Life Insurance Lowdown

When it comes to the needs of your family, you need to make a close introspection on what are the plans you will be working on to safeguard their interests. Life insurance is extremely essential to ensure to meet the needs of your family in case of your death. The death benefits received by the beneficiary is tax-free and it can be used to clear the outstanding dues and manage the family expenses. Your family can use this money to maintain a good lifestyle and pay for your children’s education.

There are more than one reason for buying a life insurance policy. If you are the only breadwinner of the family, life insurance is a good way to help provide your family with a stable financial future. Otherwise, your family will be in a disarray. Even if you aren’t the only wage earner, it’s important to go for life insurance, which will cover the financial burden of childcare and other unforeseen costs after your death.

If you are married and have children, your need for a life insurance becomes greater. In case of an untimely death, your life insurance will ensure that your children have sufficient funds for their education. You can also use life insurance as your retirement solution.

Consider using the cash value to purchase an annuity or annuitize your policy to generate a retirement income stream. There is little doubt that a life insurance policy is the need of the hour for everyone irrespective of their earning, savings and social status.

–By Priya Jestin, Staff Writer

Do you have heavy financial obligations like a big credit card debt or mortgage loan? If yes, then do go out and get yourself a life insurance policy. People with heavy financial obligations can use life insurance to ensure that their debt is covered. Life-insurance death benefits are exempt from federal taxation. So, many financial planners use clients’ life-insurance benefits to help pay for the estate taxes generated upon the death of a loved one.

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. Finally, ensure that your insurance carrier has the financial stability to pay your claim in the event of your death.

–By Priya Jestin, Staff Writer

While each individual policy may be different depending on the policyholder’s needs, there are certain factors that remain constant and affect your life insurance costs. A while back I had written about how your cholesterol level can actually affect your insurance rates. Cholesterol isn’t the only factor taken into account when deciding insurance rates. Your weight and blood pressure are the two other very common factors that can have a great impact on your life insurance costs.

So why do life insurance companies place blood pressure on such a high pedestal? Well, for one, if you have high blood pressure, it could lead to further complications. Like high cholesterol, high blood pressure can lead to heart disease and other health problems. This in turn may put you at risk for higher life insurance costs.

Your gender and age are some of the factors that determine your blood pressure and cholesterol levels. Normal adult blood pressure is generally identified as 130 over 85. You have hypertension (high blood pressure) if your blood pressure is at or above 140 over 90. A blood pressure level at or slightly above 140 over 90 is regarded as low-grade hypertension. Most insurance companies have levels they consider acceptable, and other levels they consider preferred (which may qualify you for discounted rates).

Now, your blood pressure levels alone will usually not raise your life insurance costs. But combined with another underwriting factor (such as cholesterol or obesity), hypertension is likely to raise your costs. Moreover, if your blood pressure is dangerously high, this may be reason enough to raise your rates.

This doesn’t mean you need to despair if your blood pressure levels aren’t normal. Many people respond well to medications that help lower their blood pressure. If you have managed to lower your level, your past higher level should not affect your life insurance costs now.

One of the biggest failures of the life insurance industry is its inability to educate people about the need for life insurance. Even today, decades after life insurance was introduced, many people believe the need for life insurance corresponds directly with your chances of dying. So, the argument goes, the higher the probability of your death, the more need you have for life insurance. Nothing could be farther from the truth.

What most of us don’t realize is that if we have people who are dependent on us and our income, we just need life insurance. This will ensure that our dependents like spouse, children, parents, siblings,… don’t suffer financial problems in the event of our death. So, it doesn’t matter how young or old you are or what your profession is. The ground rule is that anybody who depends on you in your lifetime should not have to financial problems after your death. Freep.com reports:

Estimate the immediate expenses your family would incur in the event of your demise. Include funeral costs, lawyer fees, mortgage and car payments, daily expenses and outstanding debts.Determine how much missing income your family will need and for how long. Consider your salary and how many years you’ll want to replace it.

Read more: Life policies must cover income, survivors’ needs

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. Just as when you first buy a policy on your home, life or car, you need to make sure 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. The comparison becomes even more important if you think your insurer is raising the premiums more than you expected.

In case you have a whole life insurance, try to get rid of riders that you no longer need. If there are any policy loans that are earning less than the interest you are paying on them, it is prudent to pay them off. If you don’t need as much coverage as you’re paying for, you can even ask your insurer if you can reduce the face amount. This is known as a partial surrender, and works out pretty fine, only remember to watch out for extra fees.

If you are planning to cans in your policy, try to find out options to save your taxes. You could consider 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.

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.

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

Are you in the federal service and nearing retirement age? If yes, have you considered how to factor life insurance into your retirement planning efforts? If not, it probably is time to begin thinking about it. Here are a few things on the Federal Employees’ Group Life Insurance program that I found while surfing.

One of the most common questions people ask is how much FEGLI coverage they are allowed to keep in retirement. According to experts, the amount of basic FEGLI you will carry into retirement is based on your salary on the day you retire. You are eligible to continue basic insurance or have it reinstated if you meet certain requirements. Govexec.com reports:

If you are eligible to continue or have reinstated basic insurance, you also are eligible to continue or reinstate optional insurance, as long as you meet the requirements listed above. Your optional insurance initially will be the same value as you had on the last day of employment.

Read more: Life Insurance Options

I know this is the last thing on your mind — that is if you haven’t thought of it at all — when contemplating marriage. Thinking how marriage could affect your insurance is definitely not at the to of your list when you are taking your wedding vows. Well, maybe once the dust has settled, you could examine your policy because insurance needs to be a priority. There are the basics like name and address changes that need to be considered. In addition, you also need to take some more steps to ensure that your insurance is marriage-ready.

One of the first things you must do is update all policies to add the new spouse. In case you feel your present policy is not good enough, go ahead and purchase another one. For instance, you may want to broaden your life insurance to include your spouse and to raise the policy value. You may need to change beneficiaries on existing life and annuity policies. While in most states, your spouse is automatically your beneficiary it is still best to change.

There are myriad reasons for you to get life insurance and yet the number of people without insurance is appalling. Why? Because of some false beliefs… we need to address these issues so that you make an informed choice. Theopenpress.com reports:

You feel there’s no need or reason to have it. Sometimes this is true. You’re 20 years old and single. Maybe not today. But let’s say you have a family or loved ones that would be hurt financially if your income wasn’t there. In that case you would agree that you do need it and want to have life insurance.

Read more: Reasons to get (or not to get) life insurance