All About Life Insurance Terms

Considering purchasing convertible term life insurance? How exactly does a convertible term life insurance policy work? Is it possible to find a cheap convertible term life insurance policy? These are all important questions to ask and to understand the answers to before you decide to make the important decision of which type of life insurance coverage to buy.

At the time of deciding what type of life insurance to buy, a person must know every single type offered in the market in order to truly make the best choice for their specific coverage needs. It is true that perhaps many companies simply refer to their policies as term or permanent life insurance, but a person must know that there is much more to that and such is the case of convertible term life insurance. In this article you will be able to know what convertible term is and the many things associated with this type of life insurance.

What Exactly Is Convertible Term Life Insurance?

Life insurance is perhaps easily understood because it simply is a contract between a person and an insurance company. The contract simply states that the person must pay monthly premiums for a certain period of time in exchange for a death benefit paid to the beneficiary in case of the insured’s death.

A term life insurance policy is simply a policy that will cover for a specific period of time, but with a convertible term life insurance policy you will have the ability to transform your policy from a temporary one to a permanent one.

What this means is that if you have a policy for 25 years and you have a convertible term life insurance policy, then you will be able to change the term policy into a whole, universal of variable life insurance policy (depending on the company).

Things To Know At The Time Of Purchasing Your Policy

Like any other product, there are a few things that a customer must know in order to make the convertible life insurance experience a successful one.

Health and Family History: At the time of applying for a policy, whether you are doing it online or in person at a local agency; make sure to have some general information about your medical history. Although companies have the right to access your files when you apply for a policy (with your permission that is), most of the times they will ask you questions about your health and family history. The more prepared you are to answer these questions, the easier the quoting process will be.

Amount and Duration of the Policy: You must also have an idea of how much life insurance you wish to buy at the particular time. The reason for this is that with term life insurance policies a person must choose an amount at the time of getting the policy. There are tools online or that the company has that will help you get the amount you will more than likely need. It is also important to understand that the particular amounts change from company to company. Also, make sure that you know the amount of time you want the policy to last. Some common ones include 15, 20, 25 and even 30 years.

The Beneficiary: Last but not least it is important to be completely certain of whom you want your beneficiary to be. The reason for this is that many people actually don’t know at the time of signing the policy and just put the first person in mind. However, many insurance companies are actually very strict when it comes to beneficiaries and they wont let a person make a change unless they fill out the appropriate paperwork. Nevertheless, it is important for a customer to know the company and their stand when it comes to particular beneficiary changes.

Lower Premiums Compared To Other Types Of Policies

Compared to many of the other types of policies, the convertible term life insurance policies give the customer a better choice. The reason for this is that a person will have the main option of converting the term life insurance to a permanent one or of simply letting the policy expire in their own hands. Having a term life insurance first also helps a lot, simply because term life insurance has lower premiums than a permanent life insurance policy.

The difference for these cheaper premiums is simply that with a term life insurance policy, the death benefit is not guaranteed to the beneficiary (particularly because the insured can still be alive at the end of the policy). Because of this reason, a person that chooses the option of having a convertible life insurance policy will have the great option of paying low premiums at first.

Medical Examinations

Another good thing about convertible term life insurance policies is that they allow a person to convert regardless of the medical condition and health of the insured. If the person in the policy chose the option of having a convertible term life insurance policy and they have paid premiums at the right time, then they have by law the right to extend their coverage if they choose to.

It is also important to highlight that this change in coverage must be made without the insured being forced to take a medical examination. The freedom of continuing the coverage regardless of everything and not having the chance of being denied might be the reasons why this insurance option is so popular nowadays.

No Premium Increases For Medical Problems

The last thing worth talking about when it comes to convertible life insurance policies is that at the time of changing your policy you cannot be charged any additional premium for any medical problems that you may have. It is important to highlight that I’m not referring to the fact that your premiums will not go up in value, because when converting from term to permanent there is always a chance of that. What I’m referring to is that at the time of converting your term life insurance to a permanent one by law you are protected against a raise in premium based on a medical condition.

No One Policy Is Right For Everyone

It is important to note that this type of plan is not for everyone, because some people just rather have a permanent policy right away or some others just want to be covered until they get retired. However, this might be exactly what some people are looking for simply because it starts as perhaps the low cost choice.

Compare Quotes To Find The Best Value

Compare the prices of regular life insurance quotes against the prices of convertible term life insurance quotes to find the best value. If you want the freedom of having a term policy and being able to convert it in the near future to a permanent life insurance plan that covers you for life then go ahead and start shopping around for your convertible life insurance plan!

 

How To Get Approval Quickly

What are some of the life insurance criteria for being approved quickly? Many people are interested in finding a quick approval life insurance policy as they do not want to go through a long and drawn out medical underwriting process. Enforcements and the criteria for people to be approved quickly into life insurance policies within life insurance industry are simply made by the companies so that they don’t lose money when it comes to claims.

For life insurance companies there is a risk associated with insuring someone because you are basically either going to have to end up paying the death benefit of the person that is deceased, or you will gain money by their paying of premiums; however, it’s important to understand that there are applicants that have it easier when it comes to life insurance policies, and that the life insurance criteria for being approved quickly varies according to many factors and is not the same from company to company.

Age Is Perhaps One of the Most Important Criteria to be Approved Quickly For A Life Insurance Policy

Although not all the companies are the same, one of the most important things about life insurance is to try and get the policy while you are still young. Just like the health insurance industry, the life insurance industry understands that the risk of dying increases as your age increases. It is because of this reason that premiums for younger people are less than those of older individuals, and it is also because of this that many life insurance companies are starting to use medical examinations as one of the most important factors in being approved.

An example of this would be a person trying to get a term life insurance policy in an insurance company that has offices all across the United States. If the person is younger or of middle age, endless possibilities will arise because they will be able to purchase term life insurance (temporary life insurance that only covers you for a specific amount of time) or a permanent life insurance policy (a type of policy that covers you for life) because the insurance company knows that the chances of you dying young are very slim (unless you have a critical illness that is). It is for this reason that many senior citizens have trouble qualifying for life insurance and they must go apply in companies that specialize in senior citizen products.

It is important to highlight that just because a person is old it does not mean that they won’t be approved easily for life insurance. If you are a senior citizen of 50 years of age or older and you are in perfect health conditions with no risk of any serious illnesses, the life insurance company might even propose a term life insurance policy, a whole life insurance policy or any other type of policy; but it all depends on how good your health is.

The Credit Report and It’s Role For a Person to Be Approved Quickly

Another way or criteria for which a person can be approved very quickly when applying to life insurance is credit reports. Many people argue about this measure because they don’t think its fair that their credit report is now taking the place of any paperwork and it is becoming more and more important in all aspects of life. The reason credit report can get you accepted very quickly is simply your commitment to the company.

What this simply means is that if you have a better credit report it will be more credible when you tell your company that you will be paying premiums every month at the exact same date and the entire amount without a penny less. On the other hand, if you have a bad credit some companies might not even take the risk of insuring you because they don’t want to insure an individual that is true to his or her word. As you can see credit report has not become a major thing when it comes to life insurance companies.

Your Lifestyle Can Help You Get Approved Quickly

Last but not least in order to get approved quickly you should be a person that does not take many risks in life. This means that your job is not a high risk one and that you do not have any hobbies that threaten your life. If you want to see an example of what this means let us compare a firefighter with a lawyer. A firefighter will more than likely be faced with life threatening conditions every single time they go into a fire. They have to run into a house consumed by flames to prevent other houses from burning or to save a life. On the other hand you have a lawyer that spends most of his or her day sitting behind a desk wondering about how to win the case. All they do that can cause harm their lives other than health related conditions involve driving to and from work, and to the courthouse. Unfortunately for a firefighter it will be a little bit more difficult for a company to insured them because they know the risk associated with their job. The same thing applies to hobbies.

Who do you think will have an easier time applying and getting accepted for a life insurance policy? A person that enjoys sailing, sky diving and kayaking in wild rivers or a person that enjoys going out on the beach, spending time with the family and maybe on occasion playing chess? The answer is the person that has the hobbies with the least degree of danger. Life insurance is a business and like any other industry, its companies are concerned with making money and not losing money.

Compare Life Insurance Quotes Because Of Differences In Underwriting

As you can see the criteria for being accepted when you apply for a life insurance policy is not that hard. You must always try to apply when you are younger not mattering if you want a term or permanent life insurance policy (always remember that the younger and healthier you are, the less your premiums will be). You must also have an OK credit report that should be good when checked by the life insurance company. This helps because they can see that they are insuring a person that is making a commitment and will try to pay premiums on time.

You will also have to show the life insurance company that the risk of insuring you is not that great and show them that your hobbies are nothing to be worried about. If you follow all these steps a life insurance company will never deny you and they will be happy insuring you. The criteria for an easy acceptance in the life insurance world is not that hard; go and get the policy that you have always dreamed of!

 

The Reasons Adults and Children Need Life Insurance

When families make the decision to purchase life insurance, they are often in the process of experiencing a major life-altering event such as getting married, starting a family, or purchasing a home. In fact, there are many good reasons for purchasing a insurance policy and most of us, at some point in our lives, will realize that owning insurance is very important to ensure our sense of security. Can you even imagine the anxiety of driving on the freeway without auto insurance? All of us know that at some point an accident is almost inevitable. When you purchase life insurance, you are making a plan to be sure your family will be safe from the effects of losing your contribution to the household income

Life insurance insures your life and pays your survivors.

Importance of insurance No one likes to think about the need for life insurance, but if you were no longer in the picture what would happen to the people who depend on you for financial support?. Even if the deceased has some life insurance, the amount is often inadequate. insurance is an essential part of any financial program. Your insurance coverage should be reviewed regularly as changes occur in your life, career and financial goals. Most people buy insurance to replace income that would be lost at the death of a wage earner. Proceeds from a life insurance policy also can help ensure your dependents are not burdened with significant debt when you die.

An important advantage of insurance is that the proceeds pass income tax free to beneficiaries and without going through probate. Most people think of life insurance only as a legacy something left behind after they die. If diagnosed as terminally ill, the insured may request payment of the insurance policies face amount instead of the death benefit being paid to a beneficiary. Portability Under most group policies employees can take their life insurance protection with them when they leave the company or retire and take advantage of group rates and the convenience of direct billing. Cash accumulation some insurance policies have a cash value account or investment component that lets you contribute premium in addition to the amount you pay for your insurance coverage.

Here are answers to other common questions about insurance. How much insurance you need depends on your financial situation and your specific circumstances at this point in your life. Our insurance needs calculator will help you estimate how much insurance you may need to sufficiently provide for the well-being of your loved ones. Everyone’s situation is unique and only you can determine the exact amount of life insurance you need.
Why insurance is so important for us?

On this post I’ll try to make a simple explanation about the importance of life insurance. Everyone surely die now, with health insurance, we can manage the risk of death leaves us with the things of value and benefit to families who leave when we die. With health insurance, we have to give stock to my family when we die, where the insurance company will pay the amount of money insurance money to my heirs, in this case is our family and that money can be used to pay for school children’s etc. That is the most common example of the benefits of life insurance. If expanded, the product according to each insurance company, there are many more benefits from life insurance. After we know a basic knowledge about the importance and the benefits of life insurance, then the second step is to act and find one of the best insurance companies that we can trust. Finding the best insurance companies and the right policy for our insurance plan can be hard if we didn’t know much about the terms in insurance plan.

In most families the major bread winner will have a term insurance policy as it can be very damaging to families when the main means of financial support is cut off. It is always difficult to determine if you should carry term or permanent life insurance.

Term life insurance really only offers death benefits such as funeral costs etc, so if you die then it is worth having the policy. Term insurance is the more affordable way to have death benefits. Currently term life insurance is the simplest form of insurance you can purchase. You can purchase large amounts of this insurance for a long time at very low prices. If you need to pay off a loan and may have difficulties if a family member dies or if you want to protect your children then term life insurance is an excellent insurance choice. The main benefit from term insurance is that you receive large payouts after a short time period. Having term insurance coverage is great if you are carrying debt as it can cover the debt instead of leaving your debt to your nearest relative.

It ensures that your family will not suffer the consequences of living without your earnings. You want to be sure that your family won’t have to uproot their lives and change their living standards in the event their income level is affected by your premature or unexpected death. And you can continue driving through the highway of life, without having to suffer the anxiety of wondering what will happen to those who depend on your earnings.

 

Tips From Life Insurance Agent

Life Insurance is an insurance product that pays at the death of the insured. It really should be called “Death Insurance,” but people don’t like that name. But it insures the death of an individual. Actually, what is insured is the economic loss that would occur at the death of the person insured.

Those economic losses take a lot of different forms, such as:

– the income stream of either “breadwinner” in a family
– the loss of services to the family of a stay-at-home-mom
– the final expenses at the death of a child
– final expenses of an individual after an illness and medical treatment
– “Keyman” coverage, which insures the owner or valuable employee of a business against the economic loss the business would suffer at their death
– estate planning insurance, where a person is insured to pay estate taxes at death
– “Buy and Sell Agreements,” in which life insurance is purchased to fund a business transaction at the untimely death of parties in the transaction
– Accidental death insurance, in which a person buys a policy that pays in case they die due to an accident
– Mortgage life insurance, in which the borrower buys a policy that pays off the mortgage at death – and many more.

Life insurance has been around for hundreds of years, and in some cases, has become a much better product. The insurance companies have been able to develop mortality tables, which are studies of statistical patterns of human death over time…usually over a lifetime of 100 years. These mortality tables are surprisingly accurate, and allow the insurance companies to closely predict how many people of any given age will die each year. From these tables and other information, the insurance companies derive the cost of the insurance policy.

The cost is customarily expressed in an annual cost per thousand of coverage. For example, if you wanted to buy $10,000 of coverage, and the cost per thousand was $10.00, your annual premium would be $100.00.

Modern medicine and better nutrition has increased the life expectancy of most people. Increased life expectancy has facilitated a sharp decrease in life insurance premiums. In many cases, the cost of insurance is only pennies per thousand.

There is really only one type of life insurance, and that is Term Insurance. That means that a person is insured for a certain period of time, or a term. All of the other life insurance products have term insurance as their main ingredient. There is no other ingredient they can use. However, the insurance companies have invented many, many other life products that tend to obscure the reasons for life insurance. They also vastly enrich the insurance companies.

Term Insurance

The most basic life insurance is an annual renewable term policy. Each year, the premium is a little higher as a person ages. The insurance companies designed a level premium policy, which stopped the annual premium increases for policyholders. The insurers basically added up all the premiums from age 0 to age 100 and then divided by 100. That means that in the early years of the policy, the policyholder pays in more money that it takes to fund the pure insurance cost, and then in later years the premium is less than the pure insurance cost.

The same level term product can be designed for terms of any length, like 5, 10, 20, 25 or 30 year terms. The method of premium averaging is much the same in each case.

But this new product caused some problems. Insurers know that the vast majority of policyholders do not keep a policy for life. Consequently the level term policyholders were paying future premiums and then cancelling their policies. The insurance companies were delighted because they got to keep the money. But over time, they developed the concept of Cash Value.

Cash Value Insurance

With Cash Value insurance, a portion of the unused premium you spend is credited to an account tied to your policy. The money is not yours…it belongs entirely to the insurance company. If you cancel your policy and request a refund, they will refund that money to you. Otherwise, you have other choices:

1. Use the cash value to buy more insurance
2. Use the cash value to pay existing premiums
3. You may borrow the money at interest
4. If you die, the insurance company keeps the cash value and only pays the face amount of the insurance policy.

So, does this cash value product make sense? My response is “NO!”

Cash Value Life Insurance comes in lots of other names, such as:

– Whole Life
– Universal Life
– Variable Life
– Interest Sensitive Life
– Non-Participating Life (no dividends)
– Participating Life (pays dividends)

Many life insurance agents and companies tout their products as an investment product. But cash value insurance is not an investment. Investment dollars and insurance premiums should never be combined into one product. And investment dollars should NEVER be invested with an insurance company. They are middle men. They will take your investment and invest it themselves, and keep the difference.

Think about the methods that agents use to sell life insurance, and compare them to any other type of insurance. What you’ll see is that life insurance sales tactics and techniques are ridiculous when compared to other insurance products.

Would you ever consider buying a car insurance policy, or homeowners policy, or business insurance policy in which you paid extra premium that the insurance company kept, or made you borrow from them? But, curiously, life insurance agents have been wildly successful convincing otherwise intelligent people that cash value life insurance is a good product to buy.

Care to guess why insurance agents have aggressively sold cash value insurance and eschewed term insurance?

Commissions.

The insurance companies have become vastly wealthy on cash value insurance. So, to encourage sales, they pay huge commissions. Term insurance commissions can range from 10% to 50%, sometimes even 100%. But cash value insurance commissions can be up to 100% of the first year’s premium, and handsome renewal commissions for years after.

But it’s not just the commission rate that matters. It’s also the premium rates that come into play. Term insurance is FAR CHEAPER than cash value insurance.

Here’s an example of a 30 year old male, non-smoker, buying $100,000 of coverage:

Term insurance costs $0.50 per thousand for a premium of $50.00. At 100% commission, the commission would be $50.00.

Cash Value insurance costs $12.50 per thousand for a premium of $1,250.00. At 100% commission, the commission would be $1,250.00.

So you see that it would be easy for an agent to place his own financial well-being ahead of the well-being of his client. He would have to sell 25 term policies to make the same commission as only one cash value policy.

But, in my opinion, that agent would have violated his fiduciary duty to the client, which is the duty to place the client’s needs above his own. The agent would also have to set aside his conscience.

My opinion is that life insurance agents operate from one of three positions:

1. Ignorance – they simply don’t know how cash value insurance works.
2. Greed – they know exactly how cash value insurance works and sell it anyway.
3. Knowledge and Duty – they sell term insurance.

Which agent do you want to do business with?

How do I know this stuff? Because I sold cash value life insurance early in my career.

When I started as an insurance agent in 1973 I knew absolutely nothing about how life insurance worked. The insurance company taught me to sell whole life insurance, and to discourage clients from term insurance. But, after some time of reading and research, I learned that cash value insurance is a bad deal. I began to sell only term insurance. I refused to set aside my conscience. I also went back to some early clients and switched their policies from cash value to term.

The insurance company fired me for that decision.

I found a new insurance company that only sold term insurance and also paid high commissions. I made a good living selling term insurance, so I know it can be done.

So, as you shop for life insurance, please accept the advice of an old agent. Never, never, ever buy cash value life insurance. Buy term insurance.