Monday, July 4, 2022

What Is The Point Of A Life Insurance Policy

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Pick A Reliable Insurance Company

Whole life Insurance Explained | Investment or Scam?

Choose an insurance company with an extensive track record of success so that itll be there your entire life and long into the future when thinking about what youll leave to beneficiaries. Making financial plans in this strategic way protects what you have now while building cash value resources for the future, no matter what life throws at you.

If you think whole life could play a part in your financial future, talk to a financial professional one who understands and explains all the options for you and your family.

This kind of guaranteed coverage allows you to financially safeguard your loved ones, leave them money, and set up a stable, tax-sensible retirement asset.

What Can Affect Your Eligibility

As mentioned previously, there are different factors that will directly affect how much youll have to pay in premiums. In some cases, these same factors can even cause the insurer to deny your request.

Here are 8 factors that affect your eligibility and insurance rates:


Naturally, the type of policy youre purchasing will affect your expenses. Term life insurance has lower rates than permanent life insurance, for instance.


Because of the risks that are associated with our age, younger people will get the best rates in the market. Its important to note that older people might even have a harder time getting some life insurance policies.


If you live in areas that are considered riskier, your insurance rates might be higher.


Careers that involve risky activities such as working in law enforcement or as a firefighter, police, skydivers, truck drivers, private or commercial pilots can result in higher rates.

Medical History

If your family has a history of genetic diseases such as cancer or heart conditions , it will mean that youre predisposed to also have one of those diseases. Consequently, you will probably have to pay higher rates.


It is scientifically proven that women live longer and healthier lives than men. Because of that, women tend to be charged lower rates.


Your driving record will also affect your eligibility and premium rates. Additionally, if you drink on a regular basis and smoke, youll also pay more money.

Top Life Insurance Statistics

  • In 2020, 54%of Americans are insured, down from 57% in 2019, with 1 in 3 families remaining uninsured.
  • 66% of Americans, or 2 in 3 individuals, buy life insurance to transfer wealth to other generations.
  • 44%of Millennials overestimate the cost of term life insurance by 5x.
  • In 2018, 28% of Millennials said they would buy life insurance online. Today, 29% of all consumers say they would.
  • There are approximately 267 million life insurance policies in place in the United States.
  • 80%of consumers say buying life insurance is a relevant financial planning topic for their household.
  • 202016%

    Something to note here is the relatively small ownership gap for the life insurance sector .

    The ownership gap percentage is essentially the difference between how many people say they ought to own a life insurance policy and those who actually do.

    This, therefore, suggests the industry is performing quite well and the vast majority of all consumers who feel they need coverage are making a purchase.

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    Cons Of Whole Life Insurance

    While there are many positive aspects to whole life insurance, there are also some disadvantages to consider. A whole life insurance policy doesnt reach its full potential until it has been in force for a number of years and remains much more expensive than guaranteed level term life insurance. For many would-be policyholders, its overkill.

  • Cash Value Does Not Accrue Immediately. A whole life insurance policy builds cash value over a period of time, not right away. In most cases, cash value doesnt really begin to accrue until the policys third year, after which value builds steadily for a period of many years. Policyholders who expect to be able to borrow against their policies immediately may be in for a surprise.
  • Surrender Charges Can Persist for Years. Every whole life policy levies surrender charges for premature withdrawals. Surrender charges may apply for as long as 15 years from a policys effective date, albeit at lower levels than soon after issuance. Before finalizing your insurance contract, carefully read the surrender clause to understand when you can begin to withdraw funds without penalty.
  • Whole Life Insurance Is Complicated. Whole life policies are governed by detailed, dense contracts that differ by insurer and policy design. Its risky to shop for and purchase whole life insurance without the help of an unbiased insurance agent and a financial advisor acting as a fiduciary that is, in your financial best interests.
  • The Uncertainty Surrounding Life Insurance For Children

    Types of life insurance: Which plan is right for you ...

    Along with uncertainty about their spouses coverage, many consumers are on the fence about insuring their children.


    Only 1/3 of people feel they have a solid understanding of childrens life insurance, yet when the product is explained to them, 47% of people agree to the need for insuring a minor with a permanent policy.

    Just 1 in 5 parents or grandparents surveyed has actually purchased a permanent childrens policy for their loved ones.


    Asked their likelihood of purchasing a policy in the next year, 67% of respondents say they are not at all likely to.

    Those who do purchase life insurance for their children say they do so to:

  • cover funeral expenses
  • provide their children with funds for the future
  • secure a low-cost policy, and
  • protect them against unexpected health changes
  • Interestingly, 1 out of 3 policyholders have increased their coverage over the years, and the same number has borrowed from the juvenile policy their parent or grandparent purchased for them.

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    What Are The Benefits Of A Whole Life Insurance Policy

    One of the most appealing benefits of purchasing a whole life insurance policy is this: As long as you pay your premiums, your death benefit will never expire. It is guaranteed to be paid regardless of when you die, whether thats tomorrow, in five years, 80 years or even further away.

    Protecting Yourself Against Large Losses

    There are some risks that pose such a large potential financial loss that you are advised to insure yourself against them, even though the risk of them ever happening is very small.

    Typically, this includes risks related to your home, your car and your health. Such types of insurance are considered to be primary insurance policies, meaning that you should insure yourself against those risks even if you do not insure yourself against any other risks.

    The reason for this is simple. Whilst you may be able to recover financially from losing small and relatively inexpensive items, such as a laptop or stereo equipment, large losses, such as those relating to your home, are much more difficult to recover from by yourself.

    In the event that something were to happen to your home, for example, being adequately insured could mean the difference between having the money to rebuild or repair your home, or losing your home and becoming homeless.

    Being insured becomes even more important if you have dependents who rely on your source of income, especially, when that income is limited to begin with.

    Whilst wealthy individuals may have the funds to recover from and absorb large financial setbacks, most people do not have large amounts of money saved up in reserve for emergencies.

    In such cases, not having insurance will therefore not only adversely affect your quality of life, but will also affect the quality of life that your family is able to lead.

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    Final Expense & Burial Insurance

    Depending on who you are speaking with or what keywords you typed in Google, you might see final expense insurance or burial insurance.These two types of policies are precisely the same, they just go by two different names. Final Expense and Burial Insurance are both types of whole life insurance policies that focus on people between the ages of 50 to 85.These policies wont offer more than $25,000 in death benefit and are much easier to get approved for if you cant get a traditional life insurance policy. The idea is to use these policies for your final expenses or burial and usually nothing more.

    How To Choose The Best Life Insurance Policy

    3 Different Types of Life Insurance Policies – Life Insurance Explained Simply

    Purchasing a life insurance policy is considered essential nowadays because it ensures that your dependents will have the financial resources to cope with their daily expenses in case of your unfortunate and untimely death. While life insurance is not necessary for every individual, it definitely plays a crucial role in ensuring the financial security of the family of an income-earning individual, and it becomes all the more important for individuals who are the sole earners in their families.

    Insurance can also come in handy for individuals who wish to repay personal loans or home loans, or those who have children that require funds for marriage or higher education. In essence, life insurance policies serve as contingency plans that ensure that your nominees or family members will remain financially stable in case of your demise as the insurance company will pay them a lump sum amount. Based on the kind of policy you purchase, you can also avail a healthy savings-cum-investment instrument that will qualify you for tax benefits as well.

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    Life Insurance Can Cover Final Expenses

    The national median cost of a funeral that included a viewing and a burial was $7,640 as of 2019. Because many Americans do not have enough savings to cover even a $400 emergency expense, having to pay for a funeral can be a substantial financial burden. If you have a life insurance policy, your beneficiaries can use the money to pay for your burial expenses without having to dip into their own savings or use credit.

    Some insurers offer final expense policies. These policies have low coverage amounts and relatively inexpensive monthly premiums.

    Functional Definition Of Insurance

    Insurance is a cooperative device to spread the loss caused by a particular risk over some persons exposed to it and who agree to insure themselves against the risk.

    Thus, the insurance is

  • a co-operative device to spread the risk
  • the system to spread the risk over many persons who are insured against the risk
  • the principle to share the loss of each member of the society based on the probability of loss to their risk and
  • the method to provide security against losses to the insured.
  • Similarly, another definition can be given.

    Insurance is a cooperative device of distributing losses falling on an individual or his family over many persons, each bearing a nominal expenditure and feeling secure against heavy loss.

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    What Is Life Insurance

    Life insurance is a contract between an insurance policy holder and the insurance provider that guarantees to pay the designated amount to the beneficiary in case of the death of the insured person. In exchange for premium payments, the beneficiary named in the contract will receive a sum from the insurer in case of sudden demise of the policyholder.

    Let Us Understand Some Commonly Used Terms In Life Insurance:

    Personal Risk Factors Influencing Your Life Insurance ...
    • Life Assured: It is the person who is covered under the insurance policy
    • Proposer: It is the person who pays the premiums of the policy. For example: If you have bought the policy for yourself, then you are both the Life Assured as well as the Proposer. Similarly, if you purchase an insurance policy for a family member, then you are the proposer and the family member is the Life Assured.
    • Nominee or Beneficiary: It is the person you appoint at the time of buying the policy to receive the benefits of your insurance policy, in your absence.
    • Insurer: The insurance company that sells the life insurance policy is called the Insurer .
    • Life Cover: It is the amount that the Insurer will pay to your Nominee in case of an unfortunate event.
    • Maturity Benefit: For Protection + Savings policies, the Insurer pays a certain lump sum of money on completion of the policy term. This amount is known as the Maturity Amount.
    • Premium: A premium is the amount you pay to the insurer for receiving the benefits of the insurance policy. These payments can be made on a regular basis throughout the policy duration, for a limited number of years or just once, as per the options available under the policy you choose.
    • Premium Payment Term: The number of years for which you pay the premiums is known as the Premium Payment Term.
    • Policy Term: The number of years for which the Life Cover continues.

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    Life Insurance That Is Permanent

    Permanent life insurance is the other significant group. You pay a premium for as long as you live, and your beneficiaries receive a benefit when you die. Permanent life insurance sometimes includes a saving component known as cash value. Permanent life insurance is classified into three types: whole, universal, and variable.

    Is Life Insurance Necessary For You

    You may wonder whether you need life insurance. Naturally, none of us wishes to die nor do we even think about the possibility of dying.

    However, were only human and our lives are like a precious crystal that could break at any time.

    The future is uncertain, and we never know what is going to happen in the next few years, months, days, hours. If youre not sure about getting an insurance policy, think about your family.

    Think about your spouse. Think about your children, if you have any. Do you think they would be able to support themselves financially without you and your income?

    If you get a policy and were to pass away suddenly, your family would be financially secured. Your children would have money to pay for their college tuition.

    Your spouse would have money to pay off all of your debts. The family would always have a place to live as they would be able to pay the mortgage.

    Take these things into consideration and then ask yourself the same question once again. Is life insurance necessary for you?

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    Final Word On Life Insurance With No Beneficiary

    To sum it up, if there is no beneficiary, your life insurance death benefit will go to a contingent beneficiary. If there is no contingent beneficiary, your death benefit will go to your estate. Once in your estate, your death benefit will be taxed and used to pay your debt. If no heir can be found, the state will get to keep your assets.

    It is vital to keep your beneficiaries up-to-date on your insurance policy and even name a few contingent beneficiaries as well. Another way to ensure your assets, including your death benefit, goes to your family is to make sure you have a will. Having a will can speed probate court up and get your loved ones the things you have worked so hard for.

    Outside Sources

    Your Dependents Wont Have To Worry About Living Expenses

    What Types Of Life Insurance Policies Are The Best?

    Many experts recommend having life insurance that’s equal to seven to 10 times your annual income. If you have a policy of that size, the people who depend on your income shouldn’t have to worry about their living expenses or other major costs. For example, your insurance policy could cover the cost of your children’s college education, and they wont need to take out student loans.

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    No Exam Life Insurance

    No medical exam life insurance can be either a term life or permanent life insurance policy.These policies will not require you to take a medical exam to be approved. However, you will mostly find these types of policies to be offered as term life products. While these policies wont require an exam, they still go through the remainder of the underwriting process.Such as requesting medical records, telephone interviews, and can take a few weeks to get approval. No exam life insurance can also have other benefits like instant approvals and immediate decisions. Those policies are known as Simplified Issue No Exam life insurance policies which we discuss below.


    What Happens When A Whole Life Insurance Policy Matures

    When the policy matures, it simply means that the cash value of the policy now equals the death benefit. If your policy matures when you reach 100, it will continue to cover you until age 121and you wont have to pay premiums. Once a policy matures, the insurer may pay the cash value to the policy owner.

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    The Cost Is Guaranteed To Stay The Same4

    Your premium payments, the amount you pay the insurance company each month, will never go up.5 By remaining level, these premiums may potentially feel much more affordable over the long run. While whole life premium payments in the early years are higher than those for term life, the advantages increase significantly as time passes. For retirement planning, this would mean guaranteed availability of life insurance in your senior years, at a fixed cost.

    Simplified Issue Life Insurance

    Life Insurance â A Disruptive Industry â Harbour Wealth

    Simplified issue life insurance is most commonly a type of term life insurance that allows you to get approved for life insurance extremely fast. These policies are often called No Exam life insurance policies however, they go a bit further with eliminating things from the underwriting process. With a Simplified Life insurance policy, along with no medical exam, you also get to avoid a telephone interview, medical records, and a lengthy application process. Insurance companies access your personal data from several companies to make an instant decision on your insurability. The leading companies are the Medical Information Bureau , Intelliscirpt for your prescription drug history, and your Motor Vehicle Record to check your driving history.A simplified issue life insurance policy can offer you term life insurance coverage in as little as 5 minutes.

    Check out the comparison of the two products below:

    Traditional Term

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