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.
Whole life is a great product to buy and the younger you are when you buy it, the better off you are. When you buy whole life insurance you lock into the mortality of the age of purchase. In other words, the younger you are, the lower the mortality of the policy and the lower the premium is you lock into. The premium of whole life never increases, so it will remain level until age 100.
On top of locking into the mortality of whole life, it is also beneficial to get the policy going early from a cash value perspective. The earlier you start the more time you have to accumulate a very significant amount of cash value inside of the policy. The cash value can be used for policy loans to buy things during the course of your life, make investments, etc. The cash value also can grow into a substantial amount of money and can be used as a source of retirement income. The money grows inside of the policy on a tax-deferred basis and can be drawn out in retirement on a tax free basis. The way that you would do this is to take withdrawals from the policy until you reached your cost basis. The withdrawals wouldn’t be considered taxable as it is return of the money you have contributed. Once you reach the cost basis, then you start taking money out with preferred policy loans. Some interest will be charged, but you will avoid paying taxes on the loans.
It is great to have a permanent whole life policy when you reach retirement. Many folks will be ending their terms and have no insurance. It will allow you to have insurance into your retirement years and have a very reasonable premium.
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.
When you are getting a whole life insurance quote, it is important to factor in several things. Are you buying enough death benefit, or should you supplement the whole life with a term rider? Should you overfund the policy above the premium to take advantage of the tax favorable nature of the cash value? If so, how much should you overfund the policy? Do you have disability waiver of premium included in the quote? Is it a good company with a long track record of good dividends.
These are important questions that should be asked as you get a whole life quote. Whole life is not a commodity like term insurance and it is important to pick a good company and to structure it the correct way. An inexpensive term rider can be included in the whole life plan, that will increase the death benefit. This rider can not only help you meet a higher exposure level, but also give you more term that can be converted to whole life later also. This is a good option to have once you understand the value of whole life. In regards to overfunding the policy, I would highly suggest it. The more you overfund the policy, the quicker it will grow. The money the is contributed to the cash value will grow on a tax-deferred basis and can be accessed on a tax-free basis if done correctly. The IRS has put a limit on how much you can contribute on each plan for a reason. They don’t seem to be very excited about plans that can be accessed tax free. I would suggest you take advantage of this benefit as much as possible.
The policy should have disability waiver of premium on it. This will waive your premium payment in case of a disability. If you can qualify for this rider, it is really valuable. Also, it is critical that you select a good mutual company with a great track record of paying dividends.
When looking at what type of life insurance to buy, it is important to marry affordable life insurance with the product that makes sense for your situation. For example, if you have a child that is 1 years old and you decide you need coverage for 20 years, don’t buy a 10 year term. The temptation to do that might be there, to save cost, but in the end it may hurt you. If you go and apply for a new 10 year term at the end of the first 10 year term, you may not be insurable and certainly the premium will be a lot higher.
The first thing we want to look at is how long will you want and need the coverage. You may want to have permanent insurance, but your budget will not allow for that. Maybe you can do a combination of term and permanent to meet your budget and your permanent need and want. It is important to buy the right amount of death benefit above all else. One case recently, the client wanted to buy 100,000 dollars of whole life, when the need for death benefit was closer to 500,000. We suggested supplementing the whole life with a 400,000 term rider to cover the additional exposure and the client agreed to that strategy. Very often we will see a client with a plan that is not budget friendly and the plan type makes no sense. As an independent brokerage we can shop all the carriers and all the different products. If a consumer is dealing with a captive agent, they may get stuck with one of the products in the agents limited repertoire.
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.
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.