Posts Tagged Life Insurance Policy
Senior Term Life Insurance
Posted by Admin in Life Insurance on August 27, 2010
We all know that purchasing life insurance at an older age is more expensive than purchasing it while very young. In an attempt to provide affordable insurance to meet the life insurance needs of older insureds, some companies are now offering Guaranteed Acceptance Life Insurance.
Guaranteed Acceptance Life Insurance policy rates are less expensive than the traditional term insurance policies. As the name implies, you are guaranteed to be accepted for this life insurance. There are no health questionnaires to complete and no physical exams to take. As long as you pay the premiums, the policies cannot be cancelled. Additionally, you may lock your premium rate for the policy amount you want. Your rates will not change for as long as you keep your insurance.
Where’s the catch you may be asking. Well, the policies are written for a limited period of time. For example, Colonial Penn’s policies are for a two-year limited benefit period. They are available for people between the ages of 50 and 85 (This age range varies depending on insurance company and state regulation).
Generally, if death occurs during the first few years, a reduced benefit is paid or the company may return the premiums paid plus interest. For instance, with a Gerber Life policy, if death occurs by natural causes within the first two years (during the limited benefits time), the beneficiary will receive all of the premiums paid plus 10%. However, if death was a result of an accident, or if death due to natural causes occurs after the two years, your beneficiary will receive the full benefit amount. In the event of suicide (with certain state exclusions), the beneficiary will receive the amount of premiums paid only.
Most life insurance companies offer a Guaranteed Acceptance Life policy for seniors. There may be variations from state to state, but the basic premise is the same. They all offer an affordable insurance option for seniors.
Please see our list of recommended insurance quote providers below to get free insurance quotes from many providers. These sites also offer pages and pages of free insurance information.
Selling Your Life Insurance (Viaticals and Life Settlements)
Posted by Admin in Life Insurance on August 20, 2010
Selling your life insurance is an option you might consider if you’re in a difficult financial situation for which you don’t see a close end. A terminal illness or old age could cause you to think twice about paying those hefty premiums at this stage of your life. Selling your life insurance carries with it complex implications and substantial risks, so it is important that you educate yourself regarding the big picture. If you’re interested in selling your life insurance, this is a good starting point to obtain some basic information.
Basics: Vocabulary
If you’ve already done any research on selling your life insurance, chances are good that you’ve come across two main terms: viaticals and life settlements. Both refer to the selling of your life insurance to a third party. So what’s the difference? “Viatical” is typically used to refer to the transaction involving a chronically or terminally ill insured, while a “life settlement” is a transaction involving a senior (generally over the age of 65) who is not terminally ill.
Even though you now know the difference, it does not mean that your state does. These terms might be used interchangeably, or your state might use one of them to refer to both transactions. For example, your state could use “Viatical Settlement” to refer to any type of transaction regarding selling your insurance. Be aware that this kind of ambiguity may exist in relation to the vocabulary used in the sale of your life insurance.
How it Works
The owner of the life insurance policy will sell it for a percentage of the death benefit a lump sum to a third party and, in exchange, receives an often substantial lump sum payment. The third party then becomes the new owner andor beneficiary of the policy and pays all of the future premiums and eventually collects the death benefit when the insured passes away.
Those considering selling their life insurance may either directly approach a viatical company or settlement firm, or they may choose to work with a broker. The broker will act as an intermediary and present the information to several different companiesfirms in an effort to find the highest price for the sale.
The settlement firms buy the insurance on behalf of investors. In this situation, the investors become the owners and beneficiaries, and the settlement firm pays the premium until the insured dies. The firm then collects the death benefit and either pays its investors a percentage of the annual return or repackages the policy for sale to another party.
Take comfort in know that the process of selling one’s life insurance is typically very confidential. Most viatical companies and settlement firms understand the discretion necessary to make the process run smoothly and easily. However, a company may act disrespectfully and become borderline intrusive by trying to keep track of the insured’s condition. For this reason, it is important to work with a respectful, experienced organization.
Who Considers Selling
Those with serious, life-threatening illnesses are most likely to consider selling their life insurance to provide cash for various expenses, such as mounting medical bills. For those who are not terminally ill, selling the life insurance might be a good idea for a number of reasons. If the owner’s beneficiary has died or if the owner can’t afford to keep paying the premiums, it would appear that they no longer have sufficient use for the life insurance. Seniors around retirement age may also consider selling their life insurance, even if they are free of debt, in order to receive a lump sum of money with which they may do whatever they please.
Keep in mind that different companies may have different eligibility requirements to be able to sell your life insurance policy.
Advantages to Selling Your Life Insurance
It might be easy to see some of these benefits, but others are a little less obvious.
mean that you’re definitely robbing your beneficiaries of their gift.
- Risks of Selling Your Life Insurance
- You might lose your eligibility for some public assistance benefits, especially those based on your income and assets (such as food stamps, welfare, Medicaid and some Social Security benefits).
- There could be tax issues. Selling the policy will
result in a tax bill if the settlement amount exceeds your cost basis. - With improved medical care, the ill person may live longer than expected.
- You might face unhappy heirs. This might not be a problem for you, but it could lead to a long road of (possibly legal) complications and battles. Some settlement actually companies require the beneficiaries to also sign off on any sale, which could be good or bad, depending on whether or not you’re dealing with a cooperative beneficiary.
-
- Borrow against your insurance policy
- Cash out the policy if it has surrender value
- Look into accelerated benefits or living benefits
-
- Borrow money (from family or friends perhaps) and use the life insurance policy as collateral
-
- If you believe that selling your life insurance policy is the right decision for you, make sure you deal with a dependable, experienced broker or settlement company to ensure that you get the best service and results from your transaction.
Other OptionsIf you come to the conclusion that selling your life insurance policy is not for you, there are other options (though none that would provide you with such a large lump sum). An insurance agent should be able to help give you more information on some of these ideas.
Understanding the risks associated with selling your life insurance will help you make an informed decision. Be sure to consult a financial advisor or tax attorney to make sure you understand the implications of the sale.
Second to Die Life Insurance Policies
Posted by Admin in Life Insurance on August 13, 2010
Usually, the death benefit from a second-to-die life insurance policy is intended to go to the children , a charity or pay taxes owed after both spouses pass away.
In the U.S. there is a marital deduction permitting you to leave an unlimited amount of assets to your surviving spouse with no taxes payable at your death. Those assets then become part of the estate of the spouse and if it includes a second to die life insurance polciy it could help pay any taxes. In Canada, there is more lenient tax treatment.
There are also tax ramifications for small businesses, which is why business partners also purchase second-to-die policies.
THE REASON TO BUY SECOND TO DIE LIFE INSURANCE POLICIES
With a second-to-die life insurance policy your beneficiaries can pay debts with the proceeds of your policy, so they won’t be forced to sell your house or liquidate assets to pay the bill.
A second-to-die life insurance policy can help to construct a financial plan reducing the tax burden of wealthy individuals by creating trusts and using second-to-die life insurance as part of the estate-planning process.
ADVANTAGES TO SECOND TO DIE LIFE INSURANCE POLICIES
1.Less expensive. Second-to-die life insurance is usually less expensive than life insurance but depends on the blend of the ages. The premium is based upon the joint life expectancy.
2.Estate Preservation. A second-to-die policy appeals to individuals who feel strongly about preserving their estates with the life insurance paying the taxes.
3.Easier to buy. It’s easier to qualify for a second-to-die policy than for individual life insurance. Since both insureds must die before the benefit is payable, the insurance company is less concerned that one of them might not be in good health.
* Builds your estate. In some cases, second-to-die life insurance is marketed as a way to build an estate, not just insulate it from taxes. Much like individual life insurance, the death benefit of a second-to-die policy can ensure that certain people receive money, even if you spend every nickel.
4.Second-to-die life insurance might make sense for people who don’t have a lot of money but want to leave an estate for their children.
Second to DIe Life Insurance
Posted by Admin in Life Insurance on August 6, 2010
Usually, the death benefit from a second-to-die life insurance policy is intended to go to the children , a charity or pay taxes owed after both spouses pass away.
In the U.S. there is a marital deduction permitting you to leave an unlimited amount of assets to your surviving spouse with no taxes payable at your death. Those assets then become part of the estate of the spouse and if it includes a second to die life insurance policy it could help pay any taxes. In Canada, there is more lenient tax treatment.
There are also tax ramifications for small businesses, which is why business partners also purchase second-to-die policies.
THE REASON TO BUY SECOND TO DIE LIFE INSURANCE POLICIES
With a second-to-die life insurance policy your beneficiaries can pay debts with the proceeds of your policy, so they won’t be forced to sell your house or liquidate assets to pay the bill.
A second-to-die life insurance policy can help to construct a financial plan reducing the tax burden of wealthy individuals by creating trusts and using second-to-die life insurance as part of the estate-planning process.
ADVANTAGES TO SECOND TO DIE LIFE INSURANCE POLICIES
1.Less expensive. Second-to-die life insurance is usually less expensive than life insurance but depends on the blend of the ages. The premium is based upon the joint life expectancy.
2.Estate Preservation. A second-to-die policy appeals to individuals who feel strongly about preserving their estates with the life insurance paying the taxes.
3.Easier to buy. It’s easier to qualify for a second-to-die policy than for individual life insurance. Since both insures must die before the benefit is payable, the insurance company is less concerned that one of them might not be in good health.
* Builds your estate. In some cases, second-to-die life insurance is marketed as a way to build an estate, not just insulate it from taxes. Much like individual life insurance, the death benefit of a second-to-die policy can ensure that certain people receive money, even if you spend every nickel.
4.Second-to-die life insurance might make sense for people who don’t have a lot of money but want to leave an estate for their children.
Online Life Insurance Protection How Much Do I Need?
Posted by Admin in Life Insurance on June 18, 2010
Online Life Insurance Protection How Much Do I Need?
There are a lot of people getting quotes for life insurance online. The quotes requested are usually for standard amounts of 50,000 to 500,000. The amounts requested often indicate that most people have not taken the time to calculate the amount of life insurance that they need. This often leads to early policy terminations because a real need was not established at purchase. It is very helpful to determine actual needs and then purchase amounts accordingly.
Basic Needs Purchase an amount of life insurance to cover the basics.
1.Final Expenses This your basic burial expense need. Choose an amount and enter it into a calculator.
2.Mortgage Balance Add your mortgage balance to the final expense amount.
3.Short Term Debt Add your entire installment loan and credit card balances to your final expense and mortgage balance totals.
Now you can purchase a basic need life insurance policy amount based on actual needs.
Additional Income Needs The next level of a needs based plan might include a life insurance amount to replace income during an adjustment time period of your choice. You may want to leave your beneficiary a total of five years of your current income in the event of your death to allow your family the time needed to find other sources of income. You can now add this income need to the basics need amount to see if combining the two will fit into your budget.
Educational Needs You can also purchase an amount of Life insurance for an educational fund. You can estimate future college costs based on inflation and then multiply the amount by the number of children in your household.
These are a just a few basic needs and reasons for the purchase of life insurance. It isnt that difficult to do a mini-need analysis. You may save yourself some premium pounds because you have taken the time to determine how much life insurance that you actually need instead of purchasing a random amount.
