Whole life, universal life, and variable universal life are all being purchased more this year than last year.  But term life insurance did not show gains; annualized premiums for term policies dropped 11% in the second quarter of 2010.  I find this interesting, given that term life insurance tends to be the most appropriate choice for the majority of the population that needs to secure death benefits.

It’s possible that the slowly-rebounding economy is responsible for the shift from term to permanent life insurance products, and for the overall upswing in total annualized premiums.  For the last couple years, the recession has meant that most of the country has been tightening their budgets.  Term life insurance policies are a lot less expensive than permanent policies, so for people who needed to buy life insurance during the recession, term products were likely more popular.  But now that the economy is showing signs of recovering, people may be more apt to purchase higher-cost permanent life insurance policies that grow cash value or include an investment component.  It will be interesting to see how the numbers play out for the rest of 2010… will term life insurance policy sales bounce back, or will the growth of permanent policies continue?

A recent NPR article details how the families of servicemen and women killed in battle are being given “checkbooks” that represent the value of the fallen soldier’s life insurance policy. The life insurance companies are keeping the money in their own investment accounts, earning several percent interest, and paying 0.5% interest to the policy beneficiaries. The carriers point out that if they didn’t offer this option for the families to earn half a percent interest on the money, it might just sit somewhere, earning no interest at all. I suppose that’s true, but families should be aware that they have lots of options, and that taking the default choice of letting the life insurance company handle the money for them (and keep a good chunk of the interest earned) might not be the best one.

Trying to figure out what to do with a large chunk of money from a life insurance settlement can be difficult in the best of times, and nearly impossible when a person is grieving. It makes much more sense to sketch out the details of what your family would do with any life insurance money before that situation arises. If you don’t die while your life insurance policy is in force, the plan won’t ever be needed. But if you do pass away and leave your beneficiaries with life insurance money, it will make things a lot easier for them if the family has a plan in place and they can simply use the money as planned, without having to make decisions while grieving. And it will make it much less likely that the surviving family members will be duped by unscrupulous “advisors” or companies that don’t have the beneficiaries’ best interests in mind.

A financial advisor can provide advice, but there are also lots of financial advice websites that can provide guidance for people trying to figure out what to do with any sort of windfall, including life insurance proceeds. Planning now for what you might do with life insurance money will likely make things easier if and when you find yourself receiving life insurance following the death of a loved one.

SB 147 will allow up to $100,000 of life insurance proceeds to be exempt from the insured’s creditors.  This law will go into effect on September 1, 2010.  Until then, the current cap of $50,000 will apply.  26 states have an unlimited exemption for the protection of life insurance settlements from an insured’s creditors.  The new Colorado law will bring the state a little closer to the protections offered to beneficiaries in other states, although $100,000 still isn’t really a lot of money in terms of protecting a family’s financial future if the primary earner dies.

The Notwithstanding Blog recently published an excellent article detailing the reasons why the tiny percentage of fast food stocks owned by major health and life insurance carriers is insignificant when compared with their overall portfolios, and also not detrimental to their policyholders.  In fact, if stock market profits are used to help keep premiums lower than they would otherwise be, policyholders are financially better off than they would be if the insurance companies were invested in a less profitable stock.

Would we be better off without fast food restaurants, or with far fewer of them?  Probably.  Would we be healthier and our health and life insurance premiums be lower?  Maybe, although it’s reasonable to expect that people might find other sources for junk food.  We pay insurance companies to protect our assets and our financial futures (and those of our loved ones) in the event of an illness, injury, or death.  Their chief responsibility to us as policyholders is to remain financially solvent and profitable in order to be able to pay claims as they arise.  Investing in profitable stocks is a good way to go about that, and the fact that some of those stocks are in fast food companies is irrelevant.

In addition, I’m curious as to how many of the people who are outraged by this issue own mutual funds or index funds that hold some stock in fast food companies.  McDonalds is part of the Dow and the S&P 500, so it’s likely included in a lot of basic funds.

Certified financial planner Carl Richards had a great article on the New York Times blog last month, about why life insurance shouldn’t be treated as an investment.  The napkin drawing is chuckle-worthy, but it also makes a really good point:  for most people, it’s a better idea to keep investing and life insurance as separate entities.  There are exceptions, such as people who need to generate cash upon their death to pay estate taxes on assets like real estate or a business that they would like to pass to their heirs without selling.  For situations like that, the financial obligation won’t diminish over time and the life insurance policy needs to be permanent.  But for most people, the need for life insurance does indeed diminish over time as children finish college and mortgages get paid off and net worth grows.  For many people, the need for life insurance after retirement is low, as there is no longer an earned income that would need to be replaced.

For people who still have many years of work ahead of them – and many years of financial obligations – now is a great time to look into securing life insurance.  A term life insurance policy will allow you to lock in the premium based on your current age, and is a great way to protect your family’s financial future without taking financial risks.

Aflac is also adding to their coverage options, with higher face value policies available than they had in the past.

We work with an Aflac representative here in Colorado, who can provide life insurance as well as a range of other products for you and your employees.  Please contact us if you would like additional information.

We are independent life insurance brokers, with no allegiance to any particular company. This gives us the freedom to help our customers choose the life insurance that truly fits their financial situation and risk tolerance. We can look at a wide variety of Colorado life insurance companies and get quotes on many types of insurance and different risk classes. By letting us know your health, driving, and family history up front, we can let you know what life underwriting class you will be classified into and get you the right quotes the first time.

We have a relationship with each of the life insurance companies that we represent. This allows us to serve as advocates for our clients, and help them get in touch with the right person when they have a question about their policy.

We have a very good working knowledge of the companies we represent:

• benefit options
• stability of the life insurance companies
• underwriting and health class guidelines for each company in Colorado . Each company has a different set of underwriting guidelines to determine what classification you will be. From preferred plus, ultra preferred, preferred, standard, and many different smoking classes, we will know what company will benefit you the most based on your health history. This can save you a lot of time and frustration getting this figured out before actually applying and jumping through the hoops for each company.

We’re free. We get paid commissions by the insurance companies so the quotes are the same if you use a broker or go directly through the insurance company. Most life insurance in Colorado is done with the help of brokers because there is no disadvantage and there are many advantages to using a knowledgeable broker to guide you in the right direction. You will always get the lowest premium for the same coverage by purchasing your Colorado life insurance through us because we can shop for the life insurance plan that fits your financial situation and tolerance for risk using our expert knowledge of how each company grids pricing, underwriting guidelines, and takes risks with their money. We will also give you more personalized attention, and a balanced perspective about the advantages of choosing one policy over another. We can also act as a liaison between you and the insurance company if you ever have any questions or problems.
The Colorado Division of Insurance polices the pricing of life insurance, so no insurance company or agency is allowed to sell at a price that is any different from the price set by the commission. So we can find the best plan for you at no cost. For years, we have been highly recommended in Colorado as a no hassle agency able to find the best life insurance for your financial plan.

We continue to be there for our customers after their policy is in force. We can always analyze different options as your financial needs change and keep you current. This will always help you know that you are getting the best deal available and that you have the best coverage you can get for your family.

We have designed this interactive web site where our customers can compare prices, get details on various Colorado life insurance policies, download applications on their own, and even apply online. We shop over 75 companies such as American General (AIG), Zurich/Chase, Banner Life, Empire General, First Colony, Transamerica, Lincoln Benefit Life, MONY, Protective, Prudential, Transamerica, Travelers, West Coast Life, United of Omaha, Fidelity & Guaranty, and many more. Get as far as you like by yourself until you would like our assistance. We will always be there to answer questions or help with applications if needed. but we have the web site in order to provide a no-pressure setting for clients to compare options that are available for them. Colorado Life Insurance disclaimer

We analyze a client’s life insurance requirements using either an income replacement method, or a needs fulfillment method, or both. We also combine this with a clients individual budget for life insurance to determine what type, and how much Colorado life insurance the client requires. The income replacement method of a needs analysis is to determine how much life insurance is required if the purpose is to replace the income that your family would require to survive. The needs fulfillment method determines how much life insurance is needed to cover future family needs like paying off debts and mortgages, saving for college, etc.