What Is The Best Life Insurance Policy?
If you’re just starting to look into life insurance or you’re reviewing your life insurance portfolio, the myriad of choices can be confusing.
Man is Mortal. That makes life insurance a little unique and interesting, doesn’t it? We purchase things like health insurance, car insurance and home insurance, then hope we never have a need to use them. Life insurance is different, because it’s a widely accepted fact that sooner or later, each one of us will die.
So many choices. When it comes to life insurance, there are many options. What is the best life insurance policy? You may have heard terms like “whole life insurance”, “term insurance” or “variable insurance” … but what does it all mean? And what are the differences? Well, first let me point out what they have in common: all life insurance policies provide payment to a beneficiary in the event of your death. Except for that basic tenet, the differences between policies can be major. In this post I will discuss the basics of the different types of life insurance. In future post I will go into detail of each type of life insurance and go through the options and the pros and cons of each.
Whole life insurance. This type of insurance covers your entire life (not just a portion or a “term” of it). It is considered permanent life insurance which is used to cover you for your “whole life.” Whole life insurance policies tend to cost more than “term” policies. This is both because they grow what is known as “cash value”, and because after a time you will be able to borrow against or withdraw from your whole life benefits to supplement your retirement. Most whole life insurance policies will have guarantees on both the cash value and death benefits.
Term life insurance. Rather than covering your whole life, “term” insurance covers a pre-determined portion of your life. Common terms are ten, twenty and thirty years, if you die within that term, your beneficiaries receive a death benefit. If not, generally you get nothing. To put it simply, term life insurance allows you to purchase more coverage for less money. Basically, you are betting on the probability of your death occurring within that specified “term”.
Variable life insurance. Variable life insurance is a permanent insurance. However, unlike whole life insurance, variable insurance allows you to invest the cash value of your policy in “subaccounts” (which can include money market funds, bonds or stocks). Variable insurance offers a bit of control, as the value and benefit depend upon the performance of the subaccounts you select. However, that means there could be significant risk involved, since the performance of your subaccounts cannot be guaranteed.
Universal life insurance. With universal life insurance, it all comes down to flexibility. It is permanent life insurance that provides access to cash values that build up tax-deferred. You can choose the amount of coverage you feel is appropriate, and you retain the ability to increase or decrease that amount as needs change (subject to minimums and requirements). You also have some flexibility in determining how much of your premium goes towards insurance, and how much is used within the policy’s savings element.
So, which is right for you? Many factors come into play when deciding what type of life insurance will best suit your needs. The best thing to do is to get a quote or review your current policies using The LIFE Study. It is very quick and easy, click here and let us assist you in looking at all the factors and help you to find the right life insurance policy at the right price for your specific needs.
How Much Does Life Insurance Cost?
What a question, “How much does life insurance cost?”
I am asked this question on a daily basis. There are many variables that make up the cost (or premium) of a life insurance policy. They include the amount of coverage you are seeking, the length of time you want the coverage to last, your overall health, family history and age and whether you are a tobacco user. There are some variables that are just as important but most people are not aware of them which includes your occupation, if you are involved in any dangerous activities such as a private pilot or hang gliding or mountain climbing… this list can be rather long. Your financial net worth and annual income is also taken into consideration when the insurance company is deciding on what premium to offer you.
The most important component of the premium, however, is the purpose for purchasing the policy in the first place. Are you looking for maximum coverage in the event of premature death (I have always wondered how many deaths were right on schedule) to take care of your family or are you looking for cash accumulation in addition to the death benefit to give you a tax-free retirement income? Are guarantees important to you? Are you funding an Irrevocable Life Insurance Trust, or do you just want your mortgage paid off?
In addition, have you looked at the financial strength of the life insurance company? If you purchased a policy through an internet term quoting machine or didn’t consider all of the above factors, you may not have the right policy. Or you might be able to improve on the policy you already own. Let me tell you a dirty little secret about most online life insurance quoting websites. These sites want you to think that they can answer the question of “what is the average price of life insurance?” In reality, what some of them are doing is selling your information to any insurance agent, and I mean any agent, that will buy your information. These insurance agents may be less experienced or unaware of all of the factors involved in determining the best life insurance policy for you.
One last thing to be aware of- insurance companies will have as many as eight different rate classes and an additional ten substandard rate classes. I find that most people that were quoted a life insurance premium without all of the facts were misquoted by as much as three to five rate classes. It is very important that all of your personal factors are taken into consideration when preparing a life insurance quote. That is why a quote or a review using The LIFE Study is the preferred method in helping you to find the best life insurance policy for you and your family.
“Click here” to get started with your free insurance review or life insurance quote.
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Why should I compare?
In the back of their minds some people quietly wonder, “Is my life insurance policy healthy? Am I paying too much? Is the company still as solid as it used to be?”
However, very few people ever find the time time to check up on their policies. And if they did, fewer still would know how to do it. Many life insurance companies have cleverly trained us to buy a policy and then forget about it. Why should we think about it any more? It’s not a pleasant subject, so why dwell on it at all? Most of us go on living normal lives. We simply pay our premium and happily put it out of our minds.
Because of this, it’s not even immediately clear why anyone would even want to review their life insurance in the first place. If this sounds a little like you, you’re not alone. So here are some things to consider:
LIFE Study Reason #1
Your spouse could end up receiving much less than you think.
An undervalued life insurance policy might be the worst legacy you could leave your family in the event of your premature death. You might ask, “How could leaving behind ’something’ be worse than providing ‘nothing’?” The answer is this. If your spouse expects nothing and gets nothing, there’s pain but little surprise. If, however, your spouse expects to be cared for until retirement, and instead finds out she needs to go back to work in a few years, this adds resentment and bewilderment to the pain. We’ve seen it. As financial planners, the developers of The LIFE Study have seen first-hand the effects of ‘too little too late’.
LIFE Study Reason #2
The elephant in your house that no one notices.
Life Insurance can often be one of the most valuable assets within a family’s financial portfolio, yet it often goes neglected. Very few people ever give it the same kind of attention as they might give their other investments. Think of reviewing your life insurance in the same way you might consider refinancing your mortgage. Just as there can be better interest rates for you to save money on your mortgage, there can be improved conditions to strengthen your life insurance. The difference is that these insurance benefits are not as widely published or known as are the mortgage interest rates!
LIFE Study Reason #3
The life insurance industry has changed.
Believe it or not, the life insurance industry has a tendency to get better with age. Free market conditions have had the effect of forcing life insurance companies to become more ‘efficient’. Market economists understand that this efficiency usually translates into better products and lower costs. Life insurance ‘products’ are no different. Your personalized, easy-to-read LIFE Study report will include up-to-the-day current information about new policies and other lesser-known options to strengthen your life insurance.
LIFE Study Reason #4
Life insurance regulatory laws change.
In recent years, the way in which life insurance policies are designed and priced has changed. Some of these improvements have happened because of market pressures and changes to medical underwriting, while other changes can be the result of new (or revised) regulatory laws. The McCarran-Ferguson Act provides for states to control their own insurance laws allowing for significant disparity between policies originating in different regions of the country. What this means is that a change in the law ‘there’ yesterday could create a competitive advantage ‘here’ today. The LIFE Study can reveal these opportunities for improved coverage at lower premium costs.
LIFE Study Reason #5
Life changes.
Since the time you purchased your original life insurance policy, some things have probably changed in your life. Has your health changed? Have you moved? Do you have any more children? Have you changed jobs? Has your net worth changed? Have any children moved out of the household? There’s a good chance the reason that you originally purchased your life insurance has changed since then as well. In addition, The LIFE Study can also help you avoid the classic life insurance ‘bait and switch’ tactic where a salesman quotes you a cost estimate before you’ve answered important health questions that may disqualify you from that preferred rate.
LIFE Study Reason #6
People are living longer.
Can this really affect the cost of insurance? You bet your life. As recently as 2002, many experts in the insurance industry still agreed that the top life expectancy was only 100 years old. But by 2003, the newly-adopted mortality tables developed by the Society of Actuaries had put the top age of Americans at 120. That’s a big shift. Most insurance companies now accept these new statistics thereby enabling the emergence of new policies that can have better coverage at a lower premium cost. This means that if you had a slightly lower insurance ‘rating’ before, (perhaps because of a medical history) now you might have a better ‘rating’ simply because the actuarial tables have shifted enough to include you in a lower cost group.
LIFE Study Reason #7
Check the financial strength of your life insurance company
With all of the current economic uncertainties, it is important to keep an eye on the financial strength and ratings of your life insurance company. With your free life insurance evaluation you will receive the current financial strength of your life insurance company.
What is The LIFE Study
The LIFE Study is a personalized independent objective evaluation of your existing life insurance. In addition The LIFE Study is a great way to find out how much a new life insurance policy would cost. Created by financial advisors (not by life insurance companies), The LIFE Study is uniquely designed to uncover the hidden, overlooked, and lesser-known opportunities to lower your costs and improve your coverage. Life Insurance is often one of the most valuable assets within a family’s financial portfolio. Yet very few people ever give it the same kind of attention as they might give their other investments. Think of reviewing your life insurance in the same way you might consider refinancing your mortgage. Just as there can be lower interest rates enabling you to save money on your mortgage, there can be improved conditions to strengthen your life insurance. The difference is that these benefits are not as widely published or known as are mortgage interest rates!
Sometimes referred to as a ‘life insurance audit’, The LIFE Study approach is unique. It’s a quick yet comprehensive analysis that weighs your personal and policy information to determine where your policy ranks within the most up-to-date insurance market data. In addition, we’ll look at the top life insurance companies and their policies to see where improvements may be found and present you with a comprehensive report of our findings.
Click here for a sample LIFE Study Report!
Best of all, this information comes to you from a seasoned, objective third-party, Your LIFE Study Analyst!