Reasons to Buy Term Life Insurace

vdeWe all have different needs and wants in our lives, but one thing that most of us need is some type of life insurance policy. We all want to believe we are invincible and nothing will ever happen to us. And I hope nothing bad ever does, but according to Guinness World Records, (this is straight from their site) “the greatest fully authenticated age to which any human has ever lived is 122 years 164 days by Jeanne Louise Calment (France). Born on 21 February 1875 to Nicolas (1837 – 1931) and Marguerite (neĆ© Gilles 1838 – 1924), Jeanne died at a nursing home in Arles, southern France on 4 August 1997.” This just illustrates that we are not invincible and we only get to enjoy this lifetime for a relatively short period of time so we might as well be prepared.

There are generally 3 types of life insurance: Term, Whole Life and Universal. I’m going to talk a little about term today. It’s what my wife and I personally have (as well as some whole life) and it’s what I believe the most in. Why buy life insurance? Here’s the short answer highlighting some of the main reasons of why you should consider buying life insurance:

  1. Pay the mortgage for your spouse
  2. Replace your income so your spouse can pay the monthly bills
  3. Pay any debt you may have so your spouse doesn’t have to worry about it
  4. Pay for funeral costs
  5. Finance future needs such as a child’s education or spouses retirement
  6. Continue a family business

Term Life Insurance

Today I’m going to go over term life insurance. It is what it sounds like. It is designed to last a specific period of time. At the end of that time, or when the term is up, the policy is finished. Typically at the end of the term the policy is expired and you pay no more premiums and you do not get any money back. There are variations of a term policy that allows you to get money back and renew it etc., but I’m only going to talk about a straight term. The different variations should be discussed with your agent to see what fits your needs. Term policies can be 5, 10, 15, 20, 25, or 30 years long. You get to choose the period of time you want the policy in force based on your personal situation.

Term policies are also the most affordable policies mainly because they expire at the end of the term and you get nothing back when it expires. I know that doesn’t make it sound like a smart choice, but it can be. For example:

Say you are 30 years old, are married, have a house with 20 years left on the mortgage and a 5 year old child. One option would be to get a 20 year term policy to last as long as the mortgage and long enough to get your child through college. After that you might not have a need for as much life insurance. Let’s say your mortgage is $100,000 and you want your spouse to be able to pay off the mortgage and have $20,000 a year to raise your child if something were to happen to you. $20,000 a year for 20 years plus $100,000 mortgage totals $500,000. That’s a lot of money, but that is a realistic number that your spouse would need if you didn’t make it home the next day.

A lot of people see that $500,000 and think there is no way they can afford that kind of insurance policy. You can. A healthy 30 year old non-smoking male or female should be able get a policy like this for less than $25 a month. I am willing to spend $25 a month for myself and $25 a month for my wife to make sure that we are financially taken care of is something happens to one of us. I probably spend more than $50 a month between food spoiling that I don’t cook in time or snacks at the gas station. If I can afford to do that then you better believe I will find $50 to make sure my family will be taken care of. If you are wanting to get a policy that gives you money back when it expires you will have to pay a little more, but you at the end of the term you will get back all your premiums that you paid. That’s why term policies are so attractive. A lot of coverage for a low premium.

Many people still don’t have life insurance to take care of their families. There are a variety of reasons for this. Below I’ve listed 3 of the most common excuses people give me when I talk to them. Remember, life insurance is one of many tools designed to help your family prevent a financial catastrophe.

1. I can’t afford it.

  • I already showed you it can be affordable. You don’t even need to get the exact amount you need. Just by having some insurance to make it a little easier for your family is better than nothing at all.

2. I don’t need it

  • Do you have a spouse and/or child? Do you think you may someday pass away? Then you should at least talk to an agent about options out there. Even if you’re single, someone will have to pay your funeral expenses if you pass away so you might want to look into getting some insurance as well.

3. I don’t have time to meet with an agent.

  • Really? You don’t have a half hour? How long is Chicago Fire or whatever your favorite show is? An agent will go to you and is willing to work evenings and weekends. Most of us can find a little time. Now there are even term policies that can be issued within 24 hours and don’t require a medical exam. The policies with no medical exams will save you all kinds of time.

Now, let’s go back to being invincible. We’re not. None of us are. We probably all have been to a benefit for a family that had a premature death that created not only an emotional hardship, but a financial one as well. That’s why there was a benefit in the first place, because the family didn’t have life insurance.

The bottom line, talk to an agent about life insurance. Just start the conversation. Find an agent you trust that has access to all the different options so you get what you need.

What Are Some Advantages Whole Life Insurance Has Over Other Life Insurance

cvbWhat do you consider an advantage?

Before considering some advantages whole life insurance has over other life insurance, it’s important that you know what you consider an advantage to be.

What’s more important to you, the return ON your money or the return OF your money? Are guarantees important to you or do you prefer risk?

Return ON or return OF

If you’re looking for a high return on your money, there is no advantage to life insurance. There is no question you stand to earn a higher return on your money by investing elsewhere, if you’re willing to take the risk. The risk is you could lose some or all of your money and there could be no death benefit.

If you’re more interested in a guaranteed return on your money, albeit a fixed and probably lower return than what you could get elsewhere, coupled with a guaranteed return of your money, then this would be a key advantage of taking this path.

If you want to be able to forecast how much your money will be worth at any point in time, with the possibility it could be worth more than the forecast, and under no circumstances less, and know what the guaranteed death benefit is, then this would also be a definite advantage.

Compared to other insurance policies

Life insurance can be divided into two main types: Temporary and permanent. Both types will pay a tax-free death benefit if the policy is in force at the time of death.

Term insurance is temporary because it is designed to be in force for a specified period of time, which is known as the term.

Permanent insurance is called what it is because it is designed to remain in force for the remainder of someone’s life.

The two main types of permanent coverage are universal life and whole life. Both have cash value and living benefits not offered with term.

Indexed universal life is intended that there will be no loss of cash value and it doesn’t guarantee there will be a gain.

Whole life guarantees there will be no loss of cash value and guarantees there will be a gain.

Compare overall cost

Initially term will almost always cost less. However, the money you pay for term is money you will never see again. If you outlive the policy, which is often the case, there will be no death benefit.

Universal usually initially costs less than whole but more than term. There is a lot of flexibility of premium with this type of coverage. If properly planned, the likelihood of a reasonable return and cash value gain is likely. It is also likely that the coverage will be in force for the remainder of your life.

The whole life policy will have the highest initial premium but the premium is guaranteed never to increase. As long as the premiums are paid the policy is guaranteed to never lapse.

Perhaps some of each?

Bob is a retirement planning and safe money professional who specializes in life insurance products and who has more than 20 years experience.

His company, A Bulletproof Life is the 5 F’s: Food, fitness, finances, fulfillment, fun. and is based on his motto: Honesty, respect, best effort

Plan Your Dream or Prepare for a Nightmare.

No one has EVER lost one cent doing business with A Bulletproof Life.

Return Premium Term Life Insurance

hgPeople want to know; what is return premium life insurance? Does term life insurance return premium? Is it the same as ROP life insurance? The short answer is return premium term life insurance is an option. It’s what it says it is. Does that make return premium term insurance one of the best life insurance plans?

Would you rather have something that allows access as it becomes available or would you rather have to wait for a specified period of time, such as 10, 20, or 30 years?

The catch

As they say, the devil is in the details. The return of premium option works only if you keep the policy until the end. For instance, if the term is 30 years and you cancel the policy in 29 years, you will not receive a return of premium.

The way it works is you pay more for the policy, possibly double.

Insurance companies make most of their money from term insurance. They are designed for people to outlive them. Very few ever pay a death benefit.

The normal cost is kept by the company. The extra cost is invested so when the policy term ends, they have made enough on your money to pay you back.

The question I do not have the answer to is how many people actually keep the policy long enough to get their money back as opposed to those who cancel it with the company keeping the extra cost.

A better way

Doesn’t it make more sense to own something that you have more control of? If you are able to hold it for as long as you want, even for the rest of your life, be more in control of how much you put in, when or if you take money out, and if you decide to cancel it, your chances of receiving something in return are much greater?

That option also exists.

Which do you prefer?

The choice is yours:

1. You can either lease or buy.

2. If you simply lease, the money is gone. You’ll never see it again.

3. However, you can pay rent plus extra for a specified period of time with the promise that if you stay for the duration of the lease, you will get all your money back.

4. Another choice is to buy and own. What you pay will probably be close to what you’d pay for the above option but you control it. You can borrow against it. You can sell it.

Term is cheaper right?

Regular term is always cheaper in the beginning. There are many variables people simply do not take into consideration.

When you ask is it cheaper, do you mean in the short run or the long run?

How Does a Whole Life Insurance Policy Work

cxzIt is quite common knowledge that you have a life insurance paying out when the insured person passes away. While there are different kinds of life insurance policies, a whole life insurance policy has stark differences as compared to a term or a universal policy. So, how does it work and what are the big advantages?

A whole life policy does not have a predefined term that is defined during the insurance policy. While it does provide a death benefit and a strong protection over the entire life period of the person that is insured, the policy is deemed valid only as long as the premiums are paid in full. Hence, this kind of policy serves as both an investment package as well as an insurance package. The idea of utilising such a policy comes to good effect when you accumulate a strong cash value towards the policy and this can be used as collateral to borrow or even withdraw during the insurance period.

Quite obviously, there would be a lower return rate as compared to other popular insurance policies. The obvious benefits that comes with this kind of a policy is that there would be a fixed premium and you are aware of the costs that you have to pay. On the flip side though, you are not going to be able to claim flexible premiums as supported by other insurance policies. At the same time, a big advantage offered by a whole life policy is that you have lifetime coverage and you have the option of calling it quits at any time with a surrender fee to be paid. Even though there would be a lower rate of return as opposed to other investments, one good point is that you have tax deferred cash accumulation; which gives you a higher rate.

While there are fixed term insurance policies available today, they do not cover a person for an entire life time and since they are generally long term polices, the risk coverage reduces as the cash value increase over a period of time. Hence, in the event that you pass away, the beneficiary would get a total of the policy amount and the total premium value.

A life insurance policy is definitely a great idea today. It would keep your family secure in drastic events and it could give your family that much needed financial support during a crisis. It would be a strong supplement as it would be expectedly a larger insured value. Make the right choice by choosing the right insurance policy for you and your loved ones. Life insurance is the perfect way to be prepared for the worst.