Most of the major life insurance companies are in the practice of selling their products or policies through agents. Barring the no load term life insurance products that are sold directly to the public, the rest are almost all through agents. Some companies even make use of what are called captive agents, who are simply those agents who are bound by contract to only represent a single company. A vast majority of the companies that are providers of competitive term life insurance make use of independent agents.
These independent agents are free to represent several companies on their own discretion. These agents can thus help you to make a selection from a variety of products and companies so that you can effectively tailor a plan based on your requirements.
Keeping this in mind you should always begin by first obtaining an online quote for your life insurance. You can then go about selecting an independent agent. The reason to be careful before settling on a plan is due to the fact that there are so many competitive costing methods now in term insurance. The last thing you would want to do would be to miss out on a quote that could save you a bundle of your hard earned money.
Term life insurance is such that the costs vary depending on certain factors lie the age of the person who wants insurance and the term he wants it for. Due to this large variance in costs various companies have competitive term life insurance policies in an effort to tap the most customers. With the Internet as your able tool you can now easily make a complete survey of the market before zeroing in on the policy of your choice. In the end the fact remains that competitive term life insurance is most beneficial for the consumer because for him it means better quotes that are easier on his pocket.
The acronym FAQ stands for Frequently Asked Questions. Most people are generally interested in purchasing a life insurance policy, in order to leave behind something worthwhile for his family. Prime importance is given to life insurance and people need their queries to be answered and doubts, cleared. The Internet has made it easy to shop, compare and obtain life insurance quotes online. A few clicks on the mouse can fetch all relevant information, from several websites. This increases his chances of getting the best online insurance quotes.
A life insurance professional can give the quotes on his website or can buy them from the person who accesses these quotes. Some of the frequently asked questions are about changing a beneficiary on a life insurance policy and whether someone, other than a relative, can be named as a beneficiary of a life insurance policy. Other queries are about the insurance products available for disabled children or the donation of the life insurance policy to a charity. There are enquiries about group life insurance and insurable interest. People also ask about the advantages and disadvantages of buying a life insurance from the employer and a company.
People enquire about ways of lowering cost of insurance, pension benefits, separate policy for a child and the appropriate age of buying a policy. Many a times they ask about the smoker?s rates for life insurance. Some people are interested in the conversion of part of a term life insurance to permanent life insurance. Others ask about the rates of return of life insurance policies. There are personnel and online sites that answer all queries. A little research does well, when investing in life insurance. It is important to be absolutely updated and appraised on the policies available. It is a once in a lifetime investment.
A term life insurance policy or plan that does not have any form of agent commissions or cuts attached to it is commonly termed as a no load term life insurance policy. This kind of no commission policy is thus devoid of any tussle due to conflicts of interest on behalf of agent and the person seeking insurance. This is a kind of coverage that can cost the policy holder a lesser amount of money and at the same time can offer the individual a quality product.
Most companies today will offer this kind of no load life insurance quotes or policies directly to the public for purchase. In order to receive an estimate, the customers who may be interested in such a policy can shop on the Internet or even speak to several professionally licensed advisors. The professional advisor is very different from an agent who makes commissions on sales. In case of a product devoid of commission the initial fee attached may be higher but on the overall the customer would have saved more money.
Purchasing a life insurance policy means being responsible for the future of one?s family. In case of a no load life insurance policy the premium rates that are quoted can most likely be noticeably less than that of a standard plan from a regular insurance company. This again can be attributed to the fact that there are no marketing fees or commission so to speak added on to the price of the policy. A no load term life insurance is additionally a form of coverage that costs you the least amount of money. Such term policies will have non-existent cash value, but will however provide you peace of mind in knowing that your family and assets are protected financially for a specified period of time in the face of any unforeseen mishaps or tragedies.
Below, we’ll explore five times people depend on you, and how life insurance would help if something were to happen to you.
1. You Have Children
The most common reason people get life insurance is to replace lost income, so that a spouse and children would be financially taken care of if either parent were to pass away. Your children aren’t dependent on you for just food and shelter.
2. You’re Married, and …
Even if you don’t have children, your spouse may be reliant on you financially to keep his or her lifestyle intact. Namely, life insurance would help with the following in the event something happened to you:
- Full financial support: If you have a stay-at-home spouse, he or she may need time to transition back into the workforce. He or she may also require further education to do so. Life insurance helps bridge the financial gap.
3. Your Parents Co-Signed a Loan/Need Your Support
This is where you might really be surprised. After all, your parents are grown and don’t depend on you financially. But there are three ways in which your passing away could be a financial shock:
- Student loans: If you have private student loans and a parent co-signed on a loan, he or she is depending on you to make your payments and pay back the loan. Otherwise, your co-signer is responsible for the balance (as this woman found out the hard way when her son passed away). This applies to other loans your parents co-signed with you too, like car loans.
- Old age: Have you discussed with your parents their plan for retirement? Whether or not they’ve said it out loud, many parents hope they can fall back on their successful children in old age. If you were to pass away, they wouldn’t have the safety net they were counting on.
- Funeral: If you’re single, your parents would likely be responsible for paying for your funeral. Like we mentioned above, a funeral can cost as much as a modest wedding.
4. You Own a Small Business
Would your small business collapse without you? You can take out a life insurance policy to benefit your business partner(s). If you were to pass away, they could buy out your portion of the business and keep it running.
5. You Care for Disabled Family Members
Life insurance is especially important if you’re taking care of someone who is disabled and won’t be able to transition into the workforce.
- Financial support: If your income is paying for their food, housing and other necessities, life insurance guarantees continued financial support if you die.
- Care: If you’re providing care to a disabled family member, you may need to pay to continue that same level of care after you pass away.
Our introduction to this topic will include the basics, which will be followed by a more in depth look at this topic.
When in the bazaar for life insurance, there are two types you can store around for: term life insurance or permanent life insurance. The chief superficial difference between the two is that term life insurance covers you for a set spot of time, where permanent life insurance covers you for the rectifier of your life. a although permanent life insurance overheads considerably more than term life insurance, it is just because when pleasing a faster look at each, permanent life insurance gives your statement the unproposened to soar its cash value, which ultimately means a better value and more money for your beneficiaries when you die.
Which is best for you?
Enduring life insurance may submit you a better payout in the long-run, but what if your fiscal obligations are only suddenly-term? When you actually just want the most quantity of coverage for the slightest quantity of money, its better to obtain a term life insurance statement. The money you keep from the premiums in term life insurance can be invested in stocks, mutual money, or bonds.
If you have completely read through the first half of this article, the second part will be a snap to understand.
The present that makes permanent life insurance so wanted is its ability to obtain cash value. A portion of the money you pay into your premium goes into a cash account that grows over time. With any kind of insurance you are considering, its important to do inquiries about the circle you may be purchasing your statement through, says David Roush, CEO of indemnity.com. You’ll also want to be effective you smarmy understand how it facility and that there are no buried fees that may get you in the end, Roush says.
How does cash value work?
Currency value accumulates very hastily in the launch, because you are younger and your mortality charge is reducing. But as time goes on, your cash value begins to dense down, not from something that you’ve done, but because of time operation its course on you and your body. The unproposeneds of you vanishing soar every year, which in spin makes the cost of insuring you go up, as well as increasing your mortality cost.
The mortality cost (a certain quantity of money the insurance circle takes out of your payments per year to pay for insurance overheads and processing) typically doubles every decade. The more they take out, the excluding that goes into your cash value. Luckily, your premiums don’t soar because the life insurance circle has full your mortality into consideration. The only time your premium could probably go up is if you have a worldwide life insurance statement with open payments if you pay too little in the launch, you may get hit with high bills later on.
On the regular, cash value can erect between four to six percent each year. If your money is in stocks, bonds, or mutual money, you are at the mercy of the cheap. At the end of the year, your cash value may be advanced than likely, or if investments aren’t performing well, it may be considerably reduce. When you die, unexcluding you already specific that you want your cash value coupled into your killing payback, your beneficiaries will not get the cash value you accumulated. So be effective to read all the minute issue when applying for permanent life insurance, just to be effective there are no surprises when you die.
Is cash value a liquid asset?
A although cash value is like a liquid asset because you have the ability to vacate money, you will be penalized and electric a fee if you resolve to vacate money. A different array (and one that is not recommended) is unfair vacate. It should be eminent although, by pleasing out money this way, your killing help gets cheap on a buck-to-buck root.
A very ordinary way people take money out of their cash value is by pleasing out a lend obtains it. You don’t have to pay it back, but the opening quantity, good the seven to eight percent gain that is tacked against it, will be full out of your killing help when you die. This may suddenly-change your beneficiaries depending on how greatly you allocated.
Another thing to keep in tend is when you vacate money from your cash value, it may become payable. If it is meaning more than what you have rewarded on your life insurance statement, it may be taxed. Also, if you take out a lend obtains it, and you forfeit the statement or it lapses before you pay it back, you will be taxed on the difference of the lend quantity and the complete quantity of the premium.
Enduring life insurance and cash value do take a while to accumulate, so if you’re not very troubled about the cool outlook, a term life statement will be a better array.
When is undivided life insurance the best bet?
If you penury life insurance for the lean of your life, and you have a high proceeds, an undivided life insurance propose may be the right verdict for you. Many adult people like undivided life insurance policies, because they use their cash value to pay off their premiums. Their life insurance stays active and their killing payback is cheap, but the quantity left in the killing payback can be worn by beneficiaries to pay off their estate or taxes that have been incurred.
Making the array
The array is yours as to what kind of life insurance you should obtain, says Roush, deciding factors depend on what kind of time entice you’re looking at, and how greatly you are agreeable to pay in insurance premiums.
If you could take the main ideas from this article and put them into a list, you would a great overview of what we have learned.
Having life insurance coverage is essential for anybody that has someone dependent upon them, financially or emotionally. Now, before you apply for a life policy, you must understand how the life insurance industry works. Life insurance isn’t hard to understand by any means. There are two entities involved with every life insurance policy process, namely the insured, the company you’ll obtain the life policy through, and the insured, the person that owns the policy, in this case you. You, the insured or covered person, agrees to pay a small amount of money for a fixed number of years. This amount is known as policy premium. In the unfortunate event of the policy holder passing away throughout the policy period, the insurance company will pay out the policy amount to the beneficiaries selected by the policy holder.
A life policy is a lot like a legal contract. There are specific clauses to agree to. For instance, if the insured should commit suicide within the first two years of having the policy, the insurance company won’t pay out the claim. Or if the insured provides details that are discovered to be wrong, the insurance company can declare the policy void.
Policies are priced in such a way that they cover claims to be paid, admin bills and of course, they have to make some profit. So, for each person that applies for a policy, an expert called an “actuary” determines the person’s fatality table. They do this by considering the person’s age, gender, wellbeing, hobbies and behavior. The family health history also plays a role when determining what the person’s life policy premium would be.
This investigation done by the insurance company is called underwriting. They’ll investigate the life policy candidate’s lifestyle by looking into their family history, health and way of life. If the company find the applicant to be too much of a risk to cover, they won’t grant them a policy. The company will, if the person is a high risk, but still insurable, hike their monthly premiums as a result of high risk.
Even though different insurance providers may have different terms and conditions, each of them have specific standard industry clauses as well, for example the beneficiary clause. The clause states that only the policy holder can change, remove or add beneficiaries onto their policies, for apparent reasons of course. Nonetheless, all insurance companies have terms and conditions and it is essential that you go through and understand these clauses.
Upon the insured’s death, the insurance company requires a proof of death certificate before proceeding with payment. If the insured’s death is found to be suspicious the slightest bit, the insurance provider may choose to investigate the death. If there are no signs of foul play, the insurance provider will pay the claim to the beneficiaries in roughly 2 weeks.
Obtaining a life policy is a crucial part of every person’s life and really should not be forgotten. There are ways to make your policy premium cheaper, but always make sure that you’re adequately covered, as being under insured can have disastrous consequences.
After more than a year studying a surge of intricate financial deals in the life insurance industry, regulators said Thursday that they had found transactions that could “give the industry a black eye,” but could not agree on what to do about them.
“There are some transactions out there that we’re not comfortable with, and we’re not sure you’d be comfortable with,” Douglas Slape, chairman of the research panel, told a ballroom full of industry representatives at a conference in suburban Washington. “We can’t go into the details because it’s confidential.”
Differences among the panelists soon became apparent as the group laid out its findings. Some expressed concern that insurers were “betting the policyholders’ money,” while others argued that the transactions were carefully vetted and safe.
The National Association of Insurance Commissioners convened the research project, in part, in response to an article in The New York Times on the growing practice among life insurers of offloading huge numbers of policies into opaque, off-balance-sheet subsidiaries. The transactions, often valued in the hundreds of millions or even billions of dollars, can improve the appearance of the insurers’ balance sheets and free up money for other projects, or to pay shareholder dividends.
The Times article questioned whether the use of the special-purpose vehicles meant a shadow insurance industry was being created, outside the usual reach of state insurance regulators.
Diverging views among Thursday’s panel of state regulators pose a problem because the transactions often involve an insurer in one state, a subsidiary in another, and policies sold to customers in any number of other states. States, rather than the federal government, are the primary regulators of the nation’s insurance companies.
“Our entire financial solvency system falls apart if there is not uniformity” among state regulators, said Joseph Torti, a panelist from Rhode Island. “We need to be able to understand what our sister states are doing.”
Separately, New York State is conducting its own investigation of the off-balance-sheet insurance deals. This year it called on the insurers under its jurisdiction to provide detailed information about their special-purpose subsidiaries, why they had created them, and whether the subsidiaries were counting assets that the insurer itself would not be allowed to include on its balance sheet.
In recent years, some states passed laws allowing insurance companies to set up the subsidiaries, because they were perceived as creating good jobs.
Conventional state insurance regulation protects policyholders by requiring companies to set aside enough of the premium money they take in to build reserves to pay all future claims. Companies are also required to maintain a healthy surplus, and regulators can make them stop selling new policies if they fall too far short.
When the life insurers secure their policies through special-purpose vehicles, however, they can do so without building up a body of liquid, cashlike reserves, as prescribed by regulators.
Instead, they offer some form of collateral, like a letter of credit, to stand behind the policies. Some regulators said there were cases in which the collateral was inadequate and would not have been admitted under the usual regulatory standards.
Data compiled by SNL Financial, a data and news company, shows that the practice of securing life policies through a wholly owned subsidiary has grown sharply in the last five years. In 2006, the companies SNL surveyed used such subsidiaries for 31 percent of the policies they reinsured; by 2011, it was up to 45 percent.
SNL also found that while the practice was very popular at some companies, others did not use it at all. The American International Group used subsidiaries for nearly 80 percent of the life policies that it reinsured in 2011, for instance, while Northwestern Mutual used only unaffiliated reinsurers, where the terms would be set in an arms’ length transaction. Still others, like State Farm, were not reinsuring their life policies as of 2011.
New York Life, a modest user of affiliated reinsurers at 15 percent, submitted a written comment letter to the panel, warning of “a system that encourages companies to circumvent statutory reserving standards by using complex structured transactions.” It called for “strong regulation” that would allow only “clean, unconditional collateral” to backstop the reinsured policies.
New York Life also said that after artificially lowering their costs through the complex transactions, some companies were coming back to market and selling new policies to consumers at low prices.
“Although lowering prices to consumers is generally a worthy objective, doing so at the expense of effective solvency regulation is inappropriate,” the company stated. “It can result in reserves being reduced below the level needed to protect policyholders.”
The off-balance-sheet vehicles are designated “captives,” under state insurance law, even though they do not resemble conventional captives, which are typically used by noninsurance companies as a vehicle to insure the company’s own risks.
Conventional captives were not subject to the regulatory panel’s scrutiny. Some of the regulators expressed concern that the insurers were using the “captive” designation inappropriately, to take advantage of state laws that allow captives to keep all financial information secret.
The secrecy of the transactions was the biggest source of disagreement among the regulators.
“We think there are things that are legitimately held confidential,” said David Provost, the delegate from Vermont, the first state to allow captives. The captives often house just one very large transaction, and some companies say more disclosure would allow their competitors to find out their confidential strategies. Mr. Provost said insurance regulators in Vermont worked hard to keep their counterparts in other states informed.
Mr. Torti, the delegate from Rhode Island, disagreed. “I have not heard, in all these deliberations, why any of this information should be confidential,” he said. “I think it should be available to the public, available to investors. It should be out there.”
Bonded life insurance settlements are settlement for insurance policies that are provided by bonding companies. For a premium, these companies promise to buy out the purchaser’s interest in the policy at face value, in case the policy does not mature by a particular date.
Bonded policies typically have a low return on investment, as a part of the purchase funds is dedicated towards, paying a lump sum performance bond premium. Bonded viatical life settlements, also known as bonded viaticals, are termed as secondary market life insurance policy contracts. Viatical investment contracts have the option of, emergency or stop loss insurance on the life expectancy, which is called a wrapper.
The insurance company that issues the wrapper offers, an insurance policy or financial guarantee, according to the performance of the underlying life expectancy. This kind of financial guarantee ensures more security and safety to policy owners, who might be interested in purchasing viatical investment contracts. This transfer of the life extension risk from the purchasers to an insurance company increases, the chances of a return on the funds that are invested.
However, there is one major risk associated with viatical purchase contracts or viatical investment. The risk is that the insured, which is also known as the viator, will live beyond their originally anticipated life expectancy. To combat the life extension risk, some viatical companies escrow additional funds to cover for it. In case these funds are exhausted prior to the maturity of the policy, its responsibility lies with the purchaser. It means that the purchaser of the viatical investment contract may have to maintain the account by paying the premiums, until the maturity of the contract. The maturity of the contract in this case is the death of insured.
There is also a possibility that, an escrow agent or trust department, is concerned with making payments for premiums on the life insurance policy. The status of this escrow agent or trust company status must also be looked upon during the determination of the value of the investment.
With competition increasing in the life insurance sector, the agent has no alternative but to get as many leads as possible and from as many sources he or she can. Good leads are one of the strong pillars of business for any life insurance agent. Hence, it becomes very important to not only get as many leads as possible but to also be sure that the leads are worth following up further.
It is for such reasons that an agent has no other option but to compare life insurance leads from various companies. Various Internet-based and telemarketing companies are in the business of providing life insurance leads. Obtaining leads from such companies can be a smart move on the part of the agent. He can hire, on a trial basis, different companies that provide leads and follow up further on the leads.
When comparing life insurance leads, it is extremely important to find out how many leads were converted in the end. An agent cannot know for sure the worth of the leads until he or she calls or meets the prospects and tries to sell them an insurance policy. If the lead company has been good and honest enough, there should not be much difficulty in selling policies to interested people. On the other hand, if the lead has been obtained by unscrupulous methods, it could very well mean that the person is not ready for a life insurance policy and may express anger at being approached about a policy. The response of the prospective customer will clearly show the extent of hard work put in by the company providing the leads.
Bad leads are dangerous, as they eat up a lot of time and energy of the agent who strives to get the client, but since the person was never ready for a policy and was instead tricked to part with his address and numbers, it could turn into a big road block for the agent.
There are a lot of things that one needs to know about buying a life insurance policy. This list of frequently asked questions on life insurance is an attempt to answer a few such questions.
What is life insurance?
First of all, there are many people who do not know what life insurance is. Life insurance is a protection that is provided to someone?s family in case of his/her death. For instance, if a person is the sole bread winner of the family, his or her family would be forced into hardship if something were to happen to him or her. It is at such a time that a life insurance policy provides for the surviving family.
Do I need to purchase a life insurance policy?
People who do not know much about life insurance also do not know whether they need it. The answer to that is an emphatic yes. No matter how much one earns while alive, there is no guarantee that one would be able to do provide for his or her family after one?s death. Generally, with death, the earnings of a person cease, causing a lot of problems to surviving family members. In such a scenario, life insurance policies become an absolute must for the family.
What are the other benefits of a life insurance policy?
Another reason someone may want a life insurance policy is to secure mortgage loans for their children?s education. Besides, there is also a lot of tax rebates on the money spent on insurance policies and their earnings. Thus, even for those who have money, life insurance can be a very important tool for saving more.
What should be the amount of coverage?
Once somebody has decided to take a policy, one needs to find out what is good for him. Various questions arise about the amount one needs to be insured for, the other factors for purchasing life insurance, and the affordability factor. There are no easy answers to this. One needs to begin by looking at one?s own needs to find an answer. The average expenses of the family, the income earned by the spouse, the age of the children, amount of debt that has been incurred, etc, must be considered. There are many policies, such as endowment plans, that offer benefits even when the policy holder is alive.