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.
Just getting started trying to figure out what type of life insurance you need. It can be really confusing and many people in the insurance industry make it very complicated to understand. Should you buy a term policy? What is a term policy? How many years should it be level? What is Whole life and universal life and should I create a blend of permanent and term insurance? How much coverage should I have? How do I calculate this? What does the rating of the company mean and how do you analyze this? Does this term carrier have a good conversion option for me down the road?
These are all good questions and we try to really simplify it for our clients and bring it down to earth. The most important thing we emphasize is getting the right amount of protection. First and foremost as a beginner to life insurance, get a death benefit that suits your situation (we can walk you through a simple analysis). If all you can afford at this moment is term, than get that on the books, so you have the protection. You can always convert some or all of it to a permanent plan down the road. Term is like renting and permanent is like buying and building equity. You want to select a term that will provide protection for the period that you will need it. For example, you have a child that is 2 and want to have at least 1 million dollars of coverage until they graduate college. The child will finish up at about 22, so a twenty year level term would probably be the most appropriate. A permanent plan (whole life or universal life) can be very beneficial, but starts at a much higher premium than term. The permanent plan premium will remain level as the term premium will go up after the initial level period. Obviously, being a permanent plan it sets up to last for your entire life. Blending term and permanent can be a good idea to give you the best of both worlds and a price tag that you can afford at that point.
We work only with companies that have an A rating or better. As you select a company, make sure that the company has at least an A rating and is not facing a major downgrade. We provide our clients with up to date ratings as that can change quarter to quarter. Talk to a Paramount Consultant and we can walk you through the companies and also discuss which ones have a good option to convert to permanent plans.
When you are looking for your next term policy it is important to have an agent shop rates for you as rates are dropping yearly. On top of just the rates, you want to select a company that has good financial strength with all the current financial turmoil. The average term rate has dropped by an average of 5% every year for the last ten years.
Another factor when looking at term rates, is the conversion options of the company. Are there good permanent options to convert to if you want a permanent policy down the road? Do they offer universal life, whole life, variable life, etc. These are all important questions to ask your agent.
Term rate quotes are just quotes technically and just a guestimation of what the premium might be based on the limited info the agent has. Just because an agent quotes you select preferred, don’t assume you can get that rate. You might be able too, but you have to go through underwriting before you truly know the premium. If something seems too good to be true, it probably is. For a free analysis, and a realistic analysis you can speak to a Paramount Consultant
We will help you evaluate your different options as well as provide you insight on different company’s. Certain company’s give better rates to smokers and that is important as you apply if you are a smoker. What if you suffer from Sleep Apnea or are a pilot, where is best to apply? At Paramount, we look at all of those factors and consider all of them to help our clients get the best offers.
Do you ever feel like you have 20 statements coming from 20 different places? Do you have your life insurance with multiple company’s? How much face amount do you have on each policy and is it enough? How much longer does your term policy remain level? Do you have the best rate available for your age and health? What are your conversion options if you want to convert your policy (s) to some type of permanent insurance like whole life or universal life? Do you have term life or permanent life insurance?
These are all important questions and good questions to ask yourself about your coverage. Our Paramount consultants like to review coverage with all of the new and existing clients and make sure that everything is aligned. We will walk the clients through their existing coverage to determine how much and what type of insurance they have. We look at consolidation options, how much face amount, rates, health changes, whether any of the conversion options make sense at that point, and if they are with carriers offering solid conversion options.
This is a free service that we offer and it is a great exercise to go through to make sure you are protecting your families financial future. It is similar to getting your oil changed in your car. If you don’t change the oil, the car will not perform at the optimal level and could be disastrous if ignored too long. On top of that, you may save some money in the short term and create a lot of wealth in the future.
Money back term life insurance is concept that has been created by the insurance company’s to refund the customer the term premiums at the end of the term. This has been a very hot product (ROP-Return of Premium). In essence, a customer is buying a term policy that costs about 30-50% more than your average regular term policy. The benefit for paying more is that the premium amount will be returned in full at the end of the term period.
Is this a good deal?
For example, a 1 million dollar, 30 year ROP term policy costs “Bob” $1000 a year in premium. At the end of the term if “Bob” has paid the full time and is still alive he will get a check back from ABC insurance company for $30,000. If he cancels early, typically he would get back only a portion of his premium: usually nothing for the first six years, 9 percent after 10 years and 35 percent after 20 years. At first look, it looks like it makes a lot of sense. If Bob, lives through the 30 years he gets back all the money he ever paid to the insurance company. On the other hand, if he paid a regular term policy for 30 years and was still alive he and his family would get nothing.
The insurance company knows that few people will ever pay for a policy for the full term and that they are going to win in most cases. On top of that, very rarely do they ever pay out a death claim. Bob, might be better off buying the less expensive term (for say $600 a year) and investing the difference ($400) in to an interest bearing account. This only would work if Bob made sure he remembered to truly save this amount every month and put it aside. Bob, may want to compare Universal life guaranteed to 100 as another option. It would cost more than the ROP and regular term, but it would guarantee a death benefit for his family. The chances he lives past 65 are very high.
ROP can be a great option to look at and it is a very popular life insurance product right now.
The good news about purchasing life insurance today is that people are living longer than ever before and the mortality rates have gone down. The average male and female are living longer than they ever have before.
The benefit to the customer buying life insurance is that longer life expectancy creates lower rates. Since 2000 the average term policy rate has gone down about 4% a year. The rates have also gone down due to insurance company’s being more selective on who qualifies based on health and the tremendous competition between company’s.
If a term policy was bought 3 or 4 years ago, it is worth taking a look at what the policy would cost you today and it might make sense to re-apply. The most popular type of term insurance is level term with a term of 20 or 30 years. The insurance company guarantees that the premiums remain the same for that period. If you can lock into a lower rate than it can make a big difference over 20 years. It is also important to select a company not just on rate, but one that has a good financial rating. If the company doesn’t have at least a A rating, it is probably a good idea to keep looking.
You can read a lot of good information about life insurance and mortality rates at http://www.iii.org.