Life Insurance Information

The Financial Services Authority (FSA) has issued guidance to warn that traded life policy investments (TLPIs) are high risk, toxic products that are generally unsuitable for the majority of UK retail investors and should therefore not be promoted to them.

TLPIs are known as ‘death bonds’ because investors are putting their money into a pooled investment or fund which invests in US life insurance policies. Basically, a TLPI investor is betting on when a particular set of US citizens will die and if these people live longer than expected then the investment may not function as expected.

Evidence from the FSA’s work to date has found significant problems with the way in which TLPIs are designed, marketed and sold to UK retail investors. Many of these products have failed, causing loss for UK retail investors. continue

Variable life insurance

To define variable life insurance is to include the fact that, unlike universal life insurance, it allows you to determine which investments are used for your savings account component, not the insurance company. You can choose low risk investment options which offer lower returns but more security, or you can choose high risk high return investment options.

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So essentially, variable Universal Life Insurance  is a type of life insurance that builds a cash value. In a VUL, the cash value can be invested in a wide variety of separate accounts, similar to mutual funds, and the choice of which of the available separate accounts to use is entirely up to the contract owner.

The death benefit for this policy type will vary, but is guaranteed to be a specific minimum amount.

Variable universal life insurance is a hybrid between variable life coverage and universal life coverage. The right life insurance type will depend on your specific situation, so make sure you know all your options before making your decision.

More On Variable Life Insurance

The ‘variable’ component in the name refers to this ability to invest in separate accounts whose values vary—they vary because they are invested in stock and/or bond markets. The ‘universal’ component in the name refers to the flexibility the owner has in making premium payments.

The premiums can vary from nothing in a given month up to maximums defined by the Internal Revenue Code for life insurance. This flexibility is in contrast to whole life insurance that has fixed premium payments that typically cannot be missed without lapsing the policy (although one may exercise an Automatic Premium Loan feature, or surrender dividends to pay a Whole Life premium).

Variable life insurance is a type of permanent life insurance, because the death benefit will be paid if the insured dies any time as long as there is sufficient cash value to pay the costs of insurance in the policy. With most if not all VULs, unlike whole life, there is no endowment age (which for whole life is typically 100).

This is yet another key advantage of VUL over Whole Life. With a typical whole life policy, the death benefit is limited to the face amount specified in the policy, and at endowment age, the face amount is all that is paid out. Thus with either death or endowment, the insurance company keeps any cash value built up over the years.

However, some participating whole life policies offer riders which specify that any dividends paid on the policy be used to purchase “paid up additions” to the policy which increase both the cash value and the death benefit over time.

With a VUL policy, the death benefit is the face amount plus the build up of any cash value that occurs (beyond any amount being used to fund the current cost of insurance.)

If investments made in the separate accounts out-perform the general account of the insurance company, a higher rate-of-return can occur than the fixed rates-of-return typical for whole life. The combination over the years of no endowment age, continually increasing death benefit, and if a high rate-of-return is earned in the separate accounts of a VUL policy, this could result in higher value to the owner or beneficiary than that of a whole life policy with the same amounts of money paid in as premiums.

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Life insurance no medical exam? That’s very rare. Most, if not all life insurance companies will likely require you to undergo a medical exam. The primary reason life insurance companies need to administer medical exams is to judge how much premium to charge a potential policyholder.

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If the company determines you are likely to die at an early age, they will want to collect more premiums early in your life, but if they feel you will live longer they would not need to collect as much from you in the early part of your life because you will be around longer to continue to make premium payments.

Life insurance companies try to accurately judge how long a potential policyholder will live with two factors: Longevity Charts and Medical Exams and History

Longevity charts are statistics on the mortality rates of people. Basically, longevity charts give an insurance company a way of knowing how many men, women, and children die when they are various ages. This information can help an insurance company determine what risk they are taking by choosing you as a policyholder.

For example, say a longevity chart reveals that men at age 29 die on average at a higher rate than women at age 29. From that statistic the insurance company would be taking a larger risk by insuring a man than a woman. This is why insurance for children is very inexpensive, because the risk of a child dying is very low so the insurance company does not have to charge a large premium.

Your medical exam and history is the second factor in determining how much risk you are for the life insurance company. Usually your medical exam can be done in the privacy of your home or office unless the insurance company will require additional tests then you may be referred to a clinic to complete your medical exam.

Things you can routinely expect to be asked about during your life insurance medical exam would be:

1. Your medical history

2. Your family’s medical history

3. Information about how to contact your primary doctor

4. Lifestyle habits such as smoking, drinking, recreational drug use and exercise

5. How much life insurance you are interested in purchasing

Procedures you can routinely expect to be performed during your life insurance medical exam would be:

1. Measurement of your weight and height
2. Measurement of your blood pressure and pulse
3. Blood work (to check things such as cholesterol, glucose, protein, and HIV)
4. Urinalysis (to check things such as protein, glucose, creatinine and cocaine)

After undergoing the medical exam your insurance company will review the results to determine if you are insurable and for what premium. The time to fully process this information may take a few months. If you failed the medical exam or feel something on the medical exam was inaccurate you will want to ask the insurance company to send a copy of your medical exam results to you or your doctor.

This way if you failed because you have a health problem you can address that with your doctor, but if you failed because of a mistake by the insurance company you and your doctor can remedy the situation immediately so your mistaken results will not stay on your health record and cause you to be denied for other insurance.

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So how do you go about maintaining life insurance policies? Yes! It is great that you found an affordable life insurance policy but purchasing your affordable life insurance policy is just the first step in being a responsible life insurance policy holder.

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To get the most out of  life insurance policies and you want it to protect your loved ones like it should, there are some simple steps you need to do in order to make sure your life insurance policy stays current and safe. Below are the steps you should take as a current life insurance policy holder to make sure the life insurance policies you have works for you:

5 Steps for Maintaining Life Insurance Policies After Your Purchase:

1. Make sure you understand your life insurance policy and ask your life insurance agent about any wording or information that you don’t understand… remember, you are paying them to work for you!

2. Store your life insurance policy in a safe place such as a fire-proof security box or safe deposit box.

3. Make or obtain a copy of your life insurance policy and store it in a different safe place than the original policy.

4. Tell the beneficiaries of your life insurance policy where your storage places are.

5. Review all life insurance policies at least yearly with your agent. Keep your life insurance agent or company informed if any of the following occur: change of address, birth or death of any family members, or if you get divorced or married.

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A life insurance claims lawyer is an unfortunate but necessary occupation if insurance company failed to pay life insurance claim. Essentially they help people who have been denied or delayed life insurance policies. After a loved one dies, filing the life insurance policy claim can be confusing and difficult but can relieve great financial burdens for your living family.

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Fortunately, in most cases, the process is not difficult. All you need to do is find the actual life insurance policy, fill in the form and submit the paper work to the concerned insurance company.If you cannot find the details you can contact your state insurance department and they should be able to help you.

If your claim is denied, there are steps you can take to try and right the ship.

*Remember if all theses processes prove too overwhelming, you need to hire a denied life insurance claims lawyer.

• First, make sure you have all the proper documentation so that you can back up your case.
• Be sure to write down the name of each and every individual you’ve spoken with in reference to your life policy. The documentation can be invaluable should your claim be denied.
• Be sure you understand the reason your life insurance request was turned down. All companies have different rules and regulations, so be sure you’re up to date on their official policy.
• When you do appeal your denied life insurance policy application, be sure to do it in the necessary amount of time, thereby not excluding yourself from possibly getting the coverage due to date issues.
• Call and check on your appeal on a regular basis so that it is not forgotten, either by you or the insurer. You can also if necessary request that the appeal be sent to the corporate office for additional review.

Should the insurer dispute your claim, keep some other things in mind.

First, a large number of life insurers are bound by the Employee Retirement Income Security Act (ERISA).

A major aspect of ERISA is that the majority of insurance policy claims permit only one appeal of the denial of a claim. That specific appeal is required to be handled by the claimant or that individual’s life insurance claims lawyer as if it were the individual’s one and only chance at winning the appeal.

In the event the appeal is processed and turned down, the individual then must turn to federal court with the lawsuit based entirely on the administrative record of the appeal.

In the majority of cases, the individual is not allowed to introduce any new evidence or contact any witnesses following the denial of the initial appeal.

So why do denials happen in the first place?

In many cases they are dictated by several excuses from insurers, including that there was some misrepresentation or non-disclosure in the application, a pre-existing condition, or, when it comes to accidental death, the injury was in fact self-inflicted due to some action by the claimant.

The bottom line is that when you think the insurer has incorrectly denied your appeal, fight back yourself or using a life insurance claims lawyer.

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If you are pondering whether or not you should buy child life insurance, do your research so you know what you could be getting into before signing a contract.

Probably the toughest part of considering child life insurance is dealing with the fact that your child may die. That though by itself can make considering this coverage a hard thing to deal with.

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The reality is, however, that unforeseen illnesses and injuries can put your child’s health in danger, so considering child life insurance is definitely recommended for parents.

There are a number of reasons to consider acquiring child life insurance.

Among them are:

• Funeral expenses for a child can run up a large financial tab for parents, oftentimes ranging from $5,000 to $10,000.
• Added expenses can be things such as bereavement counseling and time off from work;
• A number of term life policies for children combine disability benefits, thereby giving your child coverage if they suffer a severe injury;
• Life insurance for your son or daughter can assist them when they get older and want to acquire their own life coverage. This is especially true in the event there is a family history of illness that could prevent your child from getting life insurance down the road.

If you are considering child life insurance for your loved one, there different policy options for you to look at.

First, remember that child term life insurance is a temporary protector for your children. In many instances with child life insurance, a term life policy would only be acquired to provide a death benefit to the parents or guardians to cover the young one’s burial costs. In those cases, term life is the least expensive option to acquire for children.

Secondly, a number of financial planners will tell parents that the expenses for child term life insurance rates coverage would be better spent by saving the money or investing it in a mutual fund.

Remember, term life is just a death benefit and there is no investment or cash value when it comes to a term policy.

In the event you are considering whole life insurance, know that this coverage is typically acquired for children to provide both burial costs and as an investment choice for the child that will assist them in future years.

Child whole life insurance is typically inexpensive when it is purchased for a child while they are young as opposed to buying it later in life. The cash value starts accruing the end of the third year when the policy is in force.

Finally, these policies are a means with which to invest money thru a tax-deferred basis.

When it comes to industry experts, they are typically split down the middle on whether or not purchasing child insurance is a good idea or not.

To some, child life insurance policies are not a great investment and there are more attractive options out there. Te decision obviously has to come from the parent as to if these policies are the best option to protect their children.

That being said, doing one’s research on child life policies is the best place to start.

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Navigating the life insurance landscape can be tricky. You are sure to encounter a number of different policies and terms such as whole life, term life, cash value (whole or universal), variable life, and much more. How can you make sense of all the different types of policies and know that you’re making the best choice? Here’s a quick breakdown of the most common types of insurance policies and the pros and cons of each.

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Term Life Insurance

Term life is exactly what it sounds like. You purchase life insurance for a specific term, or set amount of time. You pay premiums for the entire length of the term and once the term is up, your death benefit is gone. Term life does not have a cash value component so your entire premium is simply used to keep the policy active. Once the term is up, you stop paying premiums and the policy expires. This is what makes term life one of the most inexpensive life insurance policies.

But even term life is broken down into a few different categories:

• Level Term – Your premium and death benefit remains the same for the entire length of the term, whether that is 10, 20, or even 30 years.
• Annual Renewable Term – The death benefit remains unchanged throughout the term, but the contract renews annually, usually with an increase in premium each year. Initially, premiums may be less than in a level term policy, but over time it can become more expensive.
• Decreasing Term – Here, the death benefit decreases each year while the premium remains the same. The policy ends when the death benefit reaches zero.

Advantages of Term Life Insurance
Term life policies are usually far less expensive than whole, universal, or variable life insurance. Term life also has a very specific coverage period—typically in terms of 10, 15, 20, 25, and 30 years. This allows you to only buy as much coverage as you need. For example, if you’re only concerned about life insurance while you have dependents at home or a mortgage to pay, you can plan out how long and how much coverage you need.

Disadvantages of Term Life
There is no cash value component of the policy. Your premiums strictly go towards the policy and do not earn interest or otherwise accumulate. And having a specific term can also be a drawback. If you purchase a 20-year term policy and after 20 years decide you’d like to extend your coverage, you may need to undergo proof of insurability and could be denied additional coverage or need to renew at a significantly higher premium.

Universal Life

Universal life insurance builds on term life and adds a cash component. Here, instead of just selecting a specific term and putting 100% of your premium towards the policy, part of your premium will actually go into a cash account in the policy. This cash account earns interest and accumulates tax-deferred.

Advantages of Universal Life
Universal life insurance provides additional flexibility. Because it has a cash component you could actually temporarily stop making premium payments as long as the cash value can cover the cost of insurance. In addition, you may also be able to increase or decrease the death benefit over time. Also, you can usually borrow against the policy in the form of a loan.

Disadvantages of Universal Life
Universal life is more expensive than term life. While some of that added cost will be going into the account in the form of building cash value, the rates you earn on that money may not be the best going rates. This is why many financial professionals recommend buying term and investing the difference. This allows you to still purchase a death benefit while having the flexibility to invest the difference anywhere you choose.

Variable Universal Life Insurance

Variable life insurance is very similar to universal life with one major difference. With this type of policy you aren’t earning a specific rate of interest in a cash-value fund, but instead you can invest this portion in a variety of different investments like mutual funds. So, you get much more control and can choose where to invest the cash-value portion.

Advantages of Variable Life
You’re still guaranteed the minimum death benefit as long as you keep up with the minimum premium. You also have the flexibility to invest the cash-value portion in a variety of investment vehicles. If you make wise investment decisions you can take advantage of significant tax-deferred earnings on those investments.

Disadvantages of Variable Life
By investing part of your policy in possibly risky investments, if the market turns south and you lose a lot of money, you’re putting your policy in jeopardy. A significant drop in account value could force you to pay additional premiums just to keep the contract in force. In addition, the expenses associated with the investments in variable universal life may be significantly higher than you might pay elsewhere.

Whole Life Insurance

As the name implies, whole life is meant to insure someone for their whole life. Like universal life, whole life has a cash-value component. In most cases, in a whole life policy the premium and death benefit are fixed.

Advantages of Whole Life
There are no surprises with whole life. You have a guaranteed premium, interest rate, and death benefit for the life of the policy. The cash value also grows tax-deferred and also typically allows for withdrawals and loans against the policy.

Disadvantages of Whole Life
Whole life is generally more expensive than both term and universal policies. This is largely due to the added guarantees that come with whole life. Also keep in mind that the policy is not flexible. If you determine you want more coverage or would like to increase or decrease your premium, which probably isn’t an option. Finally, the interest earned on the cash-value account may be less than you could obtain elsewhere.

Choose Your Life Insurance Carefully

As you can see, there are a number of options available and there isn’t a single right answer for everyone and every situation. If you take the time to learn what each type of policy offers you can be sure to get an insurance policy that’s right for you and not just what someone is trying to sell you.

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How much life insurance do I need is not an easy question to answer, mainly because there’s no easy formula to determine how much life insurance coverage one needs. Everyone is different and as such the figure will depend mostly on your circumstances.
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Nevertheless, a quick and basic way to figure out how much you would need is to take your annual income and multiply it by 7.

For example, a family with an income of $60,000 might need at least $420,000 worth of life insurance protection. But some insurance experts feel one may need as much as 10 times their annual salary.

There are more specific ways to estimate how much life insurance an individual or family may need. Figuring one’s need based on their income and assets can be more accurate:

Using the Expenses (-) Assets Formula

Figure a rough estimate of your annual family budget. This would include your mortgage, child care, insurance, and basic living expenses. Don’t forget to include expenses such as vacations, and future education plans such as private school and college. Next, estimate a figure for your assets such as savings, social security benefits, or any other income that will be there such as the income of a surviving spouse.

Remember, stay-at-home spouses contribute a lot to the family income by by-passing child care, travel, cleaning, cooking, tutoring and associated costs, therefore would need to be insured also.

If your estimate is high, good, it’s probably right. If you are worried about the premium cost, we would recommend choosing term life insurance. You can get a policy for the time you would need it (the amount of time your kids would depend on you) for a lower premium than other insurance options.
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The way to define term life insurance is to include the advantages as well as the fact that low cost term life insurance is an favourite for many.  So you need low cost life insurance? Take a look at the budget friendly option of a term life insurance policy.

Term life insurance policy premiums are generally much cheaper than cash-value policies (universal and whole), especially if you are young and in good health and a low cost term life insurance policy does exactly what you expect it to do by financially taking care of your beneficiaries if you die.

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Here’s the basics of a low cost term life insurance policy:

1. Buying The Low Cost Term Insurance Policy

You buy a low cost term life insurance policy with a specified time period, usually one, five, or ten years. During that "term" you pay a specified premium. Your beneficiaries will receive a death benefit if you die during the term of the life insurance policy.

2. Facts About a Low Cost Term Life Insurance Policy

Seems simple enough, right? Well, as with all insurance, there are little complexities and loop-holes you need to fill. For instance, the death benefit may not be the same throughout the term life insurance policy depending on whether you choose decreasing, level, or increasing term life insurance. And, what about when your term is over?

That’s where renewable and convertible term insurance comes in. Take for instance you want a basic 10 year low cost term life insurance policy with the death benefit to stay the same throughout the term life insurance policy, and at the end of the term you would like to "convert" to a different term life insurance policy such as a cash-value policy, without taking another medical exam. In that case you would choose a level term convertible life insurance policy.

3. Deciding if a Term Life Insurance Policy is for You

Term life insurance does not build cash-value or have the tax benefits like universal or whole life, but it can be a great option for someone who would like life insurance, but can’t afford the higher premiums. Here is a check-list to help you decide if a low cost term life insurance policy is right for you:

• You’re on a budget and cannot afford a very high premium.
• You are young, and in good health.
• You are looking for a simple, straight-forward, low cost life insurance plan to protect your beneficiaries.

4. Talking to Your Insurance Agent About a Term Life Insurance Policy

When checking with your agent on term life insurance, ask a lot of questions. Generally, agents do not receive as much commission on term life insurance verses cash-value policies so you may have to probe a little for more information.

Want to build cash value and have lifelong coverage? Check out whole life insurance: Whole Life Insurance Policy Choices

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What is whole life insurance?

And what are the advantages of Whole life Insurance? A whole life insurance policy covers you for your entire life, not just for a specific period such as term insurance. Your death benefit and premium in most cases will remain the same. Whole life insurance also builds cash value, which is a return on a portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it and you can borrow against it.

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Are there choices within whole life insurance?

Yes, the most common choices include traditional, interest-sensitive, and single-premium whole life insurance policies. A traditional whole life insurance policy gives you a guaranteed minimum rate of return on your cash value portion. An interest-sensitive whole life insurance policy gives a variable rate on your cash value portion, similar to an adjustable rate mortgage.

With interest-sensitive whole life insurance you can have more flexibility with your life insurance policy such as increasing your death benefit without raising your premiums depending on the economy and the rate of return on your cash value portion. Single-premium is for someone who has a large sum of money and would like to purchase a policy up front. Like other whole life insurance options, single-premium whole life insurance accrues cash value and has the same tax shelter on returns.

What are the benefits of choosing a whole life insurance policy over other types of life insurance policies?

Unlike term life insurance, a portion of your premium money goes toward your cash value which in turn could pay off your entire policy only after a few years. Also, your premium will remain constant during the time you are covered unless you choose otherwise. And, unless you make a change to your whole life insurance policy, you have lifelong coverage with no future medical exams. Whole life is also a good choice because of the tax savings.

Should I purchase a whole life policy for an investment?

The rate of return on a whole life insurance policy is very low compared to other investments, even with the tax savings factored in. Most investment professionals would agree that life insurance should not be used solely as an investment tool and you should judge your policy choices on the protection and not the rate of return.

But, if you are in need of life insurance, the tax benefits and cash value is an added bonus when purchasing protection for your loved ones.

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