Ways To Save On Life Insurance Policies

Many customers looking to purchase a life insurance policy, want a plan that gives adequate coverage without overpaying. Policies premiums are based on historical data that actuaries determine by solving complex algorithms. The base premium numbers are determined by risk categories which includes the applicants current health, medical history, habits, age, hobbies, credit score, driving record, etc. Policy premiums will still vary with applicants that are placed in the same group. Some common ways to save on life insurance are as follows:

  • Don’t smoke – When insurance companies determine their risks for life insurance applicants, the first class they determine is if the applicant smoked. Obviously there has been quite a few cases where people have smoked a pack a day and lived past age 100. That sample size is so small that it doesn’t effect the entire population that actuaries deal with. Underwriters will want to know if you smoke or have smoked at some point in your life. This one habit alone, can increase or decrease the applicants premium by a large number.
  • Purchase a plan that fits your coverage needs – Some customers purchase cheap policies, but then end up regretting it down the road. Sure, many policies are convertible, but may incur fees or additional charges if the plan is converted. Purchase the correct life insurance policy the first time around. This is done by talking to a good insurance agent and asking the right questions. The agent will determine what is needed for your financial situation and help you understand what type of life insurance policy fits you best. There are many different products ranging from term to permanent insurance. Common coverage for life policies are recommended to 5-10 times your annual income.
  • Save in the long run by purchasing early – More often than not, people wait till later in life to purchase life insurance. If you have the funding and ability to pay a life insurance premium, purchase it when your younger. Locking in rates at an early age will save you money in the life of your policy.
  • Pay premiums annually and automatic bill pay – After applying and getting accepted for a life insurance policy, there are options on paying for your coverage. Payment options vary slightly with each insurance company, but most insurance companies will offer a discount if installments are paid annually. This saves the insurance company money by investing the money as the receive it, rather than waiting for smaller payments to come in monthly. Insurance companies make a healthy profit on interest rates and will pass the savings on to the consumer if it’s paid entirely up front. More insurance companies now are offering automated bill payment, which may offer around a 1% discount.
  • Look into coverage “bands” – Every insurance company offers different prices for different amounts of coverage. “Bands” of insurance are policies priced according to coverage. Sometimes, an insurance company may offer a lower rate for a certain amount of coverage. Depending upon the amount of coverage you need, it may be cheaper or worthwhile getting more coverage.
  • Shop around – Inquiring with multiple insurance companies will always give you different prices. Each insurance company offer different policies, coverage amounts, discounts, etc. As with any major purchase in your life, it is wise to search for the best life insurance product. Always get multiple quotes and make sure you fully understand the policy that you need.
  • Stay healthy – Many applicants who end up paying higher premiums for life insurance are either smokers, chew tobacco, are overweight, have high blood pressure, etc. Maintaining a healthy lifestyle will lower premium rates. Never lie on an application and state that you don’t smoke, when it isn’t the truth. It is illegal to lie on a life insurance application, as if you make the misrepresentation, the contract will be voided. Fix your current state of health before applying or if you already have a policy, quit the bad habits, get healthy and have the insurance company reevaluate you when your health improves.

Although, life insurance policies can be confusing at times to the average consumer, there are many steps you can take to save money before and after buying a life insurance policy. Staying healthy and making good decisions in everyday activities will give you a good rate on your premiums. When making a major purchase in your life, make sure you understand the product that you are agreeing to terms with. An insurance agent will be able to fully describe the details of what a policy entails. Knowledge of major financial decisions in life can save you a lot of money throughout your life time.

Life Insurance Tips – How Does a Whole Life Insurance Policy Work?

If you have ever read your life insurance policy, only to have more questions than when you began, you are not alone. What does it all mean? Incontestability clause, exclusions and such, just make a person want to get to the bottom of the question… will the company pay the policy off when I die?

What is a life insurance policy anyway?

A life insurance policy is a legal contract between the person who buys the policy (called the insured) and the company that issued to policy (called the insurer). It will pay cash to a stated beneficiary when the insured dies. When a person first applies for life insurance, they are asked a series of questions to see if they qualify for the type of insurance they are applying for. Afterward, they are given a Conditional Receipt which is a temporary insurance policy while the application is in the underwriting department and waiting for results for any exams that were ordered. This receipt may be used in case of death occurs before the actual policy is delivered, so make sure your agent reviews this with you.

Once the policy is issued and the agent reviews the kind of policy issued and what’s included, he or she will explain the terms of the policy. Since a life insurance policy is a legal contract, there are some provisions or terms contained in it that you should know about. Some important ones are:

Make sure there is a copy of the actual application in the policy. You don’t want anything you said to be misstated or written in error by your agent, and if there is an error in the application, ask your agent how it can be straightened out. Because no one can change the policy once it has been issued, this is usually handled by an amendment.

Know when your payments are due. This is usually done on a monthly basis, with lower premiums being drafted from a bank account. Some other payment options are yearly and every six or three months. To help protect you against an accidental lapse of the policy, there is a grace period of 30 days after the due date. But to stay safe, make policy premiums on time every months.

The period of incontestability prevents the insurer from denying the claim because of statements made in the application after the policy has been issued. Basically it says that if the insured dies within the policy’s first two years after issue and there is an untrue statement found on the application, the insurer can deny paying the claim. After the first two year period of the policy, the insurer is fully liable to cover the insured no matter what is on the application.

Tell your true age. Some people think that if they claim they are a younger age, they’ll get a cheaper rate. Well, if they are in fact the younger age, this logic holds true. But not so if they are older. If this happens, the insurer will correct this whenever a claim is made and the adjustment will come out of the beneficiary’s proceeds.

There are some things that a policy will not cover and are excluded from the policy. The insurer makes this clear at the time the application is signed. These are individuals who serve in the military, who fly aircraft and who work in hazardous occupations or hobbies.

Settlement options are the ways the insurance company will pay out the proceeds of the policy. The company usually pays a lump sum to the person listed as your beneficiary. However, there are options that you can choose from. You can choose to receive a fixed-period of installments, fixed amount of installments, income for life, or interest only payments. Ask your agent for details and if one of these options are right for your family situation.

Non-forfeiture Options. Permanent life insurance policies have cash values, money that grows over time. This mean there are certain guarantees built into the policy that cannot be forfeited by the insurer. With these options you can borrow against the cash values built in the policy, use the values to convert to term insurance, or reduce the face amount of the policy to pay it up.

There are many more provisions and options that are too numerous to mention here. But these few should arm you with enough information to discuss your insurance needs with your agent, and for your agent to compile a thorough financial plan. More importantly, you now have an idea of how a life insurance policy works.

I Am Healthy – Why Should I Opt For a Life Insurance Policy?

These days many people are talking about life insurance policies and its benefits. In fact almost everyone is opting for life insurance policy as it provides them. So if you don’t own a life insurance policy then you must opt for one soon. It acts like a cushion you can fall back on in hard times and provides protects you and your family in different type of crisis.

Now the biggest question that comes in one’s mind is that what exactly is a life insurance and why do you need it. In the simplest term, life insurance policy can be explained as a formal contract between the insurer and the insured. Under the life insurance contract, the insurance company assures you that in the event of your death, they would give an assured amount of money to your family. This financial assistance can be of great help to them during the crisis.

Thus when you opt for a life insurance policy, it’s like getting your life assured. At the event of your death, financial crisis can actually break your family and make them face hard time. The insurance money from the policy can save them from this. The insurance amount you receive is calculated on the basis of the life insurance policy you buy and the premium you pay. Premium is a fixed amount of money which you need to pay at regular terminal.

Many people assume that they are healthy and young and therefore they won’t die early. Due to this they avoid opting for a life insurance without realizing the risk they are taking. John was just 25 years old and was the sole bread winner of his family. He chose not to opt for a life insurance policy. But death is an uninvited guest, he died of a heat stroke one afternoon and with no saving and life insurance policy to fall back on, his family had to face a tough time in making ends meet. Had he opted for a life insurance policy, it would have helped his family financially and saved them from the crisis.

Thus death is an unavoidable and unperceived event and one should not challenge death and should get his life insured. As mentioned before, when you choose to buy a life insurance policy, you basically provide a protective shield to your family. You need to buy a policy according to your requirement and according to the premium you can pay.

When you buy the policy, you are required to nominate someone. The nominee is the person who would receive the insured amount after your death. Most of the policy covers accidental death and natural death. If the policy holder commits suicide then no money is given to his family or to the nominee. Similarly, if there are chances of any fraud then the policy amount may not be paid.

Some of the Life insurance policies work as investments as well. According to this they are categorized into protection policies and investment policies. The latter is treated as an investment where the insured person buys the policy and pays a premium at regular interval. You need to pay the premium for a certain period called as the lock in period. Once that period is over, you can withdraw your amount along with the interest. But if you die during the period then the amount is given to the nominee as insured money. These types of insurance policies therefore help you to grow your capital as well.

In case of a minor, the parents get also opt for a life insurance policy. In this case the insured and the policy owner differ. The parents buy the policy for the children and pay premium for them which make them the insured party. The younger the insured party, the more beneficial it is. The amount of the insurance policy depends on this also.

If you are young then you can opt for a term policy where in you would be required to pay the premium for a fixed period of time depending on the policy you choose. The premium amount for these policies is higher as the returns are also better. Thus you would be required to pay the premium for about 5 years or more depending on policy you choose.

Whatever type of life insurance policy you choose, it is important that you pay your premium on time or else the policy would lapse and you or the nominee would not get anything at all.

Before choosing a life insurance policy for yourself or your family it is important to decide what you want from your policy. Whether you want the policy as an investment or wish to provide the benefit to your family. Then you also need to decide whether you want to opt for a term policy or a permanent policy wherein you would have to pay the premium for a long time.

Other things to be considered while buying a life insurance policy includes factors like face value, interest rate, premium amount, maturity period etc. Life Insurance is must for everyone and therefore you should opt for one and safeguard your family’s future. You can also buy policies for your children that can work as an investment and allows you to provide a healthy future to them.