Cheap Life Insurance Quote – Why Is It Required?

Life Insurance is a kind of business contract between the insurance company and the person in requirement for the insurance. Some insurance companies also offer partnership in the company profits to the policy bearer. This type of insurance is especially beneficial in families where only a single family member earns.

You can not predict the untimely death of your loved one or the sole financial supporter of the family? Neither can you do something to prevent an accident or any critical situation. At this time the life insurance plan offers you financial support. Moreover there are cheap life insurance quotes that are available in the market to provide you with an estimate of your investments beforehand.

According to the policy to attain the insurance benefits the policy bearer agrees to pay a certain amount of money monthly or annually as per their convenience. In case of accident the company also pays if the person suffers serious permanent physical disability such as loss of limbs or if other body functions do not work like sight, hearing etc. Also if a person dies by putting himself in risk such as parachuting, paragliding, traveling in aero-plane, taking part in military war, the company does not cover such conditions.

Today the market has various Life Insurance brands in the national, international and universal market. So we need to do a lot of research before choosing a single plan. The online tool that helps you in assessing this is a cheap life insurance quote.

Make it a point to check if the policy covers all the funeral and catering expenses including financially supporting the family in future. Carefully go through the agreement and policy papers and also the terms and conditions before becoming a member of the insurance plan.

Do not ignore your budget and affordability, after all the best plan for you will be the one you can easily afford. A cheap life insurance quote enables the insured to plan the budget as these quotes provide a snapshot of your investment requirements for any insurance policy. Avoid running after brands and attractive advertisement instead you can even opt for local but reliable small insurance companies that too are flooding in the markets.

Try a cheap life insurance quote and go for the best policy on offer. In case of insurance claim at the time of the insurer’s death the family of the insurer needs to produce a legal death certificate. The money is paid to the beneficiaries as mentioned by the insurer in the detail form and agreement papers.

The company is cautious due to many false insurance claims, false accidental deaths and false illness. In spite of the fact that such actions are a punishable offense, a number of people do it in order to make quick money and become rich. Life Insurance not only guarantees support after your death but these days there are insurances for pets as well. Life is precious not only for us but also for the people in our lives who love us.

Which Cash Value Life Insurance Policy Is Better? How To Compare

When considering the purchase of permanent life insurance (i.e. whole life insurance, universal), what methods should consumers use as a basis for comparison? Because permanent life insurance creates equity, one cannot look at the initial premium cost alone. Because whole life insurance, offered primarily by mutual insurers, and universal life insurance, offered primarily through stock insurers, create cash value in different ways, looking at whose cash value is higher ‘in a vacuum’ is also not advised. So how can you compare easily?

(1) Let the Agent do the work
One option is to tell the agent you’re working with to create illustrations (projections of values) by eliminating all but one variable.

Premium
Ask them to have each company’s product illustration have the same premium figure paid for the same period of time. Pick a point in the future and see which cash value is higher. If all of the other variables are the same (i.e. underwriting class, interest or dividend rate, face amount), the policy that generates the higher cash value is the more competitive contract

Cash Value
Ask the agent to solve for a desired income stream or cash value accumulation at a specified point in time (i.e. a certain age). For example, tell the agent you want to see policies that can generate $500,000 of cash value at age 70 with the same death benefit and same underwriting class. The computer systems can do this. If all other variables are the same, the policy with the lower premium is more competitive.

The disadvantage of having the agent run these ‘special requests’ is that you’re probably tipping them that you’re ‘shopping the market’ and, therefore, they may become defensive and try to talk you out of something that you want to do. However, if a trusting relationship has been established, they shouldn’t have an issue with this type of request.

(2) Internal Rate of Return (IRR)
Ask the agent to include the IRR report on the life insurance quotes. The internal rate of return on either cash value or death benefit, simply shows a rate of return on the premium dollars spent. At any point in time, the IRR report will show a percentage rate of return (i.e. 5%) on the ratio of premium spent to cash value accumulated or premium spent to death benefit. Asking for the IRR report will show that you’re concerned about performance, and not necessarily shopping. The policy with the greater IRR is the more competitive contract.

Once you’ve determined the competitiveness of the insurance policy you’re considering, there are other factors to consider before determining the best value. First, and foremost, is how is the IRR generated…on a guaranteed or non-guaranteed basis. If policy ‘A’ has an IRR of 3.5 on a guaranteed basis and policy ‘B’ has an IRR of 4.25% on a non-guaranteed basis which do you choose? Next is the strength of the company. Finally, is the relationship (or lack thereof) you want to have with an agent.

All of these factors should go into determining which policy and product is the best value for you.

Why Buy Term Life Insurance and Invest the Difference

If you were to die tomorrow, who would suffer financially? This is the planning question you use to decide whether or not you need life insurance.

If the answer is no one, it’s simple. You don’t need life insurance. If the answer is someone – your spouse, children, parents or business partners – you do. When the answer changes from someone to no one, your need for life insurance just went away. So should the policy.

So, let’s suppose, at this point in your life, the answer is still someone. You need life insurance. But what kind of life insurance? Agents are showing you all kinds of exotic, enticing plans that have all kinds of bells and whistles. Should you buy them?

The title of this piece clearly tells you where we, at Snider Advisors, fall on this issue. To be clear, we are comparing permanent insurance, also known as a cash value policy, against term life insurance, for the purpose of providing a death benefit.

I’m not saying that it is never acceptable to purchase a cash value policy. Permanent insurance does make sense for a very small minority of people. A family with a special needs child will need to provide for that child’s care for the rest of his or her life; special needs trusts are typically set up with cash value life insurance policies to accomplish this. Wealthy individuals also utilize cash value life insurance policies to pay their estate taxes, and business owners often need permanent policies for their succession planning. These people are using the product to accomplish a specific goal, which is likely different than yours.

If you need life insurance, your goal is probably much simpler: to leave a check for your dependents in the event you should die. The death benefit that your family needs can be accomplished with term insurance for a pretty darn good value.

For example, a 35-year-old healthy male, who does not use tobacco, will pay about twenty dollars a month, for $1,000,000 of term coverage, for 10 years. A permanent policy premium for the same amount of coverage would be about twenty times that much!

Term insurance is pure risk management. It pays for the cost of insurance during the specified period of coverage. Wasn’t that your goal?

Permanent, or cash-value, insurance policies are meant to be a long-term vehicle that combines insurance with an investment account. A portion of your premium goes towards your insurance coverage, while the rest is directed to a separate savings account.

There are three types of permanent life insurance: whole life, universal life, and variable life. The difference between each of these policies is essentially how the separate savings account is invested.

Whole life is invested very conservatively in cash, money markets, and bonds. Universal life tracks an index, such as the S&P 500, and variable life is invested directly in the stock market. With variable life, the policy owner can self-direct his or her investment choices.

All the “benefits” of permanent, cash value life insurance need to be carefully scrutinized:

In the first three years or so of a permanent policy, the cash value is eaten up by commissions and expenses. Be aware that an insurance agent will receive 50-100% of your first year’s premium.

How about return? James Hunt, actuary for the Consumer Federation of America, who has analyzed thousands of these policies, notes that permanent policies hardly ever yield a reasonable return unless held for twenty years or more. And what exactly is “reasonable?” Be sure you are analyzing the internal rate of return of the policy, which is the return net of fees and expenses.

Most Americans cannot get by with a 4% withdrawal rate. In fact, the vast majority will need a low double-digit yield from their portfolio to sustain thirty or more years of retirement. This would be nearly impossible to accomplish with a permanent life insurance product.

The words “professional management” should scream high fees to the consumer. What are these fees? I can bet it’d be a surprise to the agent, if he or she could find out. These almost never get discussed because they are hidden and blurred in the product.

On top of these fees and the commissions paid to the agent, you will pay surrender charges to get out of the policy. These charges often apply for 10 years or more.

Add inflation to the picture, and it’s easy to see that the investment portion of these policies almost certainly do not match up well to your financial objectives. Moreover, the investment choices in these policies are usually lousy. In our opinion, you are much better off self-directing in an IRA.

Cash value life insurance does come with favorable tax treatment, often called a “turbo-charged Roth IRA” by agents. In theory, it is. You pay the premium with after-tax dollars and the earnings grow tax-deferred; however, the cash value is not always “tax-free” as many agents claim.

If you surrender or cash-in the policy, and the total amount of cash value returned to you is less than the total amount of premiums paid, it is considered a return of principal and is not taxable. If the cash value returned to you is greater than the amount of premiums paid, the amount in excess of premiums paid is considered a “gain” and is taxable as income. If the policy you surrender is considered a Modified Endowment Contract (the company can inform you if it is), cashing-in or borrowing against the cash value may be fully taxable. You should consult a tax advisor if this is the case.

You can take out loans from your cash value tax-free, but agents fail to mention that by doing this, you are greatly increasing the chances that your policy will lapse long before the nice illustration shows, meaning that the coverage you think you have to a certain age will expire unless you pay a higher premium (often prohibitively so). If you do not pay the loan back, it is subtracted from your death benefit.

Don’t forget one other potential tax trap. If you’ve borrowed from the policy and then let it lapse, the investment earnings you’ve withdrawn become taxable. So if you aim to use the policy for income in retirement, you could end up facing a substantial tax bill late in life when the last thing you need is to be shelling out the big bucks to the IRS.

Now, let’s talk about risk. Just because the premiums are invested in short-term money instruments does not mean there is no market risk. There is less market risk than, let’s say, a mutual fund. There is, however, substantial interest rate risk.

If interest rates are high, the cash value of the policy will grow accordingly. However, a low interest rate environment will diminish the cash value of your policy as company fees and insurance coverage costs are applied. If this happens for any prolonged period of time, you run the risk of losing the bulk of your cash value, if not all of it.

Another hidden aspect of cash value life insurance is that if you, the insured, die, the only death benefit your beneficiaries will receive is the face value of the policy.

But what about all that cash value? In most scenarios, the insurance company keeps the cash value to help pay out the death benefit, which wipes out all that hard-earned savings. Some policies specify that beneficiaries will get both the face value and cash value, but it comes with a price.

Now for a word that insurance agents love: guarantees. Most insurance agents only highlight the non-guaranteed illustration showing a return of 8.5% or so. They spend very little time showing the guaranteed illustration because it doesn’t look so hot and would likely kill the sale.

Put bluntly, insurance agents are salespeople. While they are noble in their efforts to protect families in the event of premature death, most permanent life insurance recommendations are more beneficial for the agent, in the form of generous commissions, than they are for you.

In our opinion, cash value life insurance is simply not the most efficient and effective way for you to manage the financial risk, to your family, of your premature death. The truth is the policies almost never work the way they are explained in the sales pitch and you’re much better off following the old saw, “Buy term and invest the difference.”

No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice unless specifically stated as such. All investments involve risk including possible loss of principal.

AIG Life Insurance – Agent Marketing Reflections

AIG Life Insurance Company, as part of the American International Group, was the global international leader in the financial services industry. This giant has various operations in over 100 countries with additional services that include property casualty insurance, asset management services, and purchasing and underwriting subprime loans. Without the massive and controversial United States bailout, it would be in bankruptcy.

AIG has lost their coveted super high insurance ratings, where the major rating firms annually miscalculated their business practices. Now they have begun a reorganization that will constitute major selloffs while refocusing on once again becomes a dominant insurance company. Stockholders saw stock prices plummeting from its high by over 90% before now starting to stabilize.

Your big AIG question should be: Has AIG learned their lesson? Moreover, if you now or previously represented them, Have You learned your lesson?

Five things contributed to the choice of many American insurance reps to sell their insurance products to clients.

1. GREED Selling term insurance offered by AIG Life Insurance provided representatives with commission payouts often 20 to 30% higher than other major competitors.

2. SIZE Insurance representative implied to prospective clients that dealing with the largest company, meant it had to be the best. Otherwise, how could it be the largest?

3. RATINGS Many insurance reps only will sell products of the highest rated insurers. They tell themselves and clients that means financial security. Well the atomic rating bomb has exploded, injuring millions.

4. PRICE The easiest way to sell term life insurance, is to offer your prospect the lowest price on the market. Do clients buying AIG Life coverage live longer so rates are lower? Are AIG internal expenses lower, so rates are lower? (Like an expensive resort meeting in Arizona funded by American taxpayers) Do they pay their reps less? (See #1) A full combination of these would be the only way rates could be lower then competitors.

5. BUYING BUSINESS The quickest way to jump the ladder to rise upward, is for an insurance company to “buy business”. As the insurance company, you attempt to give as many clients now by whatever it takes to get more policies sold, and worry later about when claims have to be paid out. Baiting the hook was easy. Sucker in agents with higher commissions, the lowest term insurance rates, and thinking they were representing the smartest insurer out there.

AIG Life Insurance is still “buying business” today, after all the turmoil of internal problems. Watch television and you will see a closely affiliated company offering term life insurance at rates up to 70% less than others. If you somehow catch the fine print, you will see AIG mentioned as the insurer. An excellent way for AIG Life Insurance to bypass insurance representatives, and still fool consumers. A slight twist, but business as usual for them.

Selling insurance to clients should reflect the conscience of an insurance representative in recommending the right product and the right company. There are over 600 life and health insurance companies offering products in almost every state. If you are selling based highly on commission rates, company size, ratings, or price, you are probably doing a disservice to your clients.

THE BEST POLICY IS HONESTY

Finding Affordable International Travel Insurance

Most people enjoy traveling abroad, but there are some risks involved in the trips. No one wants accidents to happen but they do because we have no control over them. This means that you should never travel without international travel insurance which can be of great help in case you find yourself in trouble in a foreign country. The insurance policy should cover for any loss of baggage, illness and also death.

Some people feel strong and think that they can take care of themselves. However, you are wrong because you never know what will happen to you. Get cheap international travel insurance and you will be in a position to pay your medical bills when involved in an accident. People keep losing their baggage while on trips and you should not count yourself out. Keep yourself and your items covered with an insurance policy and things will be easy even when you get into problems. In a foreign country, you have no one to help you, but you can turn to your insurance company and claim compensation on all the items lost.

Getting international travel insurance helps you to remain calm and at peace while traveling. You will not be thinking of financial losses once you get good travel insurance cover. The travel insurance should compensate you if you are delayed during the trip. Cancellations can also cause you financial loss and you need to be compensated. To most people, travel insurance is about medical expenses. This is also good for you because you get health care without delay and the bills are cleared for you. Make things easy by getting insurance cover and your trip will be smooth without any problems.

To some people, international travel insurance is wastage of money but this is something vital and you may put your life at risk. Having an insurance cover you can think straight and also be sure of compensation if things fail to go in the right way. When looking for the cheapest insurance cover, always consider the services provided and not the price. This will ensure that you get the best to keep you protected. This is one of the most important things that you need to do when getting ready for a trip.

You need to understand that the benefits of international travel insurance are more than what you invest when applying for the insurance policy. Visit several website and see how insurance companies help in your situation which can be too costly for you. Taking sometime to do some research will ensure that you get the best out of your money. You can only do this by comparing the quotes before you purchase the policy. This will make you get affordable travel insurance and enjoy all the quality protection that you require on your trip.

Make sure that you get international travel insurance before you leave your country. Do no risk thinking that everything will be fine, it’s better to be safe than sorry.