Life Insurance Now

I was looking for websites that specialize in senior life insurance and came across ProFam.com. I was impressed with their website’s simple, clean design, and their focus on life insurance for seniors. They claim to specialize in getting insurance for those who are hard to insure, which implies to me that they have experience with what is known in the life insurance business as “impaired risk”–people with health problems.

Using the website was easy. They provide visitors to their website the opportunity to request quotes through a easy to use form, and they also have a toll-free phone number for an instant quote. Those looking for rates on life insurance for seniors should be impressed with their experience on the ProFam.com website.

Having five children, I can tell you that I am always on the look out to save money. And since one of the biggest expenses for families these days is medical and dental insurance, I was naturally interested to learn about a money-saving alternative. It’s called Ameriplan^®. Here’s how it works:

Unlike insurance plans, with expensive premiums and massive red tape, Ameriplan^® provides affordable consumer driven health and discount dental plans starting for as little as $19.95 per month. To gain access to the 1.4 million Ameriplan^® members, doctors, specialists, dentists, orthodontists, vision providers, pharmacists, and chiropractors agree to discount their services for plan members.

I investigated their program to see what type of savings I could expect. The fee schedules are based on zip code, so I entered my zip code for their dental plan. I was impressed, to say the least. I can save from 56-80% on dental services I am likely to use, like oral exams, X-rays, fillings, and teeth cleanings. The savings on braces just blew me away; should my kids need braces, instead of paying the regular $4,500.00, I would only need to pay $2,000.00.

If you are looking for an alternative to health and dental insurance, Ameriplan^® is a program you should look into. Start by going to their website and researching the fees for your area.

“The circumstances of the world are so variable, that an irrevocable purpose or opinion is almost synonymous with a foolish one.” — William Henry Seward

Change happens. Children are born. Investments grow. People get older, and hopefully wealthier. The list of potential lifestyle-altering changes that can occur for any person or family is virtually endless. As you must adapt to the changes in your life, so must your life insurance plan adapt to those changes.

By reviewing your life insurance plan every three to five years, or as needed, you can redesign your plan to suit your current situation. Doing that could potentially save you money and heartache in the long run. If you become more financially independent as you get older, or if your financial responsibilities to others diminish, you can lower or eliminate your life insurance coverage and use the saved premium payments for investing or enjoying life. If you are not financially independent yet, and your financial responsibilities increase, you may need to increase your life insurance coverage so that you don’t leave those you care about with a financial hardship after your death.

“What you leave at your death let it be without controversy, else the lawyers will be your heirs.” — Francis Osborne

A trust is a legal document that establishes a relationship in which one person (trustor) transfers an asset to another person (trustee) who manages and controls the asset for the benefit of a third person (beneficiary). A life insurance trust is a trust relationship established specifically to own a life insurance policy. Having a life insurance trust could potentially benefit your life insurance plan, and ultimately your heirs. It fact, not having one could be a mistake that leaves an irresponsible beneficiary broke and penniless.

By having your life insurance trust as the owner and beneficiary of the policy you could create several potential advantages. First, you can better insure that your lost income is replaced and continues for as long as it needs to–the main goal of life insurance. Second, you can insure that the life insurance proceeds are invested according to your instructions. Third, as I eluded to above, you can prevent the life insurance proceeds from being paid in a lump sum, only to be squandered by financially irresponsible beneficiaries in a short time. Fourth, you potentially remove the life insurance proceeds from your estate, avoiding probate and estate taxes. Depending on your unique situation, thousands of dollars could potentially be saved by implementing this strategy.

A word of warning: if for some reason you decide to purchase a cash value type life insurance policy, DO NOT put it into a life insurance trust. Because a life insurance trust is irrevocable, you will not be able to borrow your cash value from those policies. However, if you follow the strategy of only buying term life insurance, you can get around the irrevocability issue. To effectively “revoke” an irrevocable life insurance trust connected to the term policy, you just stop paying the premiums.

If you feel that establishing a life insurance trust may be the right strategy for your life insurance plan, consult with with your financial advisor and an attorney knowledgeable in trusts.

“The most important secret of salesmanship is to find out what the other fellow wants, then help him find the best way to get it.” — Frank Bettger

Life insurance salesman will often quote you the lowest rate in order to get you to complete an application with them. One agent may accurately quote you a standard rate for the same insurance company that another agent quoted you a preferred plus rate just to get you to complete the application. Your actual rate will be based on the underwriting criteria of the life insurance company you choose regardless of what any agent quotes you.

You cannot get a lower cost term life insurance policy from the same company by pitting two or more agents against each other. Each company has set rates based on their underwriting criteria. If two agents quote you different rates for the same amount and term of coverage from the same life insurance company, it’s because one of them is not properly qualifying you for the appropriate rate. You may be tempted to go with the lower rate, but you might complete an application only to find out later that you’ve wasted your time.

When I got my first life insurance policy that happened to me. My agent quoted me a preferred rate that sounded appealing to get me to complete an application with her, but after submitting my application the underwriter at the life insurance company offered me a standard rate that was substantially higher. Not knowing the strategies I know today, I foolishly lowered the coverage amount and shortened the policy term to get the monthly payment lower.

Different agents represent different life insurance companies, and some agents are better (honest) at qualifying you for an accurate rate. To get the best rate on your life insurance policy, get several agents to provide you with quotes accurately based on the underwriting criteria of the companies they represent. You want to choose from the lowest *accurate* rates you can find, not the lowest rates you may not qualify to receive.

I received the standard rate on my life insurance policy simply because my father had a heart attack before the age of 50. It didn’t matter that I was perfectly healthy! However, if I had used this strategy I would have found another agent that would have shown me another top-rated company willing to offer me a preferred rate because my father was still alive, which could have saved me hundreds of dollars and allowed me to purchase more protection for my family.

This humorous television commercial from a life insurance agency in Great Britain presents an interesting take on the uncertainties of life.

The message of the ad is simple but memorable: life is risky, even when you don’t take risks.

If you want a chuckle, and enjoy humorous television commercials, then watch this short video:

“The man is prudent who neither hopes nor fears anything from the uncertain events of the future.” — Anatole France

Life insurance agents are trained to sell you add-ons to your policy. It’s a lot like a fast food attendant asking you if you want to “supersize” your meal, or if you want fries and a coke with your order. The problem with life insurance add-ons, like fast food extras, is that it’s mostly empty calories. In the case of life insurance, it’s deadly to your wealth instead of your health.

The two main add-on options are the Disability Premium Waiver and the Accidental Death Benefit rider. The purpose of the Disability Premium Waiver is to exempt you from having to pay your insurance premiums if you become permanently disabled. The purpose of the Accidental Death Benefit rider, also known as a “double indemnity clause” is to pay your beneficiary twice the death benefit amount if you die as the result of an accident. Both add-ons seem reasonable and necessary, until you consider the odds of actually needing them and the additional costs to having them.

If you are concerned about becoming disabled during the life of your policy, the Disability Premium Waiver may not be the most cost effective way to protect life insurance premium payments. The cost is simply too much for what you are trying to accomplish. Contributing those extra dollars to a general disability policy would be the best choice to pay all your expenses, including your life insurance premiums. Furthermore, if you purchase the lowest cost term policy for an adequate coverage amount, your premiums will not be a major cost.

An Accidental Death Benefit (ADB) rider could actually cost you more than if you purchased a policy for twice the coverage. For example, let’s assume a 35-year-old male could purchase a $300,000 ten year term policy for $119 per year. Let’s further assume that an ADB rider costs only $.75 per $1000 of coverage. To have the accidental death benefit rider in that scenario he would need to pay an additional $225 per year in premiums bringing the cost of this hypothetical policy to $344 per year.

Instead of spending the extra money on the ADB rider, he could have purchased twice the benefit ($600,000 worth of coverage) for a total premium of only $188 per year. In both cases, if he died accidentally his beneficiary would receive the same amount, but by eliminating the ADB rider to achieve the same benefit amount he saved an extra $156 per year.

Obviously an ADB writer is not a good value. But you will have to run the numbers for yourself to make that determination. If your agent offers you the ADB rider, ask him the cost per $1000 of coverage. Then do the math. Compare the results with a policy for twice the death benefit amount to see if it’s a good deal or not. Is it really just “a few dollars more,” as the agent will tell you?

“The safest way to double your money is to fold it over once and put it in your pocket.” — Frank McKinney Hubbard

Whole life insurance is a type of life insurance policy that is marketed as an investment or “forced savings” plan. The claimed benefit of a whole life policy is that it builds cash value, which is the investment or savings part of the policy. When compared to other ways you could invest your money, a whole life insurance policy is simply not a good investment.

Some people falsely believe that their beneficiary will receive both the cash value and the death benefit if they die. However, when you die, your beneficiary will receive whichever is greater, either the policy death benefit or the accrued cash value. As an example, let’s assume you purchased a $50,000 whole life policy and at the time of your death the cash value had grown to $30,000. Your beneficiary would receive only $50,000 upon your death, not $80,000. In that example, at least $30,000 of the death benefit paid came out of your pocket, more if you factor in the portion of the premiums that didn’t accrue as cash value. Sound like a good deal? It is for the insurance company because it only has to pay $20,000 or less to your beneficiary.

“But you can borrow the cash value,” the life insurance salesman will tell you. Most people never do that, and when they do, they have the privilege of paying interest on their own money. Further, whatever has been borrowed and not repaid when the insured dies is deducted from the death benefit that’s paid out. Using our example above, if you had borrowed the $30,000 in cash value from your whole life policy, and had not repaid it before your death, your beneficiary would only receive $20,000.

What about the interest rate you can earn? You can get a better interest rate elsewhere. And as for the life insurance sales pitch that you can borrow the cash value tax-free, you can borrow any money from any source tax-free. Before you throw thousands of dollars away on whole life insurance premiums, consider the many other ways you could better save or invest that are not connected to a life insurance policy.

“There are worse things in life than death. Have you ever spent an evening with an insurance salesman?” — Woody Allen

I don’t know about you, but I have spent an evening with a life insurance salesman, and I have to agree with Woody. The salesman pitched me a bewildering number of choices to part me from my hard earned money, and talked and talked. That was several years before I became a life insurance agent and learned the tricks of the trade, before I knew the strategy of only buying the least expensive term life insurance policy from a company rated “A” or better.

There are numerous variations of life insurance policies, but they all fall into two basic categories: term life insurance and cash value life insurance. Cash value life insurance comes in several flavors: whole life, universal life, variable life, and variable universal life.

While cash value policies can be used to achieve multiple goals in your financial plan, the problem is that they don’t do it well. And one could achieve similar goals more effectively and profitably with better investments. That’s because cash value life insurance is not a good investment vehicle, and it should never be considered as an investment. For that reason, the best value is a term life policy. It’s pure protection at a reasonable price.

Choosing a term life insurance policy is simple. Once you decide on the death benefit amount that you need, and the length of time that you want coverage, choose the policy with the lowest premium from a company that is rated “A” or better. The ratings are given by insurance-rating companies, and are meant to give you some idea of the financial soundness of the insurance company you are considering. A rating of “A” or better is an indication that the insurance company is financially strong.

“Our judgments about things vary according to the time left us to live–that we think is left us to live.” — André Gide

The best value for the lowest cost is a level premium term life insurance policy. This type of policy will allow you to purchase an amount of coverage at a fixed premium for 5, 10, 15, 20 or 30 years (the term). The greater the term, the greater the risk for the insurance company; therefore, the greater the term, the higher the premium.

Select the shortest term that provides adequate coverage, thereby saving hundreds of dollars in premiums that would otherwise be potentially wasted on an unnecessarily long term.

How do you decide the best term? That depends on your unique situation.

For example, let’s assume that you are a 32 year old male in excellent health and able to purchase $500,000.00 of coverage for 10 years at $13.56 per month, for 20 years at $20.56 per month, and for 30 years at $36.31 per month. Two factors to consider in choosing the best term in that situation would be present affordability, and future needs.

* Present Affordability - If paying $36.31 per month for a 30 year term is going to be difficult on your budget, but you have determined that $500,000.00 of coverage is the minimum that you require, choosing a ten year term for $13.56 might be your best choice to keep a policy affordable without lowering the death benefit amount to get a longer term.

* Future Needs - It is difficult, if not impossible, to predict the future. However, it is reasonable to predict that dependent children may become less dependent one day, that dependent parents will eventually die, and hopefully that one’s wealth will increase. Those factors reduce the potential for financial hardship on others if you die, thus decrease your need for life insurance coverage over time. Will you need $500,000.00 worth of coverage 20-30 years from now?

Consider that if you stop making payments after 10 years on the 30 year term at $36.31 per month due to affordability or changing needs, and your policy lapses, you would have wasted $2,730.00 in premium payments over the 10 years you paid by using a 30 year term to accomplish what you could have accomplished by starting with a 10 year term.