Tuesday, March 1st, 2011 | Shelley Fiore | |
So you’ve decided to buy life insurance to protect your family or business?
Good move.
But there’s more to the purchase than just signing on the dotted line.
You need to pay close attention to the policy add-ons that insurers offer. In the industry, these add-ons are known as riders. Like a warranty or guarantee for other consumer purchases, riders can give policyholders additional benefits and increase peace of mind—If something goes wrong, there’s a plan B.
And while they may vary in price, they are, at the very least, prudent to consider.
(more…)
Tuesday, December 7th, 2010 | William Rowan | |
Nobody likes to pay more money for their life insurance than need be. Everybody knows that life insurance gets more expensive as you get older, but there are strategies that can help you save money on your policy. Here are a two tips that could help you to save thousands of dollars over the life of your plan.
1: Figure out how the insurance company determines your age.
There are two ways that insurance companies factor your age when you apply for life insurance. Your age will be determined either by using your actual age, or by using your age nearest. If they use your actual age and you are 44 years old, then they will use that age as the basis for your life insurance rates.
It is more common for companies use a process that is known as age nearest. This calculation is simply determined by seeing if you are closer to your next birthday, or your previous one. Using this method, if you are turning 45 in three months, the insurance company will give you the rates for a 45-year-old, which are more expensive than those for age 44. As a result, you may be able to save money if you choose a life insurance company that chooses your actual age if you are coming up on a birthday soon.
2: Backdate your life insurance policy.
Another age-based strategy you can use to save money is to backdate or save age on your life policy. Using the example above, if you were turning 45 in three months, most companies would rate you as a 45-year-old. However, did you know that you could qualify for age 44 rates?
If you paid three months of back premiums, which would make your policy date nearest to your last birthday, the insurance company will actually give you the life insurance rates for age 44! This could result in some substantial savings over the life of your policy since you are essentially paying the term life insurance rates for an age that is one year younger.
For example, let’s say that the insurance cost for age 44 was $1,200, and the premium for age 45 was $1,300. You have the option to pay three extra months of premium, or $300, to save the premium from the previous year, thereby saving $100 off of your annual premium. It may not sound like much, but using this strategy would save you $100 a year for every year of a 30-year term plan, you would end up saving $2,700 over the life of the policy.
You can save some money on your life insurance policy simply by implementing certain age-based strategies. They will not be options for everybody, but if they do match your goals, the savings can be substantial. Be sure to check out the information that the nonprofit LIFE Foundation has for choosing the best type of life insurance for your situation.
William Rowan is the founder of eTermLifeInsurance.net, a site geared towards consumer term life insurance education and comparison. Its sole focus is for consumers to find the best life insurance policy for their individual situation.
Tuesday, July 27th, 2010 | Brian H. Ashe | |
Hey, it looks like the underwriting departments of life insurance companies may be willing to look at modifying “rigid” guidelines for what they consider “good” risks to be. For example, I read that The Hartford has started paying more attention to a person’s capacity to exercise as a marker of good health and better longevity. That doesn’t mean that insurance companies won’t look at your blood pressure, cholesterol, height and weight, etc. when considering you for life insurance. It’s just that now they seem willing to look at a couple other factors, too.
People who are athletic aren’t always thin; some have a lot of muscle mass. They may not fit in neat height/weight ratio categories, but they still may be in excellent physical condition. As companies are trying to be more inclusive of those who may be outside the historic underwriting physical benchmarks, they are also sharpening their pencils on other things like aggregate cholesterol, fractionated cholesterol (how your LDL compares with your HDL), a1(c) levels and other factors to try to give very healthy folks not only “preferred” but “super preferred” rates.
When I first started in the business, the underwriting categories were pretty much “standard” or “rated.” And if you were rated, it meant your rates for term insurance, for example, could go up by about 25% for each “table” you were rated, Table 1, Table 2, etc. Since then, companies introduced non-smoker rates, preferred rates, standard-plus rates, super-preferred rates and a number of other categories that you may qualify for.
While super good health may qualify you for special discounted rates, these many different categories also mean you need to be a discriminating shopper. Companies may advertise or illustrate their very best rates in order to attract your inquiry. Just remember that the final rate will only be determined when your medical underwriting is completed. And, make sure when you are comparing companies, that you are comparing the same underwriting class, i.e, preferred to preferred. There could be a 40% pricing difference between a preferred rate and a standard rate.
But the most important advice is to make sure you have enough life insurance. If you don’t, do some shopping. All the comparisons will show you that rates are lower than they have ever been. And if you need help, don’t hesitate to contact your agent or to find one in your area with LIFE’s agent locator.
I received a phone call from a person I had never met to review his insurance. He had recently moved from California, had a 1-year-old baby and felt he needed to replace his group term life insurance, which his company had reduced after recently being acquired by another firm.
I spent time with him and his wife reviewing their financial needs and asking a series of questions about their current and future goals, and then I suggested they go to LIFE’s online Life Insurance Needs Calculator and the Human Life Value Calculator on the LIFE website. We scheduled a follow-up appointment for the next week.
When they returned to my office, I asked if they had run their own numbers based on their requirements. They had, and they determined they needed substantially more life insurance than they currently owned, including new coverage on both the husband and wife, along with a small policy for their baby.
While I guided them through the decision-making process, they determined the amount they actually needed. It worked out to be a similar number to what I had originally calculated, but now it was their number, not mine.
If you are unsure about how much life insurance you and your family need, check out these insurance calculators on our website. It may be one of the best decisions you make for your family.
Last week The Wall Street Journal ran an article called “Juicing Your Life Insurance” about “indexed” universal life insurance policies. A first read of the article might lead a consumer to decide, Wow are these things complicated! I couldn’t agree more. However, the life insurance industry developed these policies to respond to two main critiques that other types of permanent insurance are often tagged with.
With whole life insurance some consumers say, “I like the guarantee, but can’t I earn a bit more of return when the market is really up?” With variable life insurance, consumers sometime say, “I love the upside when the market skyrockets, but I can’t stand the wild market swings.” So, like any good listener, many insurance companies developed this so-called indexed life insurance product, which allows you upside participation and downside protection. The bottom line: you are able to participate in market gains, while ensuring that you don’t lose those gains should the market go south.
It is confusing … you bet. Wise consumers will consider all the options available, get good counsel from their insurance advisor and then make an informed decision. I personally own all five major types of life insurance: term, universal, whole, variable and indexed. The way I see it, the mix is diversification itself. That mix is unique to my personal and business needs, so everyone should make a decision based on their personal circumstances. Research and understanding is the key to long-term success with indexed life products. For many, the product provides a much-needed combination of upside and downside participation. It’s not for everybody, but it might be for you. Talk to your advisor to find out more.
