What are different types of insurances & how do they work?
I Just need to know all the basic types of insurances (health, car), how they all work, and are they fair?
To name just a few:
Mortgage insurance
Accidental death and dismemberment insurance
Business overhead expense disability insurance
Casualty insurance
Contents insurance
Corporate-owned life insurance
Crime insurance
Critical illness insurance
Crop insurance
Dental insurance
Deposit insurance
Disability insurance
Earthquake insurance
Expatriate insurance
Flood insurance
General Liabilty insurance
Group insurance
Guaranteed asset protection insurance
Health insurance
Homeowners insurance
Inland marine insurance
Keyman Insurance
Landlords insurance
Lenders mortgage insurance
Life insurance
Loan protection insurance
Long term care insurance
Ocean Marine insurance
Medigap
Mortgage life insurance
Ordinary life insurance
Permanent life insurance
Pet insurance
Political risk insurance
Pre-paid legal services
Professional liability insurance
Property insurance
Protection and indemnity insurance
Public auto insurance
Reinsurance
Return of premium life insurance
Terrorism insurance
Title insurance in the United States
Variable universal life insurance
Vision insurance
Weather insurance
Whole life insurance
Workers’ compensation
Fairness is not the issue. These are all legal contracts that give you rights that are enforceable in a court of law.
How can my husband open a life insurance policy?
We recently found out we are expecting a baby and need to open a life insurance policy in case something would happen to him so we’d be taken care of. We have insurance that is paid for by his employer. How do we go about getting life insurance? Is it added to our existing medical insurance, or can we get it separately?
You can buy a separate life insurance policy on your own, in addition to requesting life insurance from your employer, if they offer it.
To get your own life insurance policy you can contact a local life insurance agent, or visit a life insurance quote service to request free life insurance quote comparisons online from several insurers.
Term life insurance offers you temporary life insurance for 1-30 years. It costs much less than permanent life insurance, because it is temporary, and builds no cash value within the policy.
Many young families choose 10, 20, or 30 year level term life insurance because it offers the most coverage at the lowest cost.
Level term life insurance provides coverage and premiums that remain the same each year for up to 30 years.
If you want, you can request life insurance from your employer, but you may have to pay for it, and if you leave your company, or get laid off, the group term life insurance plan ends. You may be able to convert it to a permanent life insurance plan, but it would cost you a lot more. And, if you waited until later to get your own life insurance policy, you may not be able to qualify for coverage if you develop a health condition.
You may want to consider a term life insurance policy for you and your husband. Imagine what it would cost to replace everything you do for your family, and will be doing for your growing family once you have a child.
Bets of luck to you and your husband. And, Congratulations!!!
What are the different types of life insurance? What are the pros and cons of both?
Which life insurance companies do you recommend? How young is too young for your child? He’s 1… I’d like to leave my family with the security and without the stress of “money” when I die, but I don’t know where to start. Thank you in advance!
It is never too soon to get life insurance for you or your loved ones. Get some now!!! Life Insurance Companies are all different, but one of the main things is to make sure they have a good financial stability rating (you should ask them what theirs is) You will want to get an A or better. That means they are financially stable, among other things.
Term insurance means exactly what it says, it is for a term, or a length of time. You can get term insurance for 5 years, 10 years, 15 years, or 20 years, etc. Term insurance is very inexpensive (younger ages get cheaper insurance). It does not build cash value, and after the term runs out (the 10 or 20 years that you chose) then the premium significantly increases. If you are just starting out with a child, whether you are single or married, and you don’t have a whole lot of extra money to pay the premium, term life would definitely be a benefit for you. It gets you good insurance (you pick how much $50,000 $100,000 $150,000) for a term (10 or 20 years) for a cheap monthly premium. Again, the term that you choose will eventually run out, so you will want to convert your policy within that time before it runs out, but if something were to happen to you during the 10 or 20 years, you would have something to give to your family for burial expenses, and for financial support.
Whole life never runs out, it is not for a term, it is in fact just what it says for your whole life. It is more expensive, but you are locked into the premium rate when you take it out. (So again, buying it while you are young, you will get a better rate). Whole life does build cash value.
Regardless of which one you choose, the main key is to make sure you have some now. Get a policy soon if you don’t have one. Life insurance is medically underwritten (most companies anyway) so they will want a medical exam where they come to your house and draw blood and a urine sample to make sure that you don’t have HIV or diabetes, and that everything looks good on the lab results. (Obviously your 1 yr old probably won’t need one, but you will) Once your policy is issued, you can then think about replacing it with a different policy at a later time.
You may think, well I will put it off until next week to apply for it, but then something happens to you, for example you end up with cancer. Then, chances are, you won’t be eligible for life insurance and you won’t have a policy when you need it.
So, buy it now!!! Talk to a couple of different life insurance agents if you want, and get some more information, but definitely don’t wait. Any life insurance is better than no life insurance.
What is the purpose of building cash value inside of a life insurance policy?
Who is this type of policy ideal for? I am almost thrity and considering many options at this point, but I don’t want to consider any options solely based on my representatives opinion. What is the purpose of building a cash value in an insurance policy?
Cash value life insurance is good for a minority of people. It allows you to save up money you may need later. However, the commissions and other expenses of cash value insurance suck away a lot of your money. You will usually make more money in the long run if you buy term life insurance and invest the money you save in an IRA, 401K, or no-load mutual fund.
If you look at financial sites not run by insurance companies, they are almost unanimous in recommending term life insurance. Look at big name sites like Yahoo, CNN, Motley Fool and Kiplinger’s, and they all recommend term life insurance for most people.
However, read these sources and make up your mind for yourself. You may be one of the rare people who could use cash value insurance.
What is the difference between whole and term life insurance?
Which one is better to provide for your families needs if something happed to you?
whole life insurance
Definition
Life insurance policy that (1) normally covers an individual until his or her death, unless it lapses due to non-payment of premium or is cancelled, (2) builds up a cash value (called cash surrender value), (3) pays a fixed death benefit, and (4) where (unlike in a term life insurance) the premium amount remains constant despite the advancing age of the insured. The insured or policyholder may obtain a loan (called policy loan) against the accumulated cash value. Also called continuous premium whole life insurance, ordinary life insurance, permanent life insurance, or straight life insurance.
term life insurance
Definition
Simplest and usually the cheapest type of life insurance that stays in effect for a specified period or until a certain age of the insured. It pays the face amount of the policy in case the insured dies within the coverage period (term) but pays nothing if he or she outlives it. Also, (unlike in whole life insurance) whereas it premium cost is low in younger years, it generally increases rapidly with the age of the insured. Term life insurance is used commonly as an insurance cover for a loan repayment or post-death liabilities such as estate taxes.
What exact is whole life insurance, and how do life insurance companies profit from selling it?
Agents are always extremely keen about selling my family whole life insurance instead of term. According to the agents, whole life is preferable to term since it does not expire and as a result the beneficiary is guaranteed some payment upon the death of the insured. However, why would the insurance company profit from such a setup if they are bound to pay back an amount that is at least equal to the total amount paid?
I have tried to do some research on my own, but I still can’t seem to fully understand this matter. Any help will be greatly appreciated!
Basically insurance only works when a large groups of people own that particular insurance. Everyone pays to protect their income, but not everyone is going to use their insurance. So that’s how basically insurance companies stay in business, unless something extraordinary has happen in this country where there’s lots of people are filing for claims and the insurance company can’t pay them all (such as the Hurricane Katrina event).
What is whole life insurance?
1) Its a level term insurance to a specified age (usually to age 95, 98 or 100) plus cash value.
2) It is very expensive when compared to term insurance
3) Cash value grows at a very low rate of return. In the first 10 years, you see a negative return on your money. But long term average is anywhere between 1-4%, depending on the company.
4) If you want to take money out, you have to borrow it and pay loan interest of 5-8%.
5) If you die someday, the insurance company pay the face amount of the policy (minus loans and missed premiums) to the beneficiary, but they keep all the cash value.
6) If you do get to live by the end of policy date (when you around age 100), the insurance company pay you the cash value, but you lose the insurance.
There’s only one reason why that agent is trying to sell you whole life insurance: MONEY!
Next thing you’ll know, that agent would try to sell you universal life insurance, a product that is more horrible than whole life, but it pays out more commissions.
Go with your instinct and find a different company who would listen to your needs.
Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
What exactly is life insurance and how does it work?
What exactly is life insurance and how does it work?
I don’t understand, won’t you be dead or something so what does it do for you?
What happens if it doesn’t get cashed in, what does that mean?
Sorry I don’t understand, please explain.
Life insurance is insurance on your life. If you die the insurance company pays money to your beneficiaries. they could be family, friends, the company you work for even a charitable organization. as long as there is an insurable interest.
If you are dead the money from the insurance can pay for your funeral, your debts, mortgage, medical bills, car payments, children’s college education, your families survival if you are no longer here to provide for them, as well as pay for inheritance taxes, probate taxes (life insurance is tax free)
if you are single, no family, no responsibilities and don’t mind being buried by the state then you probably don’t need life insurance.
Lots of policies don’t get cashed in or claimed, its when someone dies and the insurance company doesn’t know about it. a death claim has not been made, usually because the beneficiaries didn’t know the person had the policy. in this case the insurance company just keeps the money until a claim is made.
There are lots of different kinds of policies and it can get a little confusing. Visit your state insurance departments website or even talk to an agent most would be more than willing to help, if you don’t know where to. Try this site to find the best life insurance
Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
What is the best life insurance to get for my parents?
I keep getting the gut feeling that I need to get life insurance for my parents. Is that possible? If so, which company is the best?
You can get insurance for your parents and name yourself as the beneficiary. They will have to participate in the underwriting and application process and you will have to show what you stand to lose financially if something happens to them.
If you rely on them financially for living expenses, then a term life policy to replace the income they provide to you.
If you are worried about their final expenses and you don’t anticipate that either you or them will be able to afford them then a whole life insurance or universal life insurance policy. This can also be useful if you want to make sure that a piece of property that they own and you want when they die doesn’t go to their creditors.
If you are worried about one not having enough income if the other dies first then a whole life insurance or universal life insurance policy on the one producing the income should work.
Other than that you don’t really need life insurance on your parents’ lives. You will not be responsible for their debts and bills when they die. Their estate is responsible. If you have a family then you should be worried about having coverage on your own life first.
Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
What kind of life insurance is better for me, term insurance or permanent insurance?
Is there any advantage to permanent insurance over term insurance or vis versa? I mean, basically it looks like term is the better deal because I can buy more death benefit for a lot less money, but permanent insurance gives me money with a death benefit. I’m in my late 40′s, have a wife and 2 kids, normal bills, mortgage, etc. Does anyone have any opinions about what is really the better deal long term?
I have seen this one asked so many times it’s amazing. Usually, you have 2 camps: the cash value (permanent) insurance camp and the term life camp. Both think that they are right.
The truth is that it depends. Now, it’s nearly impossible to say what is the *best* option for you because I would need to know more about your financial situation. It’s amazing how many websites and “experts” can say, off the cuff that one is better than another *all the time*.
The biggest advantage that term life insurance has over permanent is that it is cheaper in terms of coverage per thousand dollars of insurance. You will almost certainly be getting more death benefit with term insurance than with permanent insurance for the same amount of premium you are willing to pay.
The downside to term lies in in the fact that it gets more expensive as time goes on. Also, there is a reason why term insurance is so cheap. Depending on who you believe, only 1-20% of term policies ever pay out a claim. Now even at 20% (which I think is high), thats still not all that great if you ask me. Some might argue that with term insurance you can invest the difference. Meaning that if a permanent insurance policy costs you $100 per month and you receive $50,000 in death benefit then, as the argument goes, you could just as easily buy a $250,000 term life insurance policy for say $35/month and invest the remaining $65. Or you could buy less term insurance and have more to invest. The point is, the theory is that that by the time you reach age 65 (or whenever you plan on retiring), that you won’t need life insurance. If you are quote: “smart with your money”, you won’t need life insurance.
I think that this is a myth for most people (but again, it largely depends on your situation). One of the problems with investing is that it doesn’ t matter how smart you are with your money. Most average joe investors put their money into mutual funds. If that fund tanks 5 years before you retire, it is very likely that it will be extremely difficult to retire on what you thought you would be retiring on.
The other issue I have with the permanent vs. term debate is that folks that advocate term insurance usually try to compare permanent cash value life insurance to an investment. It’s not. It was never meant to be. They complain about how low the rates of return are after expenses. Many times the internal rates of return are only 3-5%. But do you know what the definition of “cash value life insurance” is? It’s not “a type of investment”. It’s considered “a death benefit with a *savings* component”. Look at any high yield savings account or CD. What is the rate of return? 3-5%. Look at cash value life insurance. What is the internal net rate of return: 3-5%.
The problem with permanent insurance is that it’s not a be all end all for retirement savings. Some folks think that this is all anyone should ever buy and that they should never consider anything else. They even go so far as to defend life insurance as a “good investment”. Bad move IMO.
My opinion is that BOTH sides are wrong. That’s something of an answer for you.
What are the different levels of a primerica employee and what are each levels income %?
I’m looking into joining this company so I’m interested in finding out how the commssion structure works for the different levels.
Primerica offers many financial solutions and there’s different commission rates for each solution. To make things simple, I will show you the commission rates for life insurance and how to get to each level.
The first level is Representative. To qualify for Representative, you must submit your Independent Business Application and get your life license. Representatives earn 25% commission on life insurance. Average annual premiums for life insurance for a husband and wife is about $1000. Representatives will earn $250.
The second level is Senior Representative. In addition to Representative qualification, you must have 3 new business associates to qualify for Senior Representative position. Senior Reps earn 35% commission on life insurance, so they will get paid $350. Not only that, they also earn 10% overrides (35% – 25%). So if you have a Representative who helped a family, the Representative gets paid $250 and you will get paid $100.
The third level is District Leader. In addition to Representative qualification, you must have one business associate promoted to Senior Representative. You and your team must also submit $2500 in premiums in one month. As a District Leader, you earn 50% commission on life insurance, 15% (50-35) override on Senior Reps, and 25% (50-25) override on Representatives.
The forth level is Division Leader. In addition to Representative qualification, you must have 1 business associate promoted to District Leader and submit $5000 in premiums in one month. As a Division Leader, you earn 60% commissions on life insurance, 10% override on Districts, 25% override on Senior Reps, and 35% override on Representatives.
The fifth level is Regional Leader. In addition to Representative qualification, you must have 3 business associates promoted to District Leader and submit $7500 in premiums in one month. Regional Leaders earn 70% commission on life insurance, 10% override on Division, 20% override on Districts, 35% override on Senior Reps, and 45% override on Representatives.
The sixth level is Regional Vice President. In addition to Representative qualification, you must have 6 business associates promoted to District Leader, be full time in the business, must be fully licensed, and submit $20,000 in premiums for 2 consecutive months (a minimum of $8000 in each month), must have acceptable persistency, and must be approved by Office of Supervisory Jurisdiction. RVPs earn 95% commission on life insurance plus bonuses and override commissions.
The seventh level is Senior Vice President.
The eighth level is National Sales Director.
The final level is Senior National Sales Director.
So I just showed you how you get promoted in Primerica and commission rates and overrides you can earn on life insurance. I didn’t show you the commission rates on debt elimination loans and on investments.
How to find good term life insurance?
Looking to get life insurance on myself. Need to replace 70K per year income in the event of my death. Need to support my wife and 4 year old son. What type of insurance would be best, and what type of investment advice could be given for my family to invest the money and live off the interest, leaving the principal untouched?
The best type of life insurance would be level term life insurance – either 20 year or 30 year level term life insurance.
Level term gives you coverage that remains level for a specific number of years, and your annual premiums remain level throughout the term of the policy.
The amount would be approximately 14 times your annual income (at least). That way they could take the benefit amount and invest it in a conservative investment vehicle that provides 6-7% annual return. That could be government bonds or a high quality bond fund. Hopefully, if the time ever comes, the interest rates will be higher. However, this does not take into account your existing investments, which would lower the amount of insurance protection your family needs.
To use a life insurance needs calculator.
The amount of term life insurance a person needs will depend on their specific situation and the reasons for buying the life insurance policy.
One way to decide how much term life insurance you should buy is to consider the needs of your family if you were to pass away prematurely.
Term Life insurance may provide financial security to meet many of your family’s needs by providing a fund they can use to:
Pay off an individual’s debts, such as medical bills, funeral expenses and health care costs
Pay for estate taxes and other expenses related to settling their estate
Provide a lifetime income for your spouse
Pay off an existing mortgage on your home
Pay for your children’s college education
Provide retirement funds for your spouse
Provide an adequate income for your spouse to give your family time to adjust to a new standard of living without you or your income
Receive interest to provide money for some special need – such as travel, education or health care costs.
Provide a monthly income until your children are grown up and living on their own.
The future financial needs of your family should be a major consideration in deciding the right amount of term life insurance to provide the financial security they deserve.
Another contributing factor is the amount of your annual salary. In addition, your family’s style of living they are accustomed to, your monthly expenses and future financial goals, such as, college tuition, retirement funding, vacations and living expenses.
The best way to get the maximum amount of coverage at the lowest rates would be to compare online quotes for term life insurance.
I recommend Insureme – They give you the five best life insurance quotes from top-rated life insurers nationwide.
I hope that helps! Take care and best of luck!
How is does variable life insurance work?
I went to an AXA financial advisor to plan for my retirement and he insists i get an flexible variable life insurance policy from AXA? Anyone have this insurance from AXA and how does it work? I personally want to put money on IRA’s, but he is saying this is a better option for me. I am 29 and single. What do you think?
Not to be a jerk, but that financial advisor is an idiot. Actually, he’s not an idiot, he’s trying to make bunch of money by selling you a life insurance policy. I guarantee you he doesn’t own a variable life policy. Maybe he doesn’t have life insurance at all.
This is how a variable life policy work. You pay your premiums. A portion of your premiums goes toward life insurance and the rest is invested in the stock market. There is no guarantees that your cash value will grow. Investments by themselves have their own operating and management fees. Life insurance has its own fees as well. Now you combine these two products together, you are now paying bunch of fees!
If your cash value does grow and you die someday, your beneficiary will be paid a death benefit that is almost equal to the growth of the cash value. If your cash value does poorly, you are guaranteed a minimum death benefit of what you paid for.
If you ever wanted to take money out, you would have to borrow it and pay a loan interest on it. You will affect the death benefit above the guaranteed minimum. If you cancel the policy in the future, surrender charges will apply on the cash value.
I have seen many life policies and I have never seen a life insurance policy getting a great return on the cash value. The highest rate of return I ever saw was 6%. Most of the time, its between 2% to 4%.
If you want life insurance because you have a family that is dependent on your income, get a 20-35 year term insurance. If you want to save for retirement, open a Roth IRA (if you qualify for it). If you have a job that has a 401(k), I would put money into that too. If you put the same investment in a life insurance policy and in an IRA account, the IRA will out perform the life insurance policy.
Anyway, you are making the right choice by considering an IRA. Don’t listen to agent or advisor or anyone who recommends life insurance as a retirement vehicle. Life insurance main purpose is to provide income to your beneficiary so that he/she can maintain the same life style. (though, many people who own life insurance don’t have enough coverage)
What exactly is life insurance and how does life insurance work?
What exactly is life insurance and how does life insurance work?
I don’t understand, won’t you be dead or something so what does it do for you?
What happens if it doesn’t get cashed in, what does that mean?
Sorry I don’t understand, please explain.
Life insurance is insurance on your life. If you die the insurance company pays money to your beneficiaries. they could be family, friends, the company you work for even a charitable organization. as long as there is an insurable interest.
If you are dead the money from the insurance can pay for your funeral, your debts, mortgage, medical bills, car payments, children’s college education, your families survival if you are no longer here to provide for them, as well as pay for inheritance taxes, probate taxes (life insurance is tax free)
if you are single, no family, no responsibilities and don’t mind being buried by the state then you probably don’t need life insurance. Try this site to find the best life insurance
http://best-life-insurance-usa.info/
Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
Hope this help,
How can I take out life insurance on another person?
My father owes me money and I owe alot of money because of him. I’d like to be able to take out life insurance on him incase he dies before he pays me back.
How would I go about doing this?
I’m trying to figure out how to take the insurance out on him (since he owes me). Not have him get life insurance and then make me the benifactor himself.
I think you can purchase a life insurance policy on the life of your father. You would be the owner and beneficiary, and his life would be insured. I think you would be responsible for paying the premiums.
You need an insurable interest in order to insure someone’s life. This means you are a creditor or rely on the insured person for some kind of income or money owed you.
Here is a complete explanation of insurable interest:
What is Insurable Interest? Insurable Interest is the expectation of a monetary loss that can be covered by insurance.
What is an Insurable Interest as it relates to a Life Insurance Policy?
When you buy a life insurance policy there must be an insurable interest on the person being insured on the life insurance policy.
Types of Insurable Interest for a Life Insurance Policy:
Your Own Life – Every person has an unlimited insurable interest in his or her own life. The insured person can choose whoever they want to be the beneficiary (who the proceeds are paid to upon the insured’s death) of their life insurance policy.
Parent and Child, Husband and Wife, Brother and Sister – All have insurable interest in each other, because of blood relation or marriage.
Your creditors – All creditors may have an insurable interest in you if you owe them money. The creditor can be the beneficiary of your life insurance policy for the amount of any outstanding loan.
Business relationships – May create an insurable interest. An employer may insure the life of an employee, and an employee may insure the life of an employer.
Insurable interest must exist at the time the life insurance policy is purchased. However, for a life insurance policy, insurable interest is not required at the time of loss.
Example: – A man may insure the life of the woman he is engaged to. If they marry and then are divorced, he can continue paying the premiums. If his ex-wife dies after the divorce, he would receive the death benefit.
Review:
All of the following may have life insurance beneficiary insurable interest status:
Children of a parent, Parents of a child, Husband for a wife, Wife for a husband, Creditor for a debtor, Employer for an employee, and Employee for an employer.
In order to purchase a life insurance policy, the person buying the policy must have an insurable interest in the person insured on the life insurance policy.
I hope that helps! Take care and best of luck.
P.S. – If you want to compare quotes I recommend InsureMe – They offer you the five best life insurance quotes from top-rated life insurers.
What kind of life insurance should my husband get?
We are looking to get a life insurance policy for my 25 year old husband. We have three young children so we’re trying to figure out what would best provide for the family if God forbid something were to happen to him.
Term life insurance is usually the best answer for a situation like this. Be sure you take out a policy that will last until your children are grown. Some agents might try to convince you to buy permanent insurance (universal life, for example), but there usually isn’t really a need for that. But, look at the difference in price between term life insurance and permanent insurance, and try to put away some of that extra money into savings over this time. Depending on your own employment situation, you may still need a little finanical “boost” should your husband pass away after your kids are grown (and the insurance term is up). But that is a situation you can start to cover now. If you save over the next 25 years, you will not need the coverage of permanent insurance because you will have built up your own savings nicely.
As others have said, do be sure that if you are home with the kids, you are insured as well, if the additional cost of childcare would impact your husband’s financial state. Depending on the ages of your children, where you live, and the availability of family to help out, you could be looking at $3000 in monthly day care costs. It may be worth taking out a policy on you as well if those expenses would impact your family in a bad way should something happen to you. Try this site to find the best life insurance
Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
I am interested in purchasing life insurance, but lack general knowledge of the industry?
What kind of life insurance would be best suited for a 26 year old in good health who is the sole income in the family? Keep in mind that I support a stay at home husband, and have 3 children. No assests and no debt. Thanks.
I’m a financial representative and providing life insurance is one of the things I do for clients. God forbids if the breadwinner dies, where would the family be without life insurance? Life insurance can’t protect you against harm or death, but it can replace your income. The problem is that many families that own life insurance don’t have adequate coverage, but they pay lots of premiums for it. That’s because they own the wrong type of life insurance. Take a look at the facts and you decide which product is the best:
Whole life insurance
1) Its level term to around age 100 that builds cash value.
2) Since it builds cash value, premiums are higher than term insurance that doesn’t build cash value.
3) There is no cash value growth in the first 2 years because premiums are used to pay for the insurance and commissions to the agent.
4) After first 2 years, you are guarantee a rate of anywhere between 1-4% (varies between companies)
5) If you wish to take money out from the cash value, you have to borrow it and pay loan interest of 6% to 8%.
6) If you die someday, the insurance company keeps your cash value, but pays the death benefit. Death benefit will be reduced by any loans you taken from the cash value.
Universal life insurance
1) Annual renewable term until around the age of 100 that builds cash value.
2) Flexible premiums as long as there’s enough cash value to pay for the insurance.
3) While premiums may remain level in the beginning, the internal cost of the insurance goes up every year. That means less and less of your premiums goes into the cash value. Eventually, the premiums you pay will be insufficient in the future to pay for the cost. What would happen is that you would either have to pay more premiums or a portion of your cash value will be used to pay for it.
4) Same cash value features as whole life.
Term insurance
1) Various of level term products to choose from (from 1 year to 35 years).
2) It does not build cash value, so premiums are initially lower than whole life and universal life.
3) Most term insurance are guaranteed renewable without providing a proof of insurability. If your health was to decline because of old age, you can renew your policy without any hassle.
4) When you renew, premiums will be based on your current age. So premiums will go up after the initial level term.
Those are the facts.
Personally, I have sold term insurance 100% of the time. Why? Its because my clients can get lots of coverage for low amount of premiums. Since premiums are low, I help setup investment accounts for my clients so that they can build wealth. If you had lots of money saved right now, would you still need life insurance? Probably not. But you probably don’t have lots of money saved right now and if something were to happen to you, would your family be financially ok? As you get older and continue to invest, you may or may not need life insurance when it is time to renew the term insurance. If you were to invest $200/month for the next 30 years and the average rate of return in your portfolio was 12%, you would have about $650k saved for retirement. That’s probably not enough to live on, but at least its better than having money sitting in a life insurance policy.
Which brings me to the next point. It pays to start saving early. The later you wait, the more you would have to put away to reach your retirement goal.
What do we need in order to qualify for getting health/life insurance?
I heard that some insruane companies wouldn’t allow individuals over 60+ years old for getting an insurance, especially those who are foreigners, is this true? Why they not allow that?
This is not true. It is a common misconception that people over age 60 can’t get life or health insurance. I work with mostly retired people and have never had a problem getting life insurace coverage provided they are in good health.
People over te age of 60 are not considered high risk. Rates Life insurance companies charge are based on mortality tables (likelyhood of death based on current age and life expectancy) Yor current health can have an effect on the cost of the insurance was well as your age. A person who has some health problem in many cases can still quilify for life insurance just at a rated cost (higher premium due to health). Depending on the amount of life insurance you intend to apply for will determine that requirements to quilify. Every company has different requirements based on age and amount of coverage being applied for. With many companies if you applying for over $100,000 they may require a Paramed with blood and urine (at the expense of the insurance company). In some cases they may request to see the medical records (the insurance company orders them direct form the doctor). A resting EKG is also another thing they may want and is done at the same time as the paramed (again the insurance company pays this expense).
Health insurance is a little different. They focus on morbidity which is the likelyhood of illness based on your current health and family history (parents, brothers and sisters). It can me more difacult to quilify for this type of coverage if you have exsisting medical issues. If you are working with an agent, ask him or her to submit your current health to the underwritter fo a ruleing. This can help you decide which company is most likely to insure you based on your health and family history.
What are the pros and cons of having a variable life insurance plan?
I am thinking of canceling mine and getting some term insurance, but I don’t want to make any mistakes or moves that I might regret.
There is really no pros about having variable life insurance. Here are the real facts about variable life insurance
1) It is permanent life insurance where you pay premiums for the rest of your life until you die or cancel the policy.
2) A portion of your premiums are invested in the stock market, particularly in mutual funds.
3) All mutual funds has annual operating expenses. Since an insurance company is managing your assets as well, you are also paying for insurance fees. You are now paying bunch of fees, which eats away the return on your investment.
4) Since your investment is in an insurance contract, you can only borrow money from the cash value or you can cancel the policy and pay surrender fees to get the money.
5) You are guaranteed a minimum death benefit. Your death benefit will grow if your cash value grows. Since the stock market is unpredictable, your cash value will fluctuate. If there is a loss on your investment, your death benefit will never fall below the guaranteed minimum.
If I were you, I would first see if I qualify for term insurance. If you do, then I would either cancel the variable life insurance and put the money in an IRA or in tax-efficient mutual funds OR do a 1035 exchange and move the cash value into a variable annuity. Before canceling the variable life insurance, you want to make sure all loans (if any) are paid. After that, I would invest the difference into mutual funds.
How do life insurance agencies make their profit?
I have a few questions here and thanks in advance.
Can anyone please explain how do life insurance agencies (or financial advisory agencies) make their profit?
Is that true that the life insurance companies are paying around 100% of total first year premium to the agents? How do the agencies split that with the agents?
I would appreciate if you can throw in some numbers, since i am looking to invest some angel capital into an agency, so you would help if you give numbers.
Agencies make their money from First Year Commissions (FYC) on new policies, and renewal commissions and service fees on policies which have been on the books beyond the first year.
If an agent works for an established agency, he/she will get paid a percentage of the total FYC. The total FYC could be anywhere between 40%-120%, depending on the insurance companies the agency represents, and what type of policy is being sold. Health policies pay a lot less than life insurance policies.
Of the total FYC, the appointed sub-agent would receive anywhere between 50% and 90%, depending on the sub-agents contract with the agency. Most agencies will pay advance commission on 75% of the sub-agent’s FYC.
Example:
Let’s say that the sub-agent writes a life insurance policy, and the annualized premium is $1200. ($100.00 per month). Let’s assume that the agency’s FYC is 100%, and the sub-agent’s FTC is 80%. The agency’s FYC would be $1200, and it’s advance would be $900 (75%). The sub’s FYC would be $960, and the advance would be $720 (75%). The balance would be paid as earned on the final 3 last payments of the first policy year premium. If the total ANNUAL premium was paid initially with the application for the same policy, it would be a little less than $1200, around $1162 give or take. ALL FYC would be advanced in this case.
Once the policy is in force for 12 months, renewals and/or service fees will be paid, 2-20%, depending on the carrier, and the sub-agent would get his/her percentage of that. (I had a company that paid $100% FYC and 20% renewals)
Some companies pay bonuses, based on your total production and persistency rate, the percentage of business that stays on the books.
If you work for an insurance company as an employee/captive agent, your commission rate will be somewhat less, but your benefits will make up the difference, such as company-paid retirement, 401K, health and life insurance. In this case, your commissions would be put in a commission pool, and you would draw from that on a weekly or bi-weekly basis. When you initially start selling for one of these companies, you are on a guaranteed salary for a specified period of time, while you build your commission pool. Some of these types of companies will guarantee your salary, (based on production quotas), for up to three years, on a depreciating basis.
After the first year, you start earning renewals/service fees. Let’s say that over time, you build up your book of business to $500,000 of life insurance annualized premium, and your renewals are 3%. Your base pay would be $15,000, plus your FYC and bonuses.
Some of the captive companies will offer you an established book of business, with renewals and service fees. It’s possible to be offered an agency which is paying $300-$500 or more per week, which would either go into your commission pool, or be paid as part of your initial guaranteed salary. If you are assigned to an existing book of business, you have all those policyholders as potential prospects for new business, along with their family members and other people they know.
Here are some names of companies that have guaranteed starting salaries: (Not in any particular order)
New York Life, Met Life, Monumental Life, American General, American National, Western-Southern Life, Prudential, Liberty Life.
Does my mom need to purchase some form of insurance if she plans to start an alteration and design business?
My mom lives in Chicago, Illinois and plans on starting an alteration and fashion design business. I know that insurance is always needed when starting various types of insurances but we are unsure as to whether she needs to select some form of insurance for this type of business, specially since she’s starting it from home. As stated she lives in Chicago, Illinois. I would greatly appreciate any information and/or any tips and advice.
Thanks a million.
Health medical insurance should be your first consideration. (recommended)
Disability insurance will guarantee you some income should you suddenly become unable to work because of injury or illness. Having this extra peace of mind may be well worth the extra money you pay. (recommended)
Business property insurance helps protect you against loss of inventory or equipment. If your business equipment or inventory is damaged in a flood, fire, or other disaster, this type of insurance will allow you to recoup your losses. You may be able to lump this with your Home owner insurance, but usually the Insurance company wants to keep home and business seperate . (recommended)
Comprehensive general liability insurance is necessary for your home-based business if you plan on having clients or customers visit your home. Whether you plan to hold meetings, allow customers to pick up merchandise, or have members of the public enter your home for any other reason, this insurance will protect you if someone is injured while on your property. This insurance will typically pay for your legal defense should you face a lawsuit as the result of a fall or other damage that occurs on your property.
Life insurance will help ensure that your family has the money it needs should you meet with an untimely death. Some lenders require that you have life insurance before they’ll issue a loan; this guarantees that the loan will be repaid if you meet with an untimely end.
Business interruption insurance will help your business recover from natural disasters. It will cover you for income lost during the disaster, and will pay for operating expenses that continue to accrue, even though your business isn’t up and running.
Workers’ compensation insurance is vital if you plan on having employees working out of your home. Without workers’ comp, you’ll be responsible for any medical expenses arising from injuries employees sustain while working for you. Many home-based business owners mistakenly believe that this type of insurance is only required by businesses that have a retail or separate location, but that’s not the case. (Read “What You Need to Know About Workers’ Compensation Insurance.
These insurance plans can help ensure that you are prepared to face any eventuality that might occur while you are running your own business. Disasters, accidents, and crises can strike at any time. By preparing now, you may be saving your company significant money over time.
Good luck and all the best.
