Life Insurance Lowdown

Are you a service member? Chances are you know about the ‘Wounded Warrior Insurance”. But do you know how your military insurance has been enhanced to cover traumatic injury, whether suffered in war or at home even while off duty? Most probably, you don’t. I think the main reason is that the new Traumatic Injury Protection under Servicemembers’ Group Life Insurance is still referred to as the wounded warrior insurance. And also probably because most of the nearly 3,000 recipients to date are wounded warriors who qualified for TSGLI retroactively because of injuries sustained in combat areas.

But The TSGLI goes much beyond wounded warriors and also covers injuries incurred after Nov. 30, 2005. For the record, any service member, active or reserve, who has Service members’ Group Life Insurance and suffers a traumatic injury, can be eligible for the trauma pay. Understanding this is important because members hit by traumatic injuries have to apply to their service for TSGLI payments. Estripes.com reports:

Payments help servicemembers and families handle the extra expense and strain of adjusting to life-altering injuries. Payments range from $25,000 to $100,000, depending on severity of their trauma. Loss of a hand above the wrist, for example, would qualify a member for $50,000.

Read more: ‘Wounded Warrior Insurance’ not limited to war wounds

Are your heavy financial obligations like a big credit card debt or mortgage loan bogging you down? If yes, then do go out and get yourself a life insurance policy. I know this sounds a bit off, but just imagine if you were to… well, die and leave behind huge debts for your family to repay, they wouldn’t remember you too kindly. Also that will leave your family with a financial problem that may be too huge for them to correct and they may be forced to take some drastic actions. So, if your death would leave anyone in a financial bind, then you had better get serious about shopping for life insurance.

People with heavy financial obligations can use life insurance to ensure that their debt is covered. And because life-insurance death benefits are exempt from federal taxation, many financial planners use clients’ life-insurance benefits to help pay for the estate taxes generated upon the death of a loved one. While deciding how much and what kind of coverage you need will depend on your financial position and obligations, here are a few tips that will ensure that you don’t get taken for a ride:

• Ensure that your insurer provides you with an illustration for the policy that you have chosen. If they don’t, look for another insurance company.
• Get yourself a level-premium policy. Before you buy your life insurance policy (term or permanent) you must ensure that your illustration guarantees that your premium payment will not increase over the duration of your coverage.
• It is important for you to determine the duration of coverage is important. This will help you ensure that you get the right type of policy for you and also that you keep the premium payments affordable. One way to do this is shop around and get rates from multiple insurance companies.
• Most important: Ensure that your insurance carrier has the financial stability to pay your claim in the event of your death. Know the financial soundness of your insurer.

One of the biggest benefits of having a life insurance is that you can leverage funds to create an estate that can provide for survivors or to leave something to charity. In case you want a type of life insurance in which a lump sum of money is paid into the policy in return for a death benefit that is guaranteed to remain paid-up until you die, you should go in for a single-premium life. There are different versions of single-premium life with a wide range of investment options and you can choose the one that is best suited to your needs.

In a single-premium life insurance, since the policy is fully funded, the cash invested builds up quickly. The size of the death benefit depends on the amount invested and the age and health of the insured. A younger person is generally calculated to have a longer life expectancy. This gives the funds paid in the premium more time to grow before the death benefit has to be paid out. Also, the larger the amount of capital you initially contribute to your policy, the greater your death benefit will be. While the death benefits of insurance policies provide you with an efficient means to provide for your dependents, you also need to consider unexpected expenses that can crop up in your old age.

If you like the idea of a permanent insurance with flexible premiums and options you’d probably like the idea of a variable universal life insurance policy. This type of policy combines features of universal life insurance with investment options, which means, you have the potential for a larger death settlement than you would have with an ordinary policy. Bestsyndication.com reports:

Variable universal life insurance has advantages over other life insurance policies, such as Globe Life Insurance or whole life insurance. With this type of life insurance you get to play the stock market and choose the investment funds where you want to put your money. With universal life insurance on its own, you can’t control how your cash value is invested. When you combine it with variable life insurance, you can switch investments two or three times a year if you wish to get a higher life insurance settlement.

Read more:What’s The Lowdown On Variable Universal Life Insurance?

Did you know that in a second-to-die life insurance policy, usually, the death benefit is intended to go to the children , a charity or pay taxes owed after both spouses pass away? There are quite a few things we don’t know about this kind of policy for the simple reason that many of us don’t think of taking it. Bestsyndication.com reports:

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.

Read more:Second to Die Life Insurance Policies

For some people, a life insurance policy is a form of investment. A form of ‘compulsory’ savings that allows you to get a lump sum amount after a fixed period of time. Agreed life insurance has a wider role to play, however, there is no harm in treating it like a form of investment as well. But when you do that, you have to invest considerable thought and groundwork into the process of getting yourself an insurance policy. Here are five important guidelines to keep in mind while planning your finances.

Do Your Homework: Before investing your money, ensure that you have done your homework well. Don’t get taken in by aggressive sales pitches and remember that insurance agent is more interested in his/her ‘commission earned’ or ‘business garnered’. So, you may end up with a policy that doesn’t suit your specific needs.

Know The Trends: Update yourself with the latest product trends, market conditions and changing economic scenario. This way, you will not be completely at the mercy of the agent to provide you with information and solutions.

Be Involved: A simple tip: while taking life insurance, ensure that you read the form carefully and fill the form truthfully. If you don’t do an honest job of it, and discrepancies are found in your form, it could lead to rejection of claims at a later stage.

Inform Your Loved Ones: As soon as you get yourself a policy, inform your family members and any other people you may have appointed nominees. This will ensure that they are better placed to follow up with the life insurance firm for the claim proceeds should something happen to you.

Maintain Records: Always maintain a record of your life insurance policies. Share the details of this record with your dependents. In the case of an eventuality, your dependents will knows their exact financial status.

Did you know that close to half the population or 50 percent of America’s households don’t own life insurance. Some of these don’t think there is any need to own life insurance, while there are others who own too less. LIMRA International revealed these astounding facts in a study it conducted recently. So why does such a huge percentage of the population consider life insurance unnecessary. One reason could be that it isn’t fun shopping for something you cannot use in your lifetime.

The problem is that I find it quite difficult to buy this argument. I mean if you are a responsible person and have dependents, it is only natural that you would want to provide for them in the event of any untoward incident. So, for the sake of your next of kin, it’s important to know what you’re buying and how much you should buy. Timesdispatch.com reports:

For most people, term is best because it’s more affordable. For people who can’t afford insurance, MassMutual is offering term life policies with a $50,000 death benefit at no cost for families earning between $10,000 and $40,000.For information, call MassMutual at (800) 272-2216.

Read more: THE COLOR OF MONEY: A good time for a checkup on your life-insurance needs

If you are a senior citizen, with a life insurance policy, chances are you are finding it difficult to pay the premiums on the insurance. And you may also not need it any longer if you don’t have any dependents. One way you can get rid of it is by cashing in on your policy. There is another, lesser-known method — find a reputable life settlement brokerage firm to fetch you a buyer for your policy.

This method will give you up to five times or more than the cash value of your policy. Of course, the buyer will reap the larger financial benefit at the time of that person’s passing. But you will not be left high and dry. You will get a lump sum payment for your policy, which will be substantially higher than the policy’s current cash surrender value. There are a few conditions though: that you should be 65 years or older and your policy must have a death benefit of at least $250,000.

Could it get any lower — I have a feeling that if this trend continues, very soon, we’ll get life insurance for free (I know that’s like too much wishful thinking but hey, why not). According to the Insurance Information Institute, premiums for individual life insurance are expected to continue a downward trend in 2007 with a drop about 4 percent. Chron.com reports:

The reduced premiums are expected for both term and permanent life insurance, the III said. Term life insurance provides protection for a specific period of time, say 20 years, and pays a benefit if the purchaser dies in that period. Permanent life insurance promises a death benefit as long as the consumer pays the premiums.

Read more: Forecast: Insurance Premiums to Fall

In quite a large number of American families, it isn’t easy to bring up the topic of life insurance without sounding like a villain. So if you are convinced of the need for insurance and want to get your family thinking your way, how do you go about it? One of the simplest things is to use life events as a conversation starter. Mariondaily.com reports:

Almost every life event presents itself with the opportunity to discuss life insurance. If you know someone who is getting married, having a baby, buying a new house or even retiring, check out talkaboutlifeinsurance.com and send them a customized e-card that will not only congratulate them, but remind them of the importance of life insurance. Or if you’re going through one of these life events, take the time to talk with your family about how life insurance can help protect you and your loved ones.

Read more: Why Now is a Good Time to Consider Life Insurance