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How can I be sure what I am buying?
An agent wanted me to buy a "retirement plan." when he showed me the contract, It said "life insurance" in the description. How can I be sure what I am buying?
Continue reading "How can I be sure what I am buying?" »
Is it right that I could stop paying premiums after only a certain number of years?
Read the fine print carefully. Such projections often include the value of dividends, which may be paid over the years of the projection. But dividends are not guaranteed to be as projected. The company may decide to pay less (or more) than shown in a projection. If the dividend rate changes, you may not be able to stop paying premiums in the number of years shown on the projection.
What is a "cost disclosure" form?
This gives you a standardized measure of the cost of the insurance coverage. It takes into consideration the "time value of money" and allows you to compare the cost of this insurance against other plans.
Can a company void my policy if I moved to a new state?
No, the requirement is that it has to be in conformity with the laws of the state where it was issued, at the time it was issued.
Can a company void my policy if I lie or make a mistake in completing the application?
If you make an important mistake such as neglecting to tell the company about a major health problem which could have led the company to deny you insurance, the insurance company has to discover the mistake during the "contestable period" specified in the policy. If they fail to do so, then you can have confidence that your policy will be honored - and the company cannot cancel it.
Can a company refuse to pay a claim?
Generally, no - though there are occasionally unusual cases such as where someone disappears under mysterious circumstances, or a fraudulent claim is suspected, where payment could be withheld until it becomes clear what has happened.
Can the insurance company cancel my policy?
Once the company has offered a policy and the customer has accepted it, the company is committed to the terms specified in the policy. The exception is provided by a clause in the policy called the "contestable period" (usually one or two years). During this period, the company can cancel the coverage and return the premiums if it discovers that the information given by the policyholder to qualify for the insurance contains major misstatements. Suicide is also not covered during an initial period which may be the same as the "contestable period." The "contestable period" provides the company a reasonable opportunity to protect itself against people getting insurance they would not qualify for if they gave truthful information on their applications, and it also provides the vast majority of honest policyholders the assurance that their policies will be honored.
Can I change my mind and get a refund?
Most states have a requirement that a life insurance policyholder can return a newly issued policy within a specified period and receive a complete refund of any premiums paid. This "free look" period allows the new policyholder an opportunity to review the policy in detail. Typically, the "free look" period will be 10 days for a new policy and 20 days for a replacement from the time you receive the policy. You should check with your own state to see what its provisions are.
Once accepted, the policyholder could still discontinue the policy by not paying premiums when due and thus allowing it to lapse. In this situation, the policyholder would not be eligible for a refund of premiums.
What is the importance of age/sex/health?
Increasing age increases the cost of life insurance, because the older you get, the greater your chances of dying.
Being male costs more, because females live longer on average.
Poor health raises the rates for life because it decreases the number of years you are likely to pay premiums and reduces the time before the company may have to pay a claim.
Health is often the most important factor, followed by age and sex. Someone in poor health will have to pay a very high premium, or even be uninsurable.
Some companies sell direct (by phone or mail or Internet) and have no agents. Such companies still have marketing expenses. No commissions to agents does not always mean their products will be less expensive. You still need to do your homework. To find the company with the lowest premium for the insurance plan you want, you can contact representatives from several companies or agents that represent numerous companies; check consumer magazines; or use the Internet to get quotes. You can buy insurance right here through this website.
I am on a tight budget. Where can I find the most coverage for the "leastest"?
Check online quote services and consumer publications that rank insurance plans.
Which policy should I buy? How can I hope to get the right plan for my needs?
Today's consumers of insurance and financial products have considerable knowledge and sophistication about available choices and need less direction. They also have many more choices and many more sources of advice (the Internet, books, magazines, television, cable, radio, etc). Informed insurance and financial consumers tend to buy low-cost term insurance for their life insurance needs and use any money saved to add to their investment programs.
Endowment policies are modifications of whole life. Like whole life, part of the premium goes to build up a cash value fund. An endowment policy generally has a higher premium than a whole life policy for the same amount of insurance because more of the premium is devoted to building cash value. The endowment is designed to terminate and pay out the cash amount at a designated time, such as after a prescribed number of years (for example, 20 year endowment, 30 year endowment) or at a specific age (for example, endowment at 60, endowment at 65).
What are other life insurance coverages?
Insurance Variable Life: The policy values are not fixed, but determined by the performance of investments in the stock market.
Continue reading "What are other life insurance coverages?" »
What is universal life insurance?
Introduced a couple of decades ago, it is a type of cash value insurance that allows greater flexibility than a traditional whole life plan.
What are the traditional types of whole life policies?
In addition to regular whole life which is typically designed to continue until age 90 or 100, plans are available which become fully paid up in a certain number of years (for example, 20-year payment) or at a certain age (for example, life paid up at 65). There are also variations on the whole life concept that allow more than one person to be insured (joint life, family plans) or that have different premium paying structures (single payment life, graded premium life).
It is a popular type of cash value insurance that builds up cash value and continues coverage until age 90 or 100.
If my agent recommends a cash value policy, What should I consider?
If you expect to have a continuing need for at least some life insurance throughout your life, you may want to consider a cash value policy. Alternatively, you could get a mix of cash value insurance and term insurance. This would allow you to get basic continuing coverage (cash value) together with low cost insurance (term) to meet high coverage needs for income and large debts such as a mortgage. If you are likely to discontinue the policy in a few years (more than half are dropped in less than 10 years) you should reconsider. The expenses associated with the initial years of the policy (marketing and underwriting and commissions) usually mean that a cash value policy held for only a few years can be a very expensive way of getting short term coverage.
How does cash value differ from term?
In addition to providing a death benefit, cash value life insurance also accumulates a fund that can be used to pay future premiums or serve as a form of savings.
What is cash value life insurance?
In addition to providing a death benefit, cash value life insurance also accumulates a fund that can be used to pay future premiums or serve as a form of savings.
My insurance agent recommended a term policy. What are some considerations?
You need to ask yourself some questions. What is the purpose of the coverage? Is it to cover a temporary need such as a mortgage or income for dependent children? Or are you trying to get the most coverage you can get for the amount of money you have to spend? Do you expect to have much higher income or greatly increased assets in a few years, which would render this coverage no longer necessary? These would be reasons to consider term insurance.
What are the common policy variations of term life insurance?
Term policies can be
1. level, (the amount of coverage is fixed during the period of coverage) or declining, (the coverage drops according to a specified schedule).
2. renewable, (the policyholder can continue the coverage at the end of the term by paying further - higher - premiums) or non-renewable, (the policyholder cannot continue the coverage at the end of the term).
3. convertible, (to whole life or other cash value insurance) or non-covertible, (no convertibility to whole life or other cash value insurance is available).
Term policies with options to continue or convert coverage would generally cost more than those that do not have such options.
Term life insurance is insurance that lasts for a specific time, such as 5 years or 10 years. The policy pays a death benefit in the event the insured dies during the specified period. Since term insurance is for a limited period and accumulates no cash value, the rates tend to be low for a given amount of insurance.
If you know the name of the insurance company, they should be able to check through their records and locate it - though for policies taken out long before the time of computers, it may take longer to search. If you have the policy, or the policy number, it will greatly increase the likelihood of success.
I can't find my dad's insurance policy and don't know what company he had it with. What should I do?
Without knowing more information, there are several possibilities regarding the status of this policy. Assuming your father is deceased, the policy could have:
What is a contingent beneficiary, A revocable beneficiary, And irrevocable beneficiary?
Generally, a policy has a beneficiary and a contingent beneficiary. The money would go to the beneficiary in the event of the death of the insured. But, if the first beneficiary had already died, the contingent beneficiary would receive the proceeds.
If you were both listed as primary beneficiaries you and your sister should have shared the proceeds. Unless some other allocation was specified in the beneficiary designation, you should have each received 50%.
To file a claim on a life insurance policy, for which you are the beneficiary, you should contact a local office of the company, if it has one. Call and ask for instructions or go in person. If you visit the office, bring along the policy or other documents relating to the policy. Also bring the death certificate.
Continue reading "How to filing a claim" »
What is the effect on a beneficiary's federal income tax liability?
Proceeds of a life insurance claim are generally not subject to federal income tax if it is paid to a named beneficiary.
What is the effect of social security payments on a beneficiary?
Social security payments have no effect on the beneficiary of a life insurance policy. Also, life insurance proceeds have no effect on the beneficiary's social security payments.
Generally, a policy has a beneficiary and a contingent beneficiary. The money would go to the beneficiary in the event of the death of the insured. But, if the first beneficiary had already died, the contingent beneficiary would receive the proceeds.
Continue reading "Number of beneficiaries" »
Once a life insurance policy has been issued and is in force, the owner of the policy (who would often also be the insured) is free to change the beneficiary to anyone he or she chooses, unless the beneficiary has been designated as irrevocable. Changing the beneficiary is easily done by filling out a form available from the insurance company and having it properly witnessed.
When you apply to take out a new life insurance policy, the insurance company requires that the beneficiary (or beneficiaries) have an insurable interest in the insured. Frequently they would be dependents, such as a spouse or children, who would suffer a loss if the insured were to die.
Who can take out a policy on my life?
If someone else wants to take out a life insurance on your life, your agreement and an explanation of the reason for the insurance (such as a business relationship) would be required. Also, parents would be allowed to take out policies on young children.
Who can take out a policy on my life?
If someone else wants to take out a life insurance on your life, your agreement and an explanation of the reason for the insurance (such as a business relationship) would be required. Also, parents would be allowed to take out policies on young children.
How can I be sure what I am buying?
An agent wanted me to buy a "retirement plan." when he showed me the contract, It said "life insurance" in the description. How can I be sure what I am buying?
Continue reading "How can I be sure what I am buying?" »
Is it right that I could stop paying premiums after only a certain number of years?
Read the fine print carefully. Such projections often include the value of dividends, which may be paid over the years of the projection. But dividends are not guaranteed to be as projected. The company may decide to pay less (or more) than shown in a projection. If the dividend rate changes, you may not be able to stop paying premiums in the number of years shown on the projection.