Often times the service that is provided by a life insurance agent is underestimated. You might think that the only thing the agent does is sell you the policy and then moves on. We focus on providing great service to our customers during the underwriting process and after they are officially a policyholder. I have heard many customers, say that they didn’t know who to call and had to call someone at a call center for a basic policy question in the past. We are available to our customers at anytime to answer whatever questions they have and whatever adjustments they might need to make. For example, if they need a change of beneficiary form or need to adjust their address, we help them with that. If they have a claim, then we are there to help them through the process.
Another aspect of what we do from a service perspective is keeping them informed of any changes, updates, improvements in the industry. It is important to know what is going on as changes can effect them. On top of that, we stay in touch about their conversion options. If they don’t already have a permanent life policy, such as whole life or universal life, it is important to keep them posted on options. With most carriers there is the option to convert all or part of your policy to a permanent plan with no proof of insurance. Clients are often not aware of this option and it can be of great benefit. Service is an important component of what we offer our clients.
Did you know that you can convert your term life insurance to a permanent plan with no proof of insurability? Many times clients will not be aware of this fact and are excited to hear about this valuable option. Depending on the carrier, there is a period of time that all or part of the policy can be converted to a permanent plan offered by that carrier. Just about every carrier will offer a whole life and or a universal life as a conversion option. For example, if you have a 500,000 20 year term and decide to convert 100,000 to guaranteed universal life, you will then have 100k of guaranted universal life and 400k of 20 year term. It is important to note that this conversion can be done with no proof of insurability. Even if you are uninsurable, you can still do the conversion.
Some companies will actually allow you to convert another companies term to their permanent plan. Usually to be able to exercise that option the company will require that the policy was issued within a certain number of years, with at least a standard non-smoker rate. This can be a great option if the term carrier doesn’t have good permanent policies to convert to. For example, we had a client who had term but wanted to convert part of his plan to dividend paying whole life. The term carrier he was with didn’t offer a whole life product. We were able to place the conversion to whole life with a highly respected mutual life insurance company.
As your needs change, it is important to understand this option.
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.
Have you ever tried to read a life insurance illustration? Often times they are so complicated that only a seasoned agent can understand them. They have all the disclaimers on them about returns and typically you will see at least two columns of projections.
One column will be the guaranteed column, which will be the worst case scenario. The other column is the assumption column. This is usually based on the companies current dividend scale or some type of hypothetical return. It is important to look at what guarantees are built in and to look at the companies historical results. If you have a dividend paying whole life product, the dividends will go up and down. The dividend is based on the companies success and the success will obviously fluctuate over a long period of time. Most good mutual companies have never missed a dividend, but the amount of the dividend is the key. If you are talking about a universal life, there is a bottom floor interest rate or return level in one column. Many plans might guarantee like 3 or 4 percent as a worst case scenario. The other side will be some hypothetical interest rate or market return. This like the dividend is a total guess based on some historical data and future projections.
The key to reading an illustration is that it will give you some rough parameters. Just remember that it will never play out exactly as illustrated.
Life insurance has many uses personally and for business. Personally it can be used as protection against premature death, for tax-free accumulation for retirement, for loans for buying items such as cars, charitable giving to your favorite charity, and many others. From a business standpoint, life insurance is used to secure loans, set up buy-sell arrangements, key-man protection, deferred compensation, and loan money to the business for expansion, etc.
It is important to understand how to use life insurance, so you can maximimize the value to you, your family and your business. The most common use is to buy a term policy that will cover you in the event of your untimely death. This policy can be used to provide income replacement to your family or buy your partner out in a buy-sell arrangement. Term is often used for court ordered life insurance decrees, key-man insurance and to function as a loan guarantee. When you start using cash-value products like whole life and universal life, there are even more creative uses. The internal build up inside of the policy can be used as an incredible supplemental piece to your retirement. The money grows on a tax deferred basis, and can be accessed on a tax-free basis if done correctly. The internal buildup is also a great fund to draw upon as you go to borrow against to buy new cars, invest elsewhere, etc. Cash value life insurance is also commonly used as the mechanism for deferred compensation for companies with its leverage and tax-advantage. There are many other uses that I am not mentioning, but this shows the tremendous flexibility of these products.
There are life insurance choices for healthy people after 50 and for unhealthy people obtaining life insurance over 50. If you are healthy or not to unhealthy you obviously have many more choices and the whole suite of products and death benefit amounts are available to you. These products that are fully underwritten will assign you an insurance rating after underwriting which will determine your premium. Depending on your age, 10,15, 20, and 30 year term can be available to you. Also, permanent products like whole life, universal life, and guaranteed universal life. Guaranteed universal life, is very popular with people over 50 as it is a permanent death benefit at the lowest possible cost. While it doesn’t accumulate cash value like whole life, it will guarantee coverage until age 121.
If you are unhealthy and incapable of getting approved through full underwriting, then you can go for the guaranteed issue life insurance. These products are issued even if you are uninsurable in the traditional sense, but you will pay a heavy premium for these products. On top of that you will be limited to face amounts up to only about 50,000.
We generally suggest clients get there life insurance when they are still healthy and can qualify for fully underwritten products. When you get over 50, more health issues can come into play and it is a matter of time before something will affect your insurance rating. While the health issue may not make you uninsurable, it may force you to pay 40% more than you would have 6 months ago for the same coverage. Please call us today at 800-554-5142 and we can walk you through all the various options based on your specific situation.
Getting life insurance is a fairly simple and straight forward process. The first thing you will want to determine in getting life insurance is the amount of life insurance that you want to buy. The second thing to determine is the type of life insurance that you want to buy. Do you want to buy term, whole life, return of premium term, universal life or some combination of those? Based on the purpose of the insurance and your budget, that should help in the selection of the appropriate type. For example, if you want to accumulate money as a supplemental retirement benefit, then you will obviously be using either whole life or universal life.
After determining what you want to buy, you need to select the carrier that will provide you the best option. The best option will depend on your criteria. If you want the cheapest term, than we shop the rates and select the cheapest term carrier. If you are looking at whole life insurance, then you want to look at companies that have are good dividend paying whole life carriers.
Now you have picked your face amount, product, and the carrier you want to apply with. It is time to fill out the application for that coverage. Once the application is completed a paramedical exam will be ordered. The paramedical exam is scheduled and can be completed at your home or business. After the application and the paramed are completed, you can expect about 4-6 weeks of underwriting to get approval. At the end of the underwriting process, the company will either approve you and assign an insurance rating or they will decline coverage. The insurance rating will determine the premium you pay for that policy. An example of an insurance rating would be preferred non-smoker.
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.
What is the best term life insurance? That is an interesting question and how do I determine what that means?
I generally think this can be answered through a basic analysis when selecting the carrier you want to work with. Which carrier will underwrite me the most favorably based upon my specific underwriting situation? If you have sleep apnea and take medication for a couple of different purposes, then it might be one carrier. If you have type 2 diabetes it may be a totally different carrier. Based upon which carrier will underwrite your situation the best, that will determine your underwriting rating and your ultimate premium. See what offers a Florida life insurance consultant can help with you.
Another aspect of determining the best term life insurance for you is what is the company’s financial strength. Generally you want to select a company that has an A rating or better. This is something you will want to be comfortable as you select the carrier you work with.
When determining the best term you want to look at your short and long term goals and needs with the insurance. For example, will you only want the term for the term period? Will you possibly want to convert all or a piece of the term to permanent insurance? If you will want this as an option then you want to look at what the term carriers offer as conversion options. Do they have a good whole life option? Universal Life? How long do you have to convert it with no proof of insurability?
These questions might help you if you are trying to figure out what the best term life insurance is. It is going to be specific to your situation and varies per person.
One of the longest standing arguments in the insurance business is buy term and invest the difference or buy cash value life insurance.
The argument of buying term and investing the difference is based on the premise of getting cheap term and taking the extra money (you would have spent on whole life) and investing it in the market. The thought is that you can make a higher return with the money in the market than you can inside a life insurance contract.
While the true accumulation value of an investment account can be higher than the accumulation value of the cash value, other factors must be considered. For example, what if your investment account performs poorly and you actually lose money. A life insurance policy has certain guarantees built into it that guarantees that you will not lose money no matter what.
Also, a big consideration needs to be from a tax standpoint. What is a modified endowment contract? Where will you invest? What is your tax bracket? What will the tax bracket be when you want to access the money? Would it help you to have money that you can access tax-free from the life insurance? Is the death benefit being passed tax-free going to be a benefit to your estate and family.
Term is a great way to cover your liability at a very reasonable price. The problem with term is that it only lasts for a period and most people outlive the term and their family never sees a benefit. Often times a combined approach can be a good one. In other words, having a majority of the coverage as term and part being whole life or universal life.