Posts filed under 'final expense life insurance'
Life insurance these days has so many options available as far as products go that it has become easier and easier to hone in to just exactly the right product for your life and your needs. Along with the huge increase in options is the need to have a professional independent insurance agent help you understand how best to choose or combine different options.
The good old days were simple. There was whole life insurance and you had a choice of what company you wanted to purchase it from. Today, while whole life is still an option, there is now universal life, universal life with no lapse guarantees, variable whole life and universal life. Along with all of those permanent options there are guaranteed level term insurance options from 5 to 30 years and return of premium term insurance. And for those small needs there are final expense policies or burial policies and finally, for the technically uninsurable, there is guaranteed issue graded whole life.
I’m not saying you can’t figure out the appopriate route on your own. All I’m saying is that professional advice can save you huge amounts of time and money. With the number of people who die each year “looking into” life insurance, time is an important consideration.
March 21st, 2007
Life insurance companies use criteria such as financial justification and insurable interest to determine how much life insurance they will sell to an individual.
Financial justification simply keeps the amount of insurance in proportion to the actual financial loss. The idea is that life insurance is a tool to replace a loss, not create wealth where there previously was none. My best stab at an analogy would be if you could insure your 2000 Toyota Camry, not for it’s replacement value, but let’s say for $100,000. If you wreck the Camry you then have the opportunity to upgrade to a very pricey Mercedes. I don’t see a lot of auto insurance companies jumping on that idea and I don’t hear many people asking why not. Creating wealth where there was none is not good business.
Insurable interest is another one that life insurance companies take pretty seriously. Insurable interest simply asks the question, “what financial loss would you suffer upon the death of the insured?” In the absence of insurable interest as a check and balance, we might be able to talk a relative, say our mother, into letting us purchase a large insurance policy on her as kind of an investment. If that policy was for $250,000, the query from the company would be show them that you would lose $250,000 upon the death of your mother who makes $9000 a year on social security.
We are frequently asked for life insurance quotes that don’t meet the criteria above. In the case of financial justification, as their independent life insurance agent we have to explain the criteria used and the maximum amount of coverage is that a life insurance company will approve.
With insurable interest we are often having to explain that, while a burial or final expense policy might be very appropriate, a large policy on mom as an investment is not going to fly.
Important questions to consider when considering life insurance.
March 11th, 2007
Want to throw a wet towel on an adult conversation? Ask your friends how much life insurance they carry on their children. The normal answer would run the gammet from, “why would I do a thing like that” to “that’s not something I want to talk about”.
Just suppose for a moment that juvenile or children’s life insurance isn’t some morbid thought, but a potentially valuable gift to your child. OK, who said “life insurance can’t be a gift to my child because for the life insurance policy to do anything my child has to die and I don’t want to talk about it”?
Let’s just talk about adults for a minute. Hopefully we can all agree that life insurance has value in our adult lives. OK, I think I got about an 80% positive response to that. Now, if you could pay a very small amount of money to ensure, no matter what your young adult child’s health was, that they could get life insurance at affordable rates, would you agree that there might be some value in that? If your child developed some illness during their growing years it could probably be construed as a gift, couldn’t it? A prudent thing to do to make sure they can do the right adult thing at affordable prices?
All right then! Let me tell you how to accomplish that and then I’ll tell you how to answer that awkward question and sound like you are just, well, savvy.
The best policy out there that will guarantee that your child can buy $100,000 or more of insurance when they reach age 23 has a one time cost of just $250. You are purchasing something that gives them a guarantee as much as 23 years down the road that there is no other way for them to have guaranteed. The kicker is that it also includes a small amount of term insurance as they grow up. $5000 through age 13. $10,000 when they reach 13 through age 18 and $15,000 from age 18 to 23. This is no more than final expense or burial insurance. At age 23 they can do a conversion of that policy to a universal life policy of up to $100,000 in coverage WITH NO EVIDENCE OF INSURABILITY. All of that for a one time payment of $250? Yes!!
Now, when your friend asks you how much life insurance you carry on your children, tell them you bought a guaranteed insurability policy so that when your child grows up, they are going to be able to buy insurance no matter what there health is. If they really push on the children’s life insurance question, tell them that the guaranteed insurability policy has a small death benefit rider on it if, God forbid, anything should happen while they are growing up. Tell them you weren’t really interested in children’s insurance, but it just came with the package at no additional cost.
March 4th, 2007
Burial insurance, sometimes also called a final expense policy, can be an affordable way to spread the expense of a loved one’s death over a number of years. Morbid idea? Not when you think it through. All of us reach the point of final expenses sometime.
Final expenses can be anything from a simple burial to hospital bills, attorney’s costs to administer a will, or gifts left to children or grandchildren. Depending on your personal desires, a burial or final expense policy might be as small as $5000-$10,000 or as large as $50,000-$100,000.
Most folks don’t really put a lot of thought into this kind of life insurance until they start to see “final” kind of off in the distance. Generally at that point most of us don’t want to be bothered with exams and people poking around our medical history so we opt for a guaranteed issue life insurance. We just want to sign up without any hassle. There are some good and some not so good products out there for those who want to take the easy route.
If you are in good health and just don’t want to take an exam, ask your independent life insurance agent about simplified issue life insurance. There will be a few health questions, but it is generally very easy to qualify for, comes in both term insurance and whole life, and is usually less expensive than guaranteed issue.
If you have some fairly serious health problems, guaranteed issue life insurance is a good option. Again, employ an independent life insurance agent to do the shopping for you. They will be able to get through the fine print and find a good match for you.
Are these types of policies a good idea? You know, they really are unless you have $10,000 in a box marked final expenses.
February 28th, 2007
My mother never told me running a small business was easy. In fact it went something more like, “wouldn’t you be better off getting a real job?”
Whether you are in business for yourself, or work for someone, your future can be in jeopardy if you, or they, have not adequately protected the business with business life insurance. The untimely death of an owner, partner, or key person in a business when there is no business life insurance such as a buy/sell insurance policy or key man insurance in place can be the beginning of quick end.
We often think of life insurance just in terms of protecting our family from the loss of income if a parent should die, or in terms of final expense or burial life insurance. The unexpected death of a business owner or key person can have a dramatic impact, not only on their family, but on the employees of the business and their families.
If you own a business and don’t currently have business life insurance, meet with an independent life insurance agent soon and review the structure and financials of your business. The agent can then make recommendations and provide insurance quotes that help your business become a legacy to your family and your partner(s) and employees, rather than a loss to them all.
In most cases you will want to look at term insurance or possibly return of premium term insurance rather than universal life or whole life. Why term insurance? The truth is that most businesses change too rapidly to make locking in even the longer terms or permanent insurance. A more prudent approach is to look at each aspect of your business and consider the proper term length. It may take more than one life insurance policy, but with term insurance being as affordable as it is, you should certainly be able to protect your business without significant impact on your budget.
So, mind your own business! A good steward of a business will ensure that the business will survive them.
February 25th, 2007
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