Life Insurance Basics

Many of us buy life insurance because we make sure our loved ones to stay especially relatives, financially secure, if we want to die. Replacing the income is the No. 1 reason why people buy life insurance.

They do not earn caregivers also have an important - and often overlooked - the economic value that should be covered by life insurance companies.

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Life insurance is purchased by those who are interested in achieving the objectives of specific business or change of ownership.

There are many types ofLife insurance depends on your goals, and there are great differences in price between the various companies that have the same cover. Policies are hundreds of life insurance in the United States. Most financial advisors recommend that not every provider household income of less than 10 times its annual revenue to carry life insurance.

Here's an orderly way to go about shopping for life insurance:

1) Evaluate the amount of your life insurance needed .. 2) for the type of policy is most appropriate for your goals Decide. 3) Select most of the companies by setting high standards for the evaluation of financial stability. 4) Shop to find the best price. 5 in search of ways) to get the best rate life insurance.

Life insurance is a long statement, you should pay particular attention to the time of purchase and for the duration of the policy toassessments of financial stability of the insurance company. Ratings indicate a company's ability pay debts.

The assessment of your life insurance needs

The first step in the design of life insurance is to analyze your life insurance needs - thus leaving the economic needs of relatives. A good way to determine your coverage needs, is an online calculator as a life insurance Insure.com 's Needs tool to use for prediction.

Before purchasing a life insurance policy, you should check yourfinancial situation and standard of living which is held for the dependents or survivors. For example, who is responsible for the final medical bills and funeral expenses? Do you want to relocate your family or otherwise change their standard of living after the loss of income? The assumption of immediate death is necessary to determine the current life insurance needs to be determined for a family or an individual.
Add in the financial long-term needs of other family members, asExample: the costs of children and income for the surviving spouse, mortgage and other debt payoffs, college education funds and an additional emergency fund.

Because life insurance needs change over time, should your life insurance amount will be periodically reassessed. We recommend a review at least once every five years or when there is an important event in life, as a change in income or assets, marriage, divorce, birth or adoption of a child, or a major purchase such as a house orBusiness.

They have, in theory, you should see a drop in demand for life insurance than you, because fewer people remain dependent on you for social security age. Exceptions would be to protect a business entity or the payment of taxes on a large estate to heirs. If the purpose of buying life insurance, inheritance tax is due, must be permanent, life insurance is in force as long as you live and pay the premiums.

Political decisions

Life insurance[Http: / / www.insure.com/quotesmith/controller?REF=99998&reqid=qstermindex&redirx=x] are divided into two main types:

Term life insurance that offers (buy less expensive with the cost for each $ 1,000 of death), only death protection without any side effects or fund "cash equivalents". Permanent life insurance, the "cash value" accounts, where a return on investment component is an often complex and expensive policy (mostexpensive to cover costs $ 1,000).
Term life insurance

To understand the simplest of all life insurance and the cheapest to buy: Term life insurance provides death benefit protection without any savings, investments, or "cash value" components for the entire duration of the warranty period.

Term life insurance is for the periods indicated as 10 years, 15, 25 or 30. With "Life Annual renewable," your policy is automatically renewed each year and bonuses, such as increasingelderly. Select "level of attention" if you want to keep your premiums the same for the duration of the policy. There is also "reduce the long-term care insurance", where the level of premium, but your death benefit decreases with time to stay. This is good if you only have a definite debt is reduced, such as a mortgage or business you want to cover.

As long as you pay the premium the company can terminate.

Term life insurance is a popular choice because of the long-priceTime, both for the possibility of obtaining affordable insurance life. However, if until the end of your contract term and you will still need life insurance, you will need a new policy, which is then based on the age and health, shop price.

The choice is simple from an initial period of guaranteed rates: playing time, your family needs your income for the periods available to provide a percentage. For example, if your children are young and have decades to go on yourTry 30-year mortgage term life. If your kids leave the nest and at home is almost paid off or paid, sent to 10 years, might fit the bill.

Provisions of other policies which guaranteed the popularity of term life insurance renewal hard and guaranteed convertibility.

Guaranteed renewal. Before buying a term life insurance, ask the agent or company to confirm that the policy is guaranteed renewable option, which gives you the right to continue coverage beyondthe initial rate guarantee period without a medical examination. This feature, which sells more than term life insurance today is extremely important to find, should you fall ill and are not insurable by the end of the rate guarantee period.

For example, say that you currently have a payment of $ 800 a year for $ 500,000, 20 year level term life insurance policy and to develop cancer toward the end of 20 years, so as not insurable. Assuming that you want to continue coverage, a renewable term assuranceIt allowed them to continue coverage for 20 years, renewable on an annual basis, without an examination, albeit at a much higher annual premium of, say, $ 8,000 in the year 21, $ 11,000 in the year 22, and so on.

Now you can have shock, but these premiums do not seem so high if you are very sick and uninsurable, but still need coverage.

Guaranteed Convertible. Another feature of most term life insurance policy is the right to implement these services on any policy cash valuethat the Company may at current prices, without providing shop to another physical exam. This feature can be useful in the future if you decide to cash value life insurance.

If you are interested you want to cover for a certain period of time, but I'm sure that will survive in politics, maintaining a "return premium" (ROP) term life insurance. In this type of policy, except in case of death benefit is paid by the end of the period of insurance, you get all yourThe awards of new (tax free). Return of premium term life insurance typically costs 50-150 percent more for a similar long-term policy, but provides a way to cover your bets, whatever happens.

Term life insurance is very popular on the Internet, and agencies of direct-to-consumer life insurance companies and insurance brokers.

Cash value life insurance

If you have more than a death benefit of your life insurance and how the idea of ​​a long-term savingsAccount (not insured by any federal agency) or stock market investments, you should consider cash value life insurance as a whole life, universal life or variable life. But be prepared to pay much higher premiums per $ 1,000 of coverage just because it is now funding a cash value account and the payment of fees and expenses.

In many policy cash value, the annual premium will not increase from year to year. Universal life policies can vary or even skip premium payments,which in turn fits the amount of your death.

Unlike term life insurance, which is easily compared online insurance value of money is often through agents and brokers in a face-to-face setting, where needs and strategies can be discussed are marketed.

Because of the complexity and dizzying array of possible outcomes for permanent life insurance regulators exist, the present value of insurance sold with pre-approved illustration formats. These images can fill up 15 pages or more. Cashguaranteed values ​​and projected or "illustrated non-guaranteed" amounts: the value of life insurance illustrations are divided into two main sections. Illustrations can be complex and difficult to compare apples with apples in a sense.

Be sure to include in particular the death benefit and premium payments guaranteed sections because these columns are the promises today's society. If you do not like what you see there, far away.

Another caveat: Many cash value policies contain harsh penalties forSurrendering the policy in the early years. Change your thinking is in the early years of a costly decision.

Life insurance

Ordinary life insurance provides a "permanent protection" with an account of the cash value that grows over time. All life is a level death benefit and level premiums for life and as long as you continue to pay the premiums. For example, a healthy 40-year-old woman to pay $ 4,200 a year for a policy of $ 500,000 lifetime. ThePrize remains level, $ 4,200 a year for the rest of their life and for death at any age, the policy is to pay $ 500,000 to its recipient.

Whole life also contains a cash value account that builds over time, slowly gains steam before and after several years. You can withdraw your cash value or borrow against it, but remember, if you die before you repay the loan will be paid the death benefit to your beneficiaries will be reduced. For example: Susan has a $ 500,000whole life policies in force and over the years has always borrowed from the cash value. Their full loan amount and interest totaled $ 300,000. When Susan dies, his beneficiary is $ 200,000, because the life insurance will pay for it even before the death benefit.

Understand what your beneficiaries will receive at your death. If you have a traditional whole life policy, it is only your beneficiaries the death benefit, no matter how much cash value that youestablished. Other payment options available for higher premiums are:

Death benefit and cash value Return of premium death benefit

Whole life insurance can be as "participants" or exhibited "not involved". The cost of political participation in general, but can yield annual dividends if the insurer has a good year. Dividends are not guaranteed. Non-participating life insurance does not offer dividends.

The purchasers of life insuranceas the security of fixed premiums with a known death benefit for life. They also appreciate the "forced savings" component and see how to build your cash value account.

Universal Life Insurance

This type of policy offers more flexibility than whole life insurance or term. Universal life has many moving parts to understand before buying.

After your first premium payment, you can reduce or increase the amount of your death. Even after the first payment you can payThe awards at any time and for any amount as long as not to miss a minimum payment. In some cases there are limits to how long you can pay in advance. If you want to increase the death benefit, you can go to medical evidence that damage your health has not deteriorated.

You must manage these policies to obtain sufficient funding, especially because the insurance company can raise fares.

Some new universal life insurance lead term life such as:They can be configured at the time of purchase for both death benefits and premiums level for life, is guaranteed as long as you pay the premium.

Variable Life Insurance

Variable duration provides a death benefit of a fund that works as a part of investment account. Move the uncertainties of investment gains and losses to the contractor.

The insurance company invests the premiums and offers you a choice of funds in which you make moneyinvested. Income is not guaranteed. The amount of money your beneficiaries receive and depend on the present value of the policy, how well do the underlying transactions. Theoretically, the present value falls to zero, and if so, the policy will end. Some variable life policies guarantee a minimum death benefit.

Other considerations permanent life insurance

If your cash value account is large enough, can be used by the insurer, the premium for the paymentRest of your life. This is "paid". Known as You can continue your cash value at any time, but you have to resume payment of premiums for politicians to maintain or to a reduced benefit that supports the cash value remaining. Their political figure that shows how much time can be considered for his political life "paid".

If it's not your whole life policy, you can assign the value to receive the current surrender or convert it into an annuity, but keepin mind that receives a permanent policy after only a couple of years is an expensive way to get coverage for a short period.

Riders add benefits

You can add riders to your life insurance to guard against a range of unpleasant situations. Your insurer will have its own list of available drivers, but here are a few:

Accelerated death of pilot (also known as living benefits rider): Pays benefits if you are terminally ill first. Accidental death rider: Pays an additional benefit if you die as a result of an accident. The long-term care rider: Pays a long-term care costs should not be able to do some of the "activities of daily living", such as dressing or using the toilet. Waiver of premium rider: waiver of premium payments must be completely disabled.
As life insurance has a price

Your life insurance rate is based on life expectancy, theAmount you request and the length of the policy, regardless of the length of life (life) or a specified period (term life). The issue of a low-cost life insurance depends largely on the current health status and past.

Because your current and past health impact on your life expectancy, insurers want to know as much as possible about your health. Common diseases such as hypertension, heart disease, obesity, cancer and depression mayincrease the rate of life insurance, or even in a declination.

Based on your medical history, you will be in a category as "preferred plus", "preferred", "standard" groups and "poor". The class determines the ultimate prize.

Insurance buyers with serious health conditions or a combination of conditions will be difficult or impossible to find life insurance policies. They are known as "impaired risks." Local funds are not experienced enough to order a company to find thespecializes in providing people with certain medical conditions. Luckily impaired risk specialists know-how to know where you draw on applications for people with medical conditions.

Life insurance buying process

The process of life insurance applications of paper-intensive, can take weeks and often seems intrusive for people who value their privacy. A face to face para-medical examination of the policy is usually to more than $ 100,000, funds, at least,both blood and urine, the professional paramedic.

Expect detailed questions about your lifestyle, travel to foreign destinations, your family's health history and your personal medical history. Are you going to dive? Have parents or siblings with heart disease or cancer before 60 years of age? Have you ever had any medicine for anxiety or depression? These and others are the types of questions to expect.

Sometimes the interviews are more requeststo verify your information. The examiner usually asks Paramed face to face these problems and insurance companies often conduct the follow-up telephone interviews, so you can check the first set of answers. Regardless of the type of life insurance you buy, ask the majority of policies that meet certain requirements to be related to your lifestyle and health history.

If you try to change this process by linking a response, or withholding information sounds, do not. This is aCrime in all 50 states, lie about or hide information about a life insurance. In addition, the policy obtained by fraud claim as valid.

The insurer may report the results of medical examination (expressed as a numeric code), the Medical Information Bureau (MIB), a database of those who apply for treatment of life insurance in the last seven years. If you gave different answers to questions doctors in the past, is a red flag with the increase in MIB. TheThe purpose of the MIB is to reduce fraud.

All life insurance in the normal rule to the death of any cause, at any time, any place, other than death by suicide within the first two years of insurance (1 year in some states).

If you have no interest in going through the subscription process, you have two other more expensive options:

Simplified issue life insurance can be purchased only after answering a few medical questions. There is no medical examination required. However, if youReport health problems, it is very likely to be rejected. Also, if you are healthy, or even if you have any negative history, inherited a policy is still to be your least expensive. Guaranteed issue life insurance is for those who apply (up to a limit of age), and is sold by far the most expensive type of life insurance purchases. This should be taken only by those who are rejected for everything else into account, but still need life insurance. This policygradual death benefits, means that the receiver is not the full death benefit until several years in politics.

When naming a beneficiary, keep in mind that life insurers only want the names of those who are financially dependent on you to see. An acquaintance, friend or relative is not present, a financial report, it is not possible.

Working with an agent

After examining the various life insurance policies available, you may still uncertaincorresponds best to your needs. The American Council of Life Insurers (ACLI) recommends consulting with an insurance agent. ACLI spokesman Jack Dolan can say, a political agent, who recommended to meet your needs. "Look at the policy recommended to be used with caution, that fits your personal goals," says Dolan.

Carefully study your agent and ask for advice for a point-to-point declaration. Make sure the agent explains items you do not understand. Because your policy is a legal documentIt 'important that you know what it offers.

Insure.com offers these recommendations for the decision to buy the type of life insurance:

When your agent recommends a term life insurance policy, ask:

What is the Standard & Poor's, AM Best Ratings, Fitch, Moody's and Weiss this insurance? What is the initial rate guarantee period? This policy may be renewed past the initial period to guarantee a percentage without a physical examination? If yes, what are theAwards? It is the policy convertible to permanent insurance without a physical examination? If yes, how long can I have the right to convert?

When your agent recommends a cash value policy, ask:

What is the Standard & Poor's, AM Best Ratings, Fitch, Moody's and Weiss this insurance? Can you tell me, in writing, why you should cash value insurance for me right now? Why would I want my needs to combine life insurance with my investment objectives? Can you please prepare an analysis for me is that the actual cash value insurance that costs about 5, 10 performances, 15, 20, 25 and 30 years against the purchase of term life and invest the difference of long- term in the same periods? How much is your first year of the Commission on the proposed policy against the cash value of your commission equivalentTerm life insurance? These are annual awards for my proposed budget? Why do you think I have to commit to long term, the payment of such premiums, perhaps decades? How do I get if I surrender the policy?
Additional Resources

Consumer Federation of America, the insurance rate 'of Return "service Insurance Information Institute, about the lifeInsurance Your state department of insurance can also buy life insurance online guide For a free quote for life insurance or more information about the types of life insurance available, please visit Insure.com.

Life Insurance Basics