When you are looking at buying life insurance you can work with two types of agents. Either the agent will be a broker who independently shops a lot of companies and products or you will work with a captive agent who just represents one company. A good example of a captive agent would be New York Life or Northwestern Mutual. While they do have good products, it is generally a losing proposition for the consumer.
Life insurance brokers will be a better option for the consumer as they are not beholden to one company and trying to fit a round peg in a square hole. When companies are competing, it is generally going to be more beneficial for the customer. The customer will benefit from a larger selection of potential products and will be able to access the best rates on the market if they are just buying level term. The reason for using a company that is captive like a New York Life is that it is a good mutual company with a good whole life product. There are a lot of good mutual companies that can be accessed in the broker market like Mass Mutual, Guardian Life Insurance company, Lafayette Life.
As a life insurance brokerage, we have access to just about every carrier on the market. If you are buying term insurance it is basically a commodity, so it makes sense to look for the best rate. If you are looking for a permanent plan with cash value, then we will look at all the good products in our portfolio.
We get calls all the time about AARP life insurance and that clients are interested in this. The bottom line is that AARP has partnered with New York Life Insurance Company to offer life insurance to its members. No medical exam is required and only 3 medical questions are asked on the application. Since there is minimal underwriting the premiums are note going to be more than a fully underwritten product. With that being said it may be of benefit to some to have a product not fully underwritten as health may be a concern. If that is the case there are other companies that offer similar products that may be even more competitive.
Did you know that the life insurance carriers like when you buy term life insurance? A lot of clients we speak with think that it is the agenda of the insurance company to sell them permanent insurance because it costs more. While of course life insurance carriers want you to buy permanent products, they are quite content when you buy term. Only about 2 percent of term policies ever pay out a benefit and therefore it is highly profitable for them. A good option for many is to buy a return of premium term product. This allows you to have best of both worlds with term, but return of premium if you outlive the level term. If you are not familiar with this option you should ask about it. It is usually more beneficial the younger an insured is.
With portfolios down 30 and 40% from a plunging stock market, it is nice to see steady growth in my permanent life insurance policy. The cash value in my dividend paying whole life insurance has a guaranteed interest rate in the cash value and it will never decline in value. While the internal rate of return may not be huge, it is good to know that it is positive every month. I will also receive the value of a dividend if it is declared by the insurance company. Usually good mutual life insurers will declare a dividend. It is not guaranteed, but if you have a policy with Mass Mutual, New York Life, Guardian, etc. they usually declare a nice dividend. A dividend is simply the return of an over collection of premium by the company. They meet their obligations and put enough away in reserves and then declare the dividend back to their policyholders.
On top of my cash value getting better every month, it grows tax deferred. When I access it I can get to it tax free through preferred policy loans. At retirement, I can use the cash value as a supplement to my retirement. First, I will withdraw money from the cash value up to my cost basis, and then use preferred policy loans. It is truly one of the most flexible and best tax shelters available. In fact, Walt Disney got cleaned out in the great depression with all of his stocks and only had his life insurance left. He took a policy loan out of his life policy to start Disneyland.
Like I said, it gets better no matter what.
How will a Paramount Life Insurance Consulant work for you?
- It is very important that we ask all of the pertinent questions? We can simply break this down into three parts:
1. Your current situation is different from your friends and family
2. What are your goals? (Secure retirement) Build Income TAX FREE.
3. The more your consultant (agent) knows, the better your outcome will be.
Get you know your Life Insurance consultant. Be sure you mesh with your financial advisors. This will insure that you have a great outcome for all of your insurance needs. Start planning your future today. ING is offering great rates on 20 year Term Life Insurance here: http://www.ing-usa.com/us/index.htm.