There are a million reasons not to buy life insurance today or next week or even this year. Typically, it is not something that you are going to be excited to purchase. While I completely understand this rationale, it is important to consider why you may want to buy sooner rather than later.
First of all, you will never be healthier than you are today. It is possible that you could be sick or unhealthy now, and in the future your health will improve. That is a possible scenario, but it is true in only rare circumstances. The longer you live the more apt you are to have additional health problems or take additional medications. If your health gets worse in the future, it is a matter of time before you may not qualify for a policy at all. If you need coverage and you can qualify, you should go ahead and secure the coverage.
You will never be younger than you are today. This is always true and your premiums will only go up from here. The earlier you lock into a rate and the mortality, will benefit you in the pocket book.
Another reason people wait is that they are shopping carriers and plans. The answer to this is simple, let us shop the rates for you and we will have the best rate on the market for you in 5 minutes. The process to get applied, complete the underwriting, and get you approved takes about 4-8 weeks. This process doesn’t obligate you in anyway, but it gets a formal offer from the carrier if you are insurable.
Can you get your premiums back for your life insurance if you don’t die? The answer is yes and it can be done in two different ways. The first method is by buying a return of premium term life insurance plan. These type of plans are usually available in different term lengths like regular term insurance. The concept is simply get a full refund of all premiums paid if you live through your term period. This is a great deal for the insurance company as well as for the insured. You will pay more for this than you will for a regular term policy, but you will be pretty happy if and when the money is returned. It is a good deal for the insurance company as they can use premium and generate a good return on your money and make a profit. At the end of the term, they pay the insured back the contributed amount and they keep what they made for a return.
The other way to do it is buy using a permanent plan such as whole life or universal life. After contributing for a period of time, you can withdraw money from your cash value up to your cost basis and still keep the coverage. If you can afford to pay the permanent premiums, this can be a very beneficial strategy. If you wait until the cash value is more than you contributed, you simply pull out the cash you have contributed and you have a full return of premium. The problem with return of premium is that your insurance ends at the end of the term, but with whole life or universal life you can continue coverage.
Many of our clients want to know about return of premium term life insurance. It is one of the hottest products on the market and it makes a lot of sense. Since only about 2% percent of people ever die during the term of their term life policy, why not recoup the premiums at the end.
The argument for it is that the money that you paid for the term premiums will come back to you 100% at the end of the term period. The argument against it, is that it costs more than regular term insurance does. In most cases at least 50% more than a regular term policy and often more than that. The other argument against it, is that you earn no money on the premiums you paid into the policy and only get the money back with no interest. While I understand this argument, I think it is better to get the money you put in, as opposed to the term policy that expires and you get nothing back. Return of premium basically serves as a forced savings. If you didn’t put the money into the policy, would you have saved it otherwise.
The return of premium option generally is more favorable for a younger person as the increase over regular term premiums are smaller than with older consumers. It never hurts to get a quote for both and weigh them against each other. Depending on your goals and budget, this may be a great option for you.
It may be time to start looking for a policy soon if you have been putting it off. The rates are going up with a lot of the term life insurance carriers after years of decreases in rates.
Many of the carriers are increasing their premiums by 5–15% and in many cases they are raising their rates more than that. Rates over the last decade have consistently gone down due to folks living longer, healthier lifestyles, and more competition. Many folks would re-apply each year and see a reduction in their rate. This is the time to lock in and you better do it quickly.
One strategy is to lock in for a longer term rate right now, such as 20 or 30 years. Shorter terms will probably have less popularity and consumers will want to lock into longer level periods. We can compare the plans on the market, by simply going to our quote engine and getting a quote at www.paramountlifeinsurance.com. Obviously, once you lock in the rate it can never go up until the end of the level period. Another option to look at is a permanent option that allows you an opportunity to lock into a permanent rate with whole life or universal life.
If you are a male age 65 or older and you have a term policy with at least 3 years left on the level period, you may be able to settle the policy. When I say settle the policy you may be able to sell the policy to investors who will pay you a percentage of the face amount. This may be a great option for a lot of people as most term policies never get collected on by the beneficiaries. On top of that, when the premiums go up astronomically at the end of the level period, most clients drop those policies.
The face amount to qualify for this program needs to fall in the 1 million to 5 million dollar range. The typical offer is 3 to 7 percent of the face amount. The offer is determined by the age of the policyholder and other factors. For example, a 5% offer on a 5 million dollar level term with 4 years left on it, would be $250,000. This can be pretty attractive and can even be used to buy a new policy in some instances. While the term policy may have been used initially for income replacement, the insurance need might be for estate planning now. For more information on this program, you can contact Vince at Vince@paramountlifeinsurance.com and to see if you are eligible.
Should you wait to buy your life insurance until later? That is a good question and gets to the fundamental purpose of the death benefit. Of course, if you know that you will be healthy and/or still alive and able to qualify down the road than you certainly can wait. The problem with that approach is that you never know what the future holds. It can possible save you a few dollars in premiums for the few months that you wait, but it is not worth your families future. The insured rights the small premium check and the client’s family would stand to get a big check.
The natural inclination is to put insurance off and sometimes buy it in a more reactive way. For example, I hear from clients all the time that they decided to finally move on buying it because a friend died or got sick. Another benefit to buying it is the benefit of locking in to your current age. This is important for term insurance and tremendously important with permanent insurance. With whole life insurance you buy in at whatever age you are and the premium remains level for the life of the contract. Besides that, the sooner the policy gets started the more opportunity for the cash value to build up.
To receive a free quote go to www.paramountlifeinsurance.com. Take advantage of your health if you have it.