There are more and more affordable life insurance options with all the companies vying for the business. On top of that we are seeing people live longer than ever before. With competition and different product lines that are designed for different lengths and flexibility, it creates a lot of affordable life insurance options for consumers. Term life insurance is almost a straight commodity if you have no interest in converting to a permanent plan ever. Term rates have gone down so much it is pretty staggering. A couple things to keep in mind is just because a company is saying that a policy could cost X doesn’t mean you could qualify for that rate. The company who is actually showing up as the second, third, or fourth best quote may actually underwrite more favorably and end up being a better rate.
Other very affordable options are return of premium term, which will return all premiums paid if you outlive the term. This will cost more money than regular term, but few people ever die during the term of the policy. It is especially affordable if you live through the term and get all your money back. Guaranteed universal life is also considered to be very good affordable option and the most affordable for plans that are permanent (guaranteed to 100 or 105). This type of plan is almost like a permanent term and lasts to 100 or so, but the premium never goes up and little if no cash value is built.
What life insurance company do I want to select as my carrier?
This is not a simple question to answer because there are so many good carriers on the market. On top of that, different companies have different niches in terms of their best products. If you are looking for a good universal life product then it might be one company, and if you want a good dividend paying whole life policy, than it might be other companies.
In terms of which one to select, you should figure out what type of product you want to buy and find out which carriers have the best products in that area. You should make sure that any life insurance company that you use has a good financial rating from the major rating services. If price is the most important than make sure you are getting the most competitive rate, by shopping all of the main carriers. If you just want to buy term life than price is probably your main concern and the company is probably less of a concern. As I said before, just make sure the company has good financials and at least an “A” rating.
At the end of the day, most companies will offer term options and permanent options. They will usually have various level terms, return of premium term, and either whole life and/or universal life. For the most part, you can’t go wrong provided that it is a reputable company. It is usually more important to pinpoint a specific company when buying cash value products.
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.
This is a popular way to use affordable life insurance. Mortgage protection is basically a policy that pays a death benefit that will be enough to pay off a person’s mortgage in the event of death. A term life policy will be taken out for the term of the mortgage. A level term or a decreasing term product can be used for this, although a level term is a much better value. Decreasing term has a decreasing benefit, and level term has a level benefit. Once the term product is selected for 10, 15, 20, or even 30 years, that rate is locked in. The great thing about term is that the beneficiary can use the proceeds however they want to. In other words, they can pay off the whole mortgage, continue to make payments, or do something completely separate.
Having a level term policy with the flexibility of the use of proceeds can be very beneficial. This is a single use of insurance that is only factoring in one debt of the consumer. Often times there are other debts that would be left to a beneficiary, college funding goals that might not be reached, lost income, etc that need to be considered. As a single use product, term life can certainly be a perfect fit.
Another type of term product that is being used on a regular basis for mortgage protection is return of premium term. This is a term program that is level for a period of time (the length of the mortgage) and then if the client is still alive at the end of the term they get a full refund of premiums paid. The downside to this product is that it is more expensive than a regular term, but guarantees the money back.
