Life Insurance Lowdown

Insurance is not something you would like to think about in your free time — unless of course you work in the business. As for the rest, most people generally tend to think about them only when forced to, like the time when they come up for renewal. How you update your life insurance depends on what type of policy you have. For term life, do a quick comparison of premiums to see if yours are still competitive, especially if your insurer raises them more than you expected.

Now, with term life policies going dime a dozen, you really don’t need to stick with an insurer who charges you the skies for your term life insurance. All you need to do is make a quick check of the scene and find the insurer who will give you the best terms. If you want to check multiple insurers and want your quotes in real time, I’d suggest you search for your insurers online.

For whole life, get rid of riders you no longer need. Pay off any policy loans that are earning less than the interest you are paying on them. If you find you don’t need as much coverage as you’re paying for, ask your insurer if you can reduce the face amount — known as a partial surrender — but watch out for extra fees.

And don’t cash in a policy without considering a 1035 tax-free exchange. That will let you transfer your money to another insurance policy or to an annuity and continue to defer taxes on any gains made within the policy.

First, the good bit: The insurance industry has always been an excellent provider of protection products, serving our population well and flourishing as a result. And now, that people are living longer, there are some among us who may be outliving our need for our death protection products. Many senior people are now wanting to exercise the option of having cash to maintain a quality of life over an expensive life insurance policy.

So how do you work out a solution that could be beneficial to both insurers and insured? One way is to use life settlements or secondary market. This option has become a very viable way for those clients who no longer have a need or beneficiary for their life insurance. With this option, they can convert their death benefits into a living benefit. This way, they can enjoy their wealth and use the money to provide for life’s necessities. Thebusinessledger.com reports:

While life settlements are not for everyone, they do promote the process of receiving fair market value for a life insurance policy that the policyholder wishes to sell. However, the insurance industry has been resistant to this concept.

Read more: Insurance Industry Must Work on “Quality of Life” Products

You have done well in life and want to pass on your assets to your spouse, younger generations, or favorite charities. You have two options to do this — you can either assign your assets to beneficiaries through a will and/or a trust OR, you could use life insurance products. The benefit of doing this is that you can create wealth with this tool and thereby increase the amount passed that is passed on to your recipient. Personalinsure.about.com reports:

Single premium life insurance is a valuable investment when it comes to wealth creation and transfer. With this type of life insurance, a single premium is deposited, creating an immediate death benefit that is guaranteed until the owner passes away.

Read more: Transferring Wealth with Life Insurance

Does it make economic sense to buy life insurance for your children or grandchildren? As with most financial planning questions the answer is — it depends. If you want to provide a permanent form of life insurance to protect your child’s future family, then you could probably buy a whole life policy at an early age. Indystar.com reports:

Many parents set aside funds to help their children with the expenses of college or starting a household. Life insurance policies have become a popular method of funding these goals because of the tax-deferred growth of cash accumulation values of the policy.

Read more: Should I buy whole life insurance for my kids for when they are grown?

You may think that what I’m going to say is unpleasant. Have you thought of taking a life insurance policy in your child’s name? Let me be plain here: I’m not talking about the chance of your child dying. This is not something parents want to think or talk about.

Many people believe that life insurance is necessarily all about death. That’s not the case here. Child life insurance is about preparing for the future; taking steps today can help create a better tomorrow. And as parents or grandparents, it is our duty to make the future better for our children. Such child life insurance is perfect for planning for the future because of the cash value the plan would accumulate. As an adult, they could borrow against this value…or stop the policy and withdraw the money (to pay for college or any number of things).

Is life is getting cheaper? It would seem so as aging populations, the Internet and a number of other factors force down the cost of term life insurance. And yet, most Americans don’t seem to be taking advantage of this great windfall. Theledger.com reports:

If that person is healthy, he could save money by replacing the older insurance with a new, 10-year term policy for $525 per year or a new, 20-year term policy for about $1,000 per year. The savings typically are even higher for policies for $1 million or $2 million in coverage.

Read more: Life Insurance Now Cheaper Than Ever

Is your life insurance a necessity that must be paid for by any means? I really don’t think so. I know some people think of a life insurance as an absolute necessity. But believe me, it is not always a good thing to have. Especially if you are past your prime — that would be around the age of 70 and above. If you can afford it, life insurance is a great idea and allows us to help provide for those we love. But in case of people who are retired, the rules change a bit.

You insure yourself to ensure that your family gets some form of income even after your income has stopped. But in the case of a retired person, his/her income comes from Social Security, savings and possibly a pension. So, it is safe to assume that the death of this person will not affect the standard of living of his survivors. In such a scenario, you really don’t need a policy that is milking you dry.

Life insurance has its beginnings with providing the proverbial ’safety net’ for the family. However it’s meaning and utility has undergone a lot of change in the recent years. In the 21st century one of the most important issues is to find a means to deal with a constantly changing and uncertain economic climate. What it implies therefore that now more and more families want to make provisions for paying current bills, as well as planning for future events and changes in their lives. Providing college educations for children and comfortable retirement incomes for themselves are just some of the things that they want to do apart from leaving behind handsome cash for their dependents.

Variable Life Insurance may therefore be just the thing that you have been looking for. Variable life insurance guaranteed death benefit. And at the same time while you are alive, it will grow on a tax-deferred basis and become available to you via policy loans or withdrawals when you need funds.

Life insurance has become a necessity in today’s life. But it is not so much of a necessity that a man in his late 70s should have to pay through his nose as insurance premium. That’s exactly what happened to an elderly gentleman who is into his early 80s. Twenty years ago when he was working, he took a life insurance policy, which seemed a bargain — he had to pay his premium for a few years after which it would build up enough value to pay for itself. While the going was good for over a decade, now suddenly this person finds out that he is being forced to pay a huge amount as premium. He is now retired and doesn’t have the means to pay such a large amount of money.

If I were in his position, I’d dump the policy. I know some people think of a life insurance as an absolute necessity. But believe me, it is not always a good thing to have. Especially if you are in the old man’s shoes. If you can afford it, life insurance is a great idea and allows us to help provide for those we love. But in case of people who are retired, the rules change a bit.

You insure yourself to ensure that your family gets some form of income even after your income has stopped. But in the case of a retired person, his/her income comes from Social Security, savings and possibly a pension. So, it is safe to assume that the death of this person will not affect the standard of living of his survivors. In such a scenario, you really don’t need a policy that is milking you dry.

Life insurance is not something you would like to think about in your free time — unless of course you work in the business. As for the rest, most people generally tend to think about them only when forced to, like the time when they come up for renewal.

But it pays to give your policies a checkup when they come up for renewal. Just as when you first buy a policy on your life, you need to ensure you have the right amount of coverage at the best price. So, what should you look for when updating your policies? How you update your life insurance depends on what type of policy you have. For term life, do a quick comparison of premiums to see if yours are still competitive, especially if your insurer raises them more than you expected.