years till your policy is in effect. Cash-value insurance has three types: Whole life-Premium amount stays fixed if paid regularly. Universal life-the amount of premium and the frequency of payments are at your discretion. Variable life-you can invest the reserve fund in stocks, bonds, or money market funds offered by the insurance company.
Is it a good idea to buy a convertible term policy?
Convertible term policy allows you to convert your term life insurance into cash-value life insurance. You can consider buying a convertible term policy if you feel cash-value life insurance is expensive for you now and may be affordable few years later in life.
Who needs life insurance?
My husband and I both work-should we each have our own policy? You can buy two policies depending upon your contributions to run your family setup. If you feel that a substantial part of your household income will be lost with the death of either you or your spouse then you may decide buying two separate policies.
Should I buy a burial policy?
Burial policies sold specifically to pay for funeral and burial expenses can turn out to be unbeneficial because the premiums although seem low add up to a lot over time. Also before purchasing such plans you should compare prices with few local insurance agents.
Do children need life insurance?
Children don’t need life insurance unless they are adults and supporting you financially.
Are whole life policies suitable for people of elderly age?
Whole life policies are a good option for people in their 40s and 50s and who are concerned to relax the burden of significant estate taxes on their children.
Is this true that term insurance is temporary and whole life insurance is permanent?
Yes. Term life insurance contract is signed for a set number of years while whole life insurance is signed up for your entire life. If your age lies between mid 60s and early 70s, it is recommended that you buy term life insurance because term life premiums cost lower than cash-value life insurance.
Understanding sales presentations
How can I find the cost of my term life policies in 5 or 10 years?
At the time you buy the life insurance policy your insurer will show you the chart of projected and guaranteed premiums. The current chart will show what rate of premium the company will charge you for now and for the next five to ten years until it reaches the maximum scale. Also you can compare the insurer’s rate increase histories from rating services.
What are some tips for buying a cash-value policy?
Always search for companies that are paying higher guaranteed cash surrender value in the first ten years. Look for a low-load-or low expense-whole life policy. Always pay the premiums by yourself. Back load policies may not be a worthy option.
Should I get a front-load or a back-load policy?
With front-load; the commission and expenses are deducted from your premiums before they’re added to your death benefit and reserve fund. With back-load, these are deducted from your cash surrender value as surrender charges if you close the policy. If you close a back-loaded policy in the first few years, your cash surrender value could be reduced to almost nothing.
If I choose term insurance, can the insurer drop my coverage if I get seriously ill?
No. It is recommended that term life insurance must be renewed periodically. You can only lose the coverage if your policy expires.
When my beneficiaries collect on my insurance, will they have to pay any taxes?
Life insurance death benefits are not taxable but if you withdraw money from the reserve fund portion of your cash-value policy, you will owe taxes on any income the reserve fund has earned.
How to shop for insurance
How can I find a good insurance agent?
Insurance agents that work full time as Chartered Life Underwriters or Chartered Financial Consultants are categorized as good. Also you can verify the agent’s license by calling the state insurance department to know if the agent ever had any license disciplinary issues.
About your policy
What is a “rider?”
Rider is a special coverage added to your life insurance policy but not actually a part of basic policy. Insurers normally charge separately for riders in addition to your basic coverage.
There’s a “premium waiver” amendment on my policy-what does it mean?
Premium waiver is a relaxation given to those people who have been disabled for the past six months. If a policy holder becomes disabled and can not work in their regular occupation, he/she can skip to pay premiums and still keep the coverage.
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