Understanding Term and Whole Life Insurance

Posted on March 29, 2012 by MarieHarvey

Understanding Term and Whole Life InsuranceAnyone with a family, a business or that simply doesn’t want to have their final arrangements become a financial burden on others should understand the importance of life insurance. Life insurance can simply be enough money to make final arrangements or a larger policy that is the equivalent of leaving an inheritance, the amount of the policy is the easy part of shopping for insurance, the hard part is understanding the difference between term and whole life.

Life insurance is touted as a necessity for anyone with a family to support or a business to protect. It’s also recommended for those who wish to leave an inheritance to someone. The choice of when to purchase life insurance (and how much to get) is complicated enough, but the most puzzling decision is often choosing a type of life insurance. How do you know whether term life insurance or whole life insurance is best for you?

The Basic Differences

In order to make a decision between term life insurance and whole life insurance it is important to first understand the basic differences and then move forward with learning which insurance is best for certain situations. The following explains the basic differences in term and whole life insurance.

  • Length of policy term: The term of the insurance varies dramatically from whole life to term life. Term life is only in effect for a predetermined amount of time. This time is set at the onset of the policy and can be from 5 to 30 years. Whole life insurance is in effect for the entire life of the policy holder as long as the premiums are paid.
  • Financial options: Whole life insurance offers financial options such as borrowing against the policy and interest accruing on the premiums which can be used later in life to pay the premiums. Term life insurance does not have benefits and only pays out if the policy holder passes away while the policy is in effect.
  • Cost: The price difference between whole life insurance and term life insurance is impressive. Whole life is more expensive simply because it is guaranteed to pay out as long as the premiums are in paid. Term life insurance, on the other hand, may not ever pay out, if the policy holder is living when the term ends.

These are the major differences in whole life insurance and term life insurance and should be a starting point for making a decision on which type of policy best meets the needs of the family or individual.

Choosing Insurance

The decision between whole life insurance and term life insurance is one that will be based on the needs of the family at the current time and future needs. Some things to consider when deciding are explained to help make the decision.

Best Reasons to Choose Whole Life Insurance:

  • Long term financial stability for the family should an unexpected death occur;
  • Owns or is part of a business and wants to make sure that the business is not financially effected in the event of death;
  • The policy holder wants to leave the beneficiary an inheritance or leave a charity one;
  • Paying into a term policy and outliving that policy is simply money being thrown away that cannot be recouped.

Best Reasons to Consider Term Life Insurance:

  • Concerned with leaving the family holding a mortgage or college education fees should the policy holder die.
  • Payments are more manageable and will remain manageable if the policy is a long term policy.
  • Time limited need for insurance. This is particularly true if the applicant is older in age and wants to make sure there is a policy in effect when they die.

There may be many other reasons that one policy is better than the other, these decisions are simply some of the most obvious ones. There are also combination policies that offer the best of both worlds. These are convertible term life insurance policies provide term life insurance for a pre-determined set of time and then allow the policy holder to convert the policy to a whole life policy for the remainder of their life.

Many families have both types of life insurance policies in effect, term and whole life. Term life insurance is inexpensive enough that a policy can be purchases to cover the life of a mortgage and a whole life policy put in place at a young age as well in order to get better rates. The term policy will ensure that the family home is not in jeopardy in the event of a death while the whole life policy will ensure that there is financial security for the long term.

The bottom line is that all families need to assess their financial situation and the risks involved should the unexpected occur without insurance. This will help them see that insurance is a necessity and it’s simply a matter of determining what type.

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Term Life Insurance for Smokers

Posted on March 22, 2012 by SharonNoel

Are you looking for term life insurance? Are you a smoker? If so, you are probably experiencing the wrath of high premium insurance quotes. As a smoker, you are considered at a higher risk for terminal illnesses such as emphysema, chronic bronchitis, heart disease, lung cancer, throat cancer and COPD. For women, smoking also puts you at a higher risk for cervical and reproductive cancers. This higher risk is the reason for your higher premium quote.

You Will Never Find a Rate the Same as a Non-Smoker

Unfortunately, because you smoke, you will never find a rate that is the same as a nonsmoker. Your smoking is considered a high risk behavior and life insurance companies have to minimize their financial risk. There are, however, some slightly more affordable options for life insurance – even if you are a smoker.

Term Life Insurance for SmokersFinding a More Affordable Option

One of the most affordable term life insurance policies, even for smokers, can be found through WholesaleInsurance.net. This is an online quote agency that can help connect you with many different life insurance companies and help you find the very best possible rate. They may even be able to help you find a policy that you don’t have to disclose your smoker information, enabling you to pay a rate the same as a nonsmoker would with the same policy. These policies, however, are often higher than other types of life insurance because risks are not assessed in depth like they are with other policies.

Another Solution

If you are still experiencing difficulty in finding the right policy, you do have other options. One option would be to quit smoking. Keep in mind that policies will inquire about your previous smoking habits – some up to three years. For this reason, you may want to consider taking out a short term policy to cover you until your previous smoking habits are no longer considered in your life insurance policy.

Lying is Not an Option

Because of the higher premiums, you may be tempted to lie about your tobacco use so that you can get a lower premium. If you smoke, this is not an option. In fact, lying can cause a complete denial of coverage. A medical exam is used, in part, to help determine your life insurance rates and determine your eligibility. A urine specimen is taken during the medical exam and the use of tobacco can be found in your urine specimen. Avoid lying and do your best to find an option that will help you experience a slightly lower rate or head in the direction of a lower rate without altering the truth.

What About Other Tobacco Use?

Smoking isn’t the only tobacco habit that can increase your life insurance rates. Chewing tobacco can also increase your term life insurance rates. While you may not be at a higher risk for some smoking health complications, there are other health complications associated with chewing tobacco. If you use any type of tobacco – nicotine patches, cigars, dip, pipe tobacco, snuff , chewing tobacco – you should answer yes in the tobacco use section of the policy questionnaire.

Recreational Smokers

What if you only smoke in social settings? How do you answer the tobacco use question? Some insurance companies will allow you to classify yourself as a nonsmoker, but the insurance company will have the final say in how often you can smoke and what type of smoking habits would place you in the same classification as regular smokers. The best way to find out is to be honest with the life insurance agent. Many agents are willing to work with you to help you find the most affordable rate.

Final Expense Life Insurance

If you still can’t seem to find a life insurance policy to meet your needs, you may want to consider final expense life insurance. The payout is much lower for this type of life insurance, but there are fewer health concerns with this type of policy. Additionally, a final expense life insurance policy does not require a medical exam to obtain the policy. This may be your best option to finding affordable life insurance as a smoker.

It’s Never Too Late

Any smoker can quit smoking, no matter how long it has been. It may not be easy and it may feel impossible, but it can be done. And in just a matter of six months to three years, you may be able to receive rates the same is if you had never smoked. Support groups, medications and other solutions have been developed over the years to help smokers kick their habit. Some of these solutions have been very helpful. Just remember that after you quit, you cannot go back. It only takes one cigarette or dip to start the habit all over again.

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Reasons for Accidental Death Insurance

Posted on March 15, 2012 by MarieHarvey

Reasons for Accidental Death InsuranceAccidental death insurance is offered by many companies. Banks often offer their members accidental death insurance policies that are very inexpensive and yet there are lots of people who simply don’t carry accidental insurance because they don’t see a need for it. Life insurance policy holders can often get an accidental death rider for a very small fee or even free through some insurance companies. Typical accidental death insurance riders to life insurance policies double the death benefits of the life insurance policy if death occurs during the insurance policy life.

Defining Accidental Death Insurance

Unlike other types of life insurance, accidental death insurance is a very limited form of life insurance, which is partially why people choose to forego this insurance. As the name implies, the only way the accidental death insurance policy pays is if the death is caused by an accident. While this is a good policy to have in addition to life insurance, it is not an adequate policy to stand alone without other insurance.

People Who Need Accidental Death Insurance

Ideally, everyone should have an accidental death insurance policy, in addition to their life insurance due to unintentional death due to injury being 5th in causes of death in the United States. However, if this is not reason enough, people who travel a great deal or work in a high risk injury should make this a required part of their financial planning.

What is Covered?

Accidental death insurance covers more than just death caused by an accident. Some of the other incidents that are covered include:

  • Loss of eyesight due to an accident;
  • Loss of certain limbs due to an accident;
  • Loss of fingers;
  • Permanent paralysis

There are also many different types of accidents where death is covered, including:

  • Murder
  • Death due to equipment failure
  • Falls
  • Motorcycle Accidents
  • Drowning

There are possibly many more accidents that are covered by accidental death policies and the policy holder should make it a point to read their coverage and know what is and what is not covered.

What is not covered is also important to note so that family members aren’t left wondering why the insurance did not pay the claim. The most common non-covered incidents include:

  • Suicide
  • Sickness that leads to death
  • Terrorist attacks
  • Natural causes
  • Death while under the influence of drugs or alcohol may be denied.
  • Sports and hobbies that are high risk may or may not be covered; these should be checked against the policy.
  • Death while committing a crime.

Just as with checking the policy for what is covered, the policy should be checked to determine what is not covered. Additionally, the policy holder should find out how long after the accident the death benefit is in effect. For instance, a motorcycle wreck that doesn’t cause death until several months later may not be covered. There is often a time frame that is in effect from the time of the accident until death occurs that is a payable time frame.

Best Reasons and Benefits for Accidental Death Policies

The main thing to keep in mind is that accidental death policies do not in any way negate the need for life insurance. If death is not accidental, the policy simply does not pay out any money.

There are many benefits to having accidental death insurance, including the following:
Here are some specific benefits to having accidental death life insurance:

  • Affordability: Accidental death life insurance can provide the policy holder with up to $500,000 in benefits for as little as $11 monthly. This is only if death is by accident.
  • Coverage: Anyone can take out an accidental death life insurance policy; there are no health questions to answer. This insurance is also available regardless of age.
  • Travel Benefits: Some, not all, accidental death life insurance policies cover death while traveling. This added benefit provides the frequent traveler with a peace of mind should their death occur while on a plane or other mode of transportation.

These are a few of the reasons that accidental death life insurance is important and should be considered when shopping for an insurance policy. Many people feel like they are paying money for something they may not ever need and thus are wasting their money. The answer to this argument is simply that the cost of this insurance is so cheap and the payoff to the family left behind in the event of an accident so large that the benefits outweigh the risks.

Accidental death insurance is often overlooked when applying for life insurance and only when an accident occurs does the family wonder why there wasn’t a policy in effect to cover the dreaded incident. Peruse the reasons for having an accidental policy and make it a point to be as insured as possible.

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