Life Insurance Cost

If you are married or have children, then you should seriously consider term life insurance.  You definitely want to make sure that your family is taken care of and protected in the event that you should die prematurely, particularly if you are the household’s breadwinner.  Although term life insurance does not build up any cash value over the time you are paying your premiums, it does provide a significant amount of coverage in the event of your death for your loved ones.  The death benefit proceeds from your term life insurance policy can help to pay your funeral expenses, medical bills, and provide your family with a financial cushion during the time of grief and loss.

In fact, term life insurance is the simplest type of insurance in existence.  The purpose of term life insurance is to provide affordable and temporary life insurance coverage for individuals and families who are on limited budgets.  This form of insurance is affordable for most people.  For a 30 year old healthy and nonsmoking male, the typical cost is about $2,500 a year for a $50,000 death benefit.  As you get older the cost of  your premium will increase as well, but only when the term on the policy expires.  When it comes to term life insurance, the premium price is set when you originally agree to the term.

What many families who are trying to pay their mortgages and other debts off will do is buy a term life insurance policy as backup just in case anything should happen to either spouse during the time they are trying to pay for the mortgage or debt.  In today’s economy, a majority of households can barely meet their living expenses on the two incomes.  That is why life insurance coverage is a necessity in case the family loses one of these incomes due to death of one of the spouses.  One of the other main reasons why people  may invest in a term life insurance policy is to ensure that their children and spouse are provided for.  Many parents obtain term life insurance when they are raising their children and then allow the term to expire when their children go to college.

Although term life insurance is very beneficial in the event you should pass away, it is not intended to be a long term investment due to the fact that it doesn’t accumulate cash value.  The major purpose for term life insurance is for covering the financial responsibility of the insurance policyholder should they die.  The death benefit proceeds can be used to pay funeral expenses, cover any outstanding bills and supplement the income of the family while they are in their period of adjustment.

If you happen to be a healthy individual who doesn’t currently have any life insurance, then you should strongly consider buying term life insurance.  This will provide you with the peace of mind knowing that your loved ones and family will be well taken care of in the event that you should die.  While it is true that losing a member of the family can be quite devastating, you don’t want to add on financial burdens such as funeral expenses, debt and loss of your income on top of their grief and loss.  Investing in term life insurance provides you with the assurance that your family will be provided with the death benefit from your life insurance policy if you were to die within the term on your policy.

Following the collapse of the mortgage business last year, investment banks on Wall Street started looking for a different way for making money. They think that they just might have found one. Bankers are planning to purchase life settlements. These are life insurance policies elderly and ill people sell for $400,0000 to one $1 million in cash, depending on what the insured person’s life expectancy is.

The bankers plan to securitize the insurance policy. What this means in the jargon of Wall Street, is packaging hundreds or even thousands of these policies together to issue bonds. These bonds will then be resold to investors, such as the large pension funds, who will then receive the death benefits when the insured person dies.

The sooner the policyholders dies, the higher the return will be. If the insured individuals end up living longer than is expected, the investors could wind up with low returns or could even lose money.

Wall Street would end up profiting either way by pocketing the large fees they would receive from creating, reselling and then trading the bonds. However, some experts who have analyzed life settlements are warning that insurance companies in the short term may need to raise premiums if they wind up paying out more in death claims than was anticipated.

The idea of turning life settlements into bonds is still only in the planning stages, but our phones are already ringing off the hook with questions, said Kathleen Tillwitz, who is a DBRS senior vice president. DBRS is the company that provides risk ratings for investments and is in the process of evaluating nine different proposals for the securitization of life insurance from private investors as well as financial firms, which includes Credit Suisse.

One investment banker, who did not have the authority to speak with the news media, said we are hoping after the first offering to get a herd stampeding.

Following the financial meltdown of the economy, the exotic investments that had been created on Wall Street received a lot of the blame. It was an array of financial products and not just sub prime mortgage securities, including structured investment vehicles, credit default swaps and collateralized debt obligations that all proved to be much risker than had been originally anticipated.

The financial collapse gave all of this financial creativity a bad name in general, but it didn’t carry over to Wall Street. While Washington continues to debate the need for increased financial regulation, the investment bankers are busy concocting new financial products.

In addition to proposing that life settlements be securitized, some banks are repackaging some of their poor performing securities into ones with higher ratings, calling them re-remics. These are the re-securitzations of mortgage investment conduits. The investment firm Morgan Stanley states that a minimum of $30 billion of residential re-remics were completed this year.

Financial innovation can theoretically be a good thing in terms of lowering borrowing costs and providing consumers with additional investment opportunities, and in general help the economy to grow and expand. Those in favor of securitizing life settlements claim it would benefit individuals who would like to cash out on their insurance policies during their lifetime. However, others are very dismayed by the quick return of Wall Street to its old ways of chasing after profits with complex new financial products.

James D. Cox, a Duke University professor in corporate and securities law, says it is bittersweet. The sweet part of it is that there are investors who have an interest in the exotic products that underwriters create. The underwriters earn large fees while the rating agencies are getting paid to provide ratings. The bitter part of it is that it’s a return back to the good ole days.

What may be good for Wall Street may end up being bad for both the insurance companies as well as their customers. This is due to the fact that policyholders often end up allowing their life insurance policies to lapse before dying. This happens for a variety of reasons, including children growing up and not needing financial protection any longer, or the insurance premiums get too expensive for seniors to afford. When this occurs, the insurance company isn’t required to pay out.

However, if the insurance policy gets purchased and then gets packaged in with a security, then investors will continue to pay on insurance premiums that may have previously been abandoned. This could result in more policies staying enforced, which would result over time in more payouts and less profits for insurance companies.

Neil A Doherty, who is a Wharton professor who has analyzed life settlements, says when the insurance companies set the premiums they based them on wrong assumptions. He added that insurance companies would probably need to raise the cost of premiums on new life insurance policies if widespread securitization occurs.

Steven Weisbart, who is chief economist and senior vice president at the Insurance Information Institute, states that life settlement critics believe it defeats the major purpose of what life insurance is intended for. It is not an investment or gambling product, he added.

After Mortgages
Wall Street, undeterred by the critics, is racing ahead with their idea for one simple reason. There is $26 trillion worth of life insurance polices that are in force in the U.S. It could be a huge market.

Of course not all life insurance policyholders are going to want to sell their policies. In addition, investors will not be interested in the policies of healthy people because the premiums would have to be paid for too long, which would reduce the profits on their investment.

However, even if just a small fraction of life insurance policy holders were to sell their policies, there are some industry analysts predicting that this market could be a $500 billion one. This would aid Wall Street in offsetting losses in revenue due to the collapse of the market for U.S. residential mortgage securities, which is down from a high of $941 billion in 2005, down to $169 this year so far, according to the firm Dealogic, who tracks financial data.

There are some financial firms on the move and looking to over run their competition. For example, Credit Suisse is effectively building up a financial assembly line of sorts in order to purchase large quantities of life insurance policies and then package and resell them in a similar way that the Wall Street firms packaged and sold sub prime securities.

Credit Suisse purchased a business that does life settlements originations and has also set a group up for structuring deals along with another one for selling products.

The investment firm Goldman Sachs has created a life settlements tradable index, which enables investors to place bets on whether individuals will die sooner than what was planned or live longer that what was expected. Their index is very similar to a stock market index that enables investors to place bets on the market’s overall direction without purchasing stocks.

If Wall Street is successful in turning life insurance policies into securities it would transform this controversial business of purchasing and selling life insurance policies, which on a smaller scale has existed for a few decades, into something much bigger.

Those who defend life settlements make the argument that having a market in place which allows the elderly or ill to sell their life insurance policies for cash is actually a public service. They make the argument that insurance companies only offer a cash surrender value which is typically just a fraction of what the death benefit is when policy holders want to get a cash out, even though they have paid large premium amounts for years.

This is where life settlement companies enter in. Depending on a number of different factors, a life settlement company will pay anywhere from 20-200% more than what the cash surrender value is that the life insurance company will pay.

However the life settlement industry has been haunted by persistent complaints of fraud. State insurance regulators, who are hamstrung by a hodge podge of regulations and laws, have been critical of life settlement brokers for trying to coerce the elderly and ill to take policies out just so they can resell them to the brokers. This type of life insurance is often referred to as stranger-owned.

In 2006, Eliot Spitzer, when he was the attorney general for the state of New York, sued Coventry, which is one of the biggest life settlement companies. He accused the firm of participating in bid rigging with their rivals in order to keep prices low that were offered to individuals who were looking to sell their life insurance policies. This case is still continuing.

Stephan Leimberg, who co-authored a life settlements book, said when testifying last April to a Senate Special Committee on Aging that life settlement predators, if they are left unchecked by regulators, legislators and the life settlement industry, have the means and motive to take advantage and exploit seniors.

Predictions Can Be Tricky
In addition to the problem of fraud, there is another risky potential for investors. That is the possibility that some individuals could end up living a lot longer than was expected.

This risk is not just hypothetical. It occurred during the 1980s when new treatments for AIDS became available and prolonged AIDS patients’ lives. Investors who had purchased their life insurance policies with the expectation that a majority of AIDS victims would most likely die within two years wound up losing money.

Last fall it happened again when the companies that estimate life expectancy found that people were indeed living longer.

Wall Street’s challenge is to find a way to make life insurance policy securities safe and more predictable investments. In order to interest large investors, any securitized bond needs a seal of approval from one of the credit rating agencies which measures the risk level.

Banks are, in many ways, trying to duplicate the sub prime mortgage securities model. These securities became popular after the rating agencies gave them a triple A top tier rating. While an individual mortgage that belonged to a home buyer that had bad credit would be considered to be a risky investment due to the strong possibility of a default, packaging many of these mortgages in a bundle helped to limit the risk. At least that is how the theory went, which depended on the fact that were would not be a lot of defaults occurring all at once.

In retrospect that idea was seriously flawed. However, Wall Street seems convinced they can solve the problem with life settlement policy securities.

This is the reason why Goldman Sachs and Credit Suisse bankers have visited DBRS, a rating agency located in lower Manhattan that is not well known.

In 2008 DBRS published criteria that offer ways of securitizing a life settlements portfolio that minimized the risks.

Interest came flooding in. For example, hedge funds that have purchased life settlements are eager to buy and sell these policies more readily, so they will be able to cash out on the non profitable investments and keep the profitable ones. Wall Street banks, which were beaten down during the recent financial crisis, have been looking for ways to get going once again with their securitization machines.

Ms. Tillwitz, who is a DBRS executive overseeing the project, stated that DBRS spend a period of nine months becoming comfortable with all of the risks that are associated with providing a rate for a life settlements pool.

One question is whether there could be a way to protect against agents committing possible fraud through purchasing life insurance policies and then reselling them to circumvent problems that occurred with sub prime mortgages where some of the brokers made fraudulent loans which ended up in the securities packages there were sold to investors. The question being how could investors have assurance that the life insurance policies were acquired legitimately so that there would not be disputes on the payouts at the time of the original policyholder’s death.

Another question was how to ensure that the policies that were purchased had been obtained legally, since some states prohibit selling the policies until after a period of two to five years?

Risk Spreading
In order to further understand how these risks could be managed, Ms. Tillwitz along with Jan Bucker, a colleague with a PhD degree in nuclear engineering and mathematics wizard, traveled around the world to visit with firms that manage life settlements. Ms Tillwitz stated that they didn’t want to rate deals that ended up blowing up.

So what was their solution? Ideally a life settlements bond would contain policies from individuals that had a range of diseases such as lung cancer, leukemia, heart disease, diabetes, breast cancer and Alzheimer’s. The reason for this is, for example, if there were too many leukemia patients in the security portfolio, and then there was a cure that was developed, the bond’s value would plummet. Another precaution that DBRS would take would be to run a background check on the issuers and include a quality range of life insurers.

Mr. Buckler tested how different policy mixes would perform by running computer simulations in order to demonstrate what would occur to the returns where people lived much longer than had been expected.

However, even with a mathematical wizard calculating all the possibilities, there are some risks that cannot be predicted. How can computers make accurate predictions on what might happen if, for example, health reform were to pass and large numbers of Americans had better care which resulted in people in general living longer? Or what if some sort of magical cure for all forms of cancer was invented?

If these computer models ended up being wrong, the investors might wind up losing lots of money. Some of these assumptions might appear to be unlikely, but effectively that is what occurred with a lot of the sub prime loan securities that had been given triple A ratings.

The investment banks selling the securities tried to lower their risk through doing things like packaging mortgages that came from different regions and had different borrower credit levels. The assumption was that if housing prices fell in one area, for example Florida, which resulted in widespread defaults, it wasn’t likely that the housing prices would end up falling at the same exact time over in another region, such as California for example.

Economists made note of the fact that historically speaking housing prices had dropped on a regional but not national basis. When the housing prices did drop nationwide, the investors ended up losing hundreds and hundreds of billions of dollars.

Moody’s and Standard & Poor’s, who both gave many of the triple A ratings out, after getting burned are now approaching the life settlements issue more cautiously. In the 1990s Standard & Poor’s rated Dignity Partners but has declined to comment on what their plans are regarding life settlements. Moody’s says that financial firms have approached them who are interest in the prospect of securitizing life settlements but state that they haven’t seen a portfolio yet that meets their standards.

Investor Interest
Even with the mortgage debacle still fresh in their minds, there are investors that are intrigued by the idea. One of these investors is Andrew Terrell, who was the co-head at the mortality and longevity desk at Bear Stearn’s. The desk traded life settlements portfolios that were unrated. He later worked at Institutional Life Companies, which was a Goldman’s Sachs’s venture introducing a life settlements trading platform. Mr. Terrell believes that securitized life insurance policies do have a lot of potential and that investors who are looking to spread their investment risks are always on the look out for new types of investments, particularly ones that don’t move in the same direction as the other investments in their portfolio.

Mr. Terrell said it was an interesting asset class due to the fact that is has less correlation to the market as a whole than other types of asset classes.

Some of the academics studying the securitization of life settlements do agree that it appears to be a good idea. There is one difference that they agree on. That is death has no correlation to stocks rising and falling.

Joshua Coval, who is a Harvard Business School professor in finance, states that the risks of these assets are not hard to estimate and for the most part they don’t have exposure to the broader economic risks. He added that tranching and pooling doesn’t amplify the systemic risky of the underlying assets.

In the meantime, the insurance industry is gearing up for a fight. According to Michael Lovendusky, who is associate general counsel and vice president for American Council of Life Insurers, said while mortgage providers have all been tainted by sub prime mortgages, there is also the concern that life insurance companies would all become tarnished by sub prime life settlements.

The insurance industry might find an ally in the government. In April during the Senate committee hearing insurance regulators from the states of Illinois and Florida were among those who were expressing concerns regarding life settlements, arguing that the current regulations were inadequate.

Herb Kohl, Democratic Senator from Wisconsin and the Special Committee on Aging chairman, stated that securitizing life settlements adds yet another element of potential risk to the industry that already needs enhanced regulations, consumer safeguards and more transparency.

DBRS states that they agree that this needs to be looked at carefully. Ms. Tillwitz stated they wanted the life settlements market to flourish safely.

The different options that can be added to a life insurance policy vary widely. The common denominator, however, is that these options will cause the life insurance premium to increase. Many times it is money well spent.

One of the more well known options is the Waiver of Premium. What this does is allow premium payments to be waved during specific times, such as when the policy holder becomes incapacitated because of an illness or injury. Because the policy holder may not have the ability for earning money, this form of protection can end up being a real financial lifesaver, particularly since family members will be covered as well. Some insurance companies might specify the conditions, like becoming permanently or totally disabled, or the option may only take affect at a certain age.

Critical Illness Cover is another extra that is popular. If an individual becomes unable to work due to a critical illness like cancer, this option allows a portion of the maturity total to be issued as a lump sum. Or occasionally it might be distributed as regular payments that mirrors the former income. Each insurance policy will have its own list of the illnesses that are covered. If the patient does recover they will not be required to pay the money back. This option can be purchased alone or as part of endowment or whole life insurance.

An Accidental Death Benefit option will provide a larger monetary amount (as much as 100% of regular benefits) to the policy holder’s beneficiaries in the event the policy holder dies accidentally. This option can be added onto a life insurance policy for children and spouses. For a fairly modest sum it can provide as much as a million dollars worth of additional coverage.

The Accelerated Death Benefits option allows the policy holder or their spouse to collect on benefits if the insured individual receives a terminal illness diagnosis. As an example, if an individual is given only a year or less to live, then they can receive up to fifty percent of their coverage. This amount will decrease the amount that their beneficiaries will receive when the insured dies.

The option for Permanent Total Disability provides an extra insurance benefit should the policy holder become permanently and totally disabled due to an illness or accident. Permanent is defined as a condition lasting a minimum of two continuous years where there does not appear to be any chance of improving or having the ability to return to work.

These extra life insurance options are only a small sample of what may be offered by life insurance companies to policy holders. These are normally referred to as Rider Benefits due to the fact that they ride alongside the main policy. Any comparisons of life insurance should include quotes from several different insurance companies. You should discuss your individual situation with experienced and qualified insurance professionals. Some life insurance companies may even include an option or two free of charge in order to make their insurance policies more competitive and attractive, which doesn’t mean these options are any less valueable.

Appropriate life insurance coverage for an individual and their family provides peace of mind and should be a top priority when planning your finances.

When it comes to whole life insurance, there are seven different types and each type is different from the others.  Two forms of whole life insurance are very different and may have an impact on how life insurance will work for you.

Whole life insurance means just what is implied by the name, it is insurance that lasts for your whole life.  It comes with a minimum cash value that is guaranteed as well as growth that gets included into the insurance policy.  The greatest advantage that whole life insurance policies come with is the guaranteed death benefit.  They also come with guaranteed cash values, annual and fixed premiums, and cash values that are accessible.

The drawback to whole life insurance is in the fact that the premiums aren’t flexible.  In addition, the internal rates of return really aren’t all that competitive compared with other types of savings opportunities.  It is very important to keep in mind that although whole life insurance can be either participating or non-participating, not every insurance company will offer both of these forms of whole life insurance, or any of the other types either.  It is very important that you check with your insurance company to find out what types of whole life insurance they are offer.  If you go through an insurance broker or agent, they can help your find an insurance company that offers the kind of whole life insurance that you are looking for.

Non-participating life insurance is not very flexible.  All the determinations are made at the time the policy is issued and then most things can’t be changed.  The premiums, death benefits, and cash surrender value are determined at the time that you set the policy up.  Once you have been issued your policy you won’t be able to make changes.

However, what this also means is that your insurance company takes the risk of the policy’s performance as compared to actuarial estimates.  It is actuaries who determine what the risk levels are for the clients.  If the actuary underestimates future claims, the insurance company will have to make the difference up.  However, if the actuarial estimates are too high, the insurance company will get to keep that difference.  The actuaries most likely aim high when it comes to their risk estimates so that the chances that the insurance company will have to pay when the estimate is too low are significantly lowered.

With participating whole life insurance, when actuarial estimates are too high, the insurance company will share its profits with the policy holders.  The more success the insurance company has the more profit and surplus there will be.  The insurance company’s best interest is served when  they aim high so that they are able to share profits with their policy holders.  However, actuaries are actually very adept and their estimates are usually dead on.

In summary, the choice of which type of whole life insurance you choose is up to you, but is one that you shouldn’t  take light because your future could very well depend on it.

Term life insurance basically means what is implied by its name: it is insurance whose coverage is valid for only a certain amount of time that is outlined in the insurance policy.  Whole life insurance also basically means what the name implies: it is insurance whose coverage is for the entire duration of an individual’s life and pays out upon the death of the covered individual.  When it comes to term life insurance, only about two percent of these policies pay out a death benefit, which makes them more lucrative for insurance companies and less expensive for individuals who are looking for this kind of insurance.

It can be a difficult decision to make for people who want to have insurance.  The first question you should ask yourself is, why do I need insurance?  If you have a spouse who doesn’t  have a high earning potential and young children, then term insurance might be the best answer to help get your children through college.  If you work under dangerous conditions, then term insurance might be a better option than whole life insurance.

For families who have young children, income needs are lower once the children have finished college.  The expense of paying for college is over once they have finished school.

Working under dangerous conditions where you could face work place death on a regular basis is another short term need when it comes to life insurance and you might be able to obtain term life insurance for a period of five years or so until you are able to change jobs or move up the job ladders into a position that isn’t as dangerous.

Term life insurance does offer some types of flexibility that is not provided with whole life insurance.  Term life insurance is a lot less expensive than whole life insurance is.  And for individuals and families with short needs, term life insurance is a better option.  It is very true that whole life insurance offers a guaranteed payout and is basically a savings account that will mature and be paid out to your beneficiary at the time of your death.  By the time the payout happens,  you will have already paid the death benefit amount and probably then some to the insurance company.  When it comes to term life insurance, this may not be the case and you may have only paid only a fraction of what the death benefit payout is over the policy term.  If you pass away, your beneficiary will receive the death benefit which will probably end up being a lot more money than you had paid in premium costs.

Whole life and term life insurance policies both provide us with a safety net.  It gives us the knowledge of knowing that when or if we die that our loved ones will be provided for.  It is a way for us to take care of our loved ones even after we have died.  The ultimate amount of savings that you will get with whole life insurance may not be worth it once you start comparing it with other types of available savings programs.  When it comes to term life insurance, you pay for premiums to your insurance company for a service that you might not ever use or that your family might not ever benefit from.

If you are on a limited budget, then term life insurance is probably your best option.  If you happen to have a need for life insurance that is short term and immediate, then again term life insurance is probably a good option and whole life insurance will waste your money and time.

If you happen to be single right now you may not think that life insurance applies to your life at the moment.  However, if something should ever happen to you there will be someone who will be burdened, either financially or in some other way, with being responsible for your funeral.  Additionally, life insurance is one of those things that follows you throughout your life, so the earlier you are able to get it the better off you will be later.  Let’s examine the reasons why life insurance really can be a good idea for you, and also how you can choose between term life and whole life insurance.

If you buy an insurance policy now, you can lock the rate in for the life of the policy (or in the case of whole life insurance, your own lifetime).  What this means is that you will pay the rates of a healthy twenty year old (or whatever age you are now) for the policy’s duration no matter how sick or old you may become.  Life insurance is a  great investment to obtain now so that later when you aren’t a swinging single anymore you will have have already taken care of it.

When you do get ready to settle down and have a family you will already have protection in place for your family.  In the unfortunate event that you should die young, your partner, parents or some other relative will have means for paying for your funeral, which can end up being a heavy burden.  Life insurance is a great investment, and the younger you happen to be the better the investment will be.  In terms of investment, a whole life insurance policy will also earn a cash value that you will be able to borrow against if you ever need it.  You will also have the ability to cancel the policy and withdraw your cash value in the form of a lump sum.

So now that you have a better understanding of why life insurance is really a good idea even for single people, the next question is what type of investment or insurance should you get?  If you do not have dependents, usually whole life insurance is the best best.  Term life insurance is better for helping to defer risks of a loan like on a mortgage or car or for additional coverage when your children are young.  Since you don’t have the concern about passing a financial burden onto your spouse yet, you probably don’t have a need for term life insurance.

On the other hand, whole life insurance will help to pay for your funeral expenses and will last for your entire life provided you make your premium  payments.  Over time you can add on term life insurance to take care of those theoretical children and spouse you might have some day, but still have whole life insurance that you lock in now to get a great rate that will cover you into your golden years and retirement.

If you take responsibility now and take care of your future, in a few years you will be thanking your lucky stars when it’s time for you to start a new way of living.  You will be relieved that you had the foresight and took the time for taking care of business when you were young to give you coverage that will last for your entire life.  Congratulations on you making a great decision.

While it is true that you can take loans out against your policy for whole life insurance, there are alternative methods that you can tap into your policy without having to reduce your death benefit.  Depending on what the terms are on  your policy and your insurance company, you might have an option for withdrawing dividends on an annual basis or to reinvest them back into your policy which raises the death benefit.

The first step in learning how to use your dividends is understanding the terminology that is found in your life insurance policy.

Dividends are the funds that are earned by your insurance policy and distributed to you as the policy holder.  They work in a similar way that interest does, except that an insurance company doesn’t guarantee any return on investment or dividend.

Paid-up additions (PUAs) are bought with dividends that are earned during a particular year by the insurance policy.  In order to determine how many paid-up additions there are in your policy, you just subtract the listed death benefit from your statement from last year from the death benefit listed on your statement for this year.  The difference between the two is PUA amount that has been purchased during the last year.

Most insurance companies return PUAs and dividends automatically to your policy unless you exercise your option for cashing them out.  However, once you do make a change for withdrawing dividends out of your policy, then you can expect to get a check each year until you change your option.

To request that PUAs or dividends be cashed out you will need your most recent policy statement, your policy number, the amount of PUAs you have available, and your insurance company’s customer service phone number.

Contact your insurance company and tell the customer service representative that you want to change how your dividends are used and ask them to send them to you by check.  Another thing you can do is ask that they be used for paying your premiums or paying down any loan balances you may have against the policy.

PUAs and dividends are usually issued once every year, and usually it is on the anniversary date of your policy.  When you speak to the customer service representative they will probably be able to let you know how long it will take to receive the check and how to contact them just in case it doesn’t show up.  Be sure to write this down and keep a close watch on your mail box when it comes time for your check to arrive.

If in the future you want to change back to having dividends be absorbed by your insurance policy, you can contact your insurance company again after you wait a year.  Usually you will not be able to change this policy more than once a year.

PUAs that have been purchased with dividends as well as dividends are not taxable.  If you ask your insurance company to have them reinvested back into your policy, you will not be penalized.

If you make the election to withdraw your PUAs that have bought with dividends or your dividends, this money might be taxable.  You can get in touch with your accountant if you have questions about this potential tax liability.  Sometimes insurance companies will send you the instructions you need to report your exercised dividends on the proper place on your tax form.

For tax purposes, keep a copy of statements that come with the dividend checks.  You should keep this documentation for at least eight years to protect yourself in the event of an audit.

As we grow older, there are different discounts that are available to us for different situations.  When we get older rates for our auto insurance tends to decrease, given the fact that we have proven we are able to drive our cars without being high risks.  This same principle applies to our homeowners insurance.  Our insurance premiums will start to decrease once we get to a certain age, due to the fact that we have proven that we are able to properly care for our possessions and take safety precautions.  Unfortunately, when it comes to life insurance, this is not true.  Rates on our life insurance are more likely to go up as we get older.  In this article we will discuss how people who are older than 50 can find reasonable rates for life insurance policies.

If you are familiar with some of the more basic uses of a computer and are over the age of 50, the internet can provide you with a way to find affordable life insurance.  The internet is full of online businesses that offer their services to assist you in locating the best life insurance policies.  Using your favorite search engine will enable you to find links that can lead you to the online businesses that offer help.  All you need to do is type keywords into the search engine like:  life insurance, life insurance locater, life insurance seniors.

Beneath the links that show up, there will be brief descriptions of the available websites.  You then just need to click on the link that you want so that you will be able to review the web page.  Or if you would prefer to browse different life insurance company websites so that you can do your own research, that is another possibility.  Instead of entering keywords like insurance into the search engine, just enter the name of the insurance company that you want to research.  Once the list is generated, just click on the link that goes to their site.

Most of the major life insurance companies have official websites and offer you the option of receiving an online quote.  Just keep in mind that this is just an estimate and that you will be required to provide them with some personal information, so you might want to think about getting quotes for an insurance right through an actual insurance agent after you have completed your online research.

Finally, when you are attempting to find the best life insurance quotes for individuals 50 years or over, it is very important that you compare quotes from several different life insurance companies.  Although most insurance companies do take the same basic factors into account when computing life insurance quotes, it doesn’t necessarily mean that you will get the same exact quote from each company.  While you may provide the same information to each life insurance company, some companies may consider you to be a higher risk than others.  That is why it is very important that you obtain several quotes before making your final decision on which policy you will buy.  A careful comparison of several different quotes from life insurance companies will help you find the best life insurance policy that provides you will the most coverage for the least amount of money.

We all pay for health insurance hoping we won’t ever need it. By its very definition, insurance is something that we all hope we don’t ever have to collect on. So after we have paid for many years worth of life insurance premiums, and having “lucked out” for all these years, it is easy to think of all those premium costs as a waste of money.

There is one way of eliminating this problem, which is a form of insurance called Return of Premium. With this form of insurance you are able to collect on it without dying. After paying 20 years worth of life insurance premiums, an individual can get their money back,, and not just part of it like with whole life insurance. With return of premium insurance you get 100% back all of the premiums that you have paid.

The premium costs on these policy vary, depending on what state you live in. They usually cost somewhere between what a term life and whole life policy would cost. Return of Premium has benefits that both term and whole life insurance offer. If is affordable like term life insurance is and has cash value like whole life insurance. You can buy return of premium insurance for time periods ranging from 3 to 30 years.

Most insurance companies will be able to provide you with an estimate within approximately 24 hours. The cost for a return of premium policy is based on your physical condition, age and other habits such as the use of tobacco, which is similar to other forms of insurance.

If you want to make sure that your family is protected, but don’t like the idea of throwing money away to insure your life, then return of premium might be a perfect type of life insurance for you. You will not only get all of your money back when the policy ends, but you also won’t have to pay any income tax on the money that is returned to you.

Return of premium is an ideal form of life insurance for young people who expect that they will go through a lot of changes before they retire. Whether you are single or just beginning a family, return of premium insurance will allow for changes later on in the future.

Even if you end up not keeping your return of premium policy until the end of the term, you are still able to get part of the premiums returned. The longer you keep the policy, the higher percentage that will be returned to you. You will get a small percentage back if you cancel early and 100% back if you do not cancel at all.

You may, on the other hand, wind up wanting to keep your insurance policy at the end of term. Most insurance companies offer continuance terms after the original term ends. Since you will receive a large lump sum of cash, you might want to investment the money into whole life insurance. Whole life insurance policies also have cash value, although it isn’t exactly the same as with return of premium. You will have the ability to borrow money against your insurance policy and still have coverage.

An easy way of insuring yourself without losing your money is through return of premium insurance. It is one way of actually collecting on benefits without the need of really using it.

Contact your insurance agent to discuss whether or not Return of Premium is good for you.

Universal Life Insurance is similar in many ways to whole life insurance, but is different in the sense that the policy’s cash value earns interest. In this respect universal life insurance is more than an insurance policy, it is also an investment.

You have a divided premium on universal life insurance. A portion of your premium payment goes toward covering the cost of your insurance, the remainder goes toward the policy’s cash value. You earn interest on the cash value portion of your universal life insurance. Some policies will offer you a minimum interest payment that is guaranteed.

Universal life insurance is a great choice if you want to protect your family but also have options. Universal life offers you guaranteed death benefits (provided that the cost of the premiums is not more than the cash value) as well as a solid investment which you can either borrow or withdraw against.

There are optional term riders that come with most universal life policies. Therefore you can increase your benefits temporarily without having to buy a new policy. Usually you can also add additional beneficiaries, such as children or a spouse, to your policy. The versatility with universal life insurance makes is a great choice for growing families.

You also have the ability of deferring capital gains taxes with universal life insurance. The capital gains can remain with the cash value on the insurance policy until your death. At that point in time they are subject to estate taxes. The cash value can be used before death without having to terminate the policy or paying taxes on it. You can simply borrow against the cash value.

Many times a policy for universal life insurance will let you choose the amount of your premiums that goes into the tax-sheltered amount. Your investments can be guaranteed and safe, or you may want to choose a mutual fund or other type of investment.

There are three different kinds of universal life premiums. With a single premium, one amount pays for the complete policy. As long as your insurance costs don’t deplete the investment or cash value, the policy will remain valid. With a fixed premium, you have monthly premium payments for a certain, fixed amount of time. Normally, the policy will be in effective well after you have stopped paying insurance premiums. With a flexible premium, you get to decide how much and when to make payments. When you don’t make a premium payment, the amount of the payment gets deducted from your policy’s cash value. This form of policy, allows you the opportunity to make a single large payment at the time that you first obtain your policy, and then make other payments sporadically depending on what your financial situation is.

Most policies come with an option called Waiver of Premium. If you become disabled, you can still continue your coverage without having to pay premium payments.

A big part of starting your family is planning ahead for the future. There is more to it than just saving a few dollars in a rainy day fund. What universal life insurance provides you with is the opportunity to protect your family in the event of your death as well as save and invest. It can help you now and also help your family in the future. Contact your life insurance agent and discuss whether or not universal life insurance is the right thing for you and your family.