[...] In a reminder that Universal Life insurance (a form of permanent life insurance) premiums are not fixed, a recent class action lawsuit in CA ended with a federal judge ruling that Conseco Life Insurance Co. cannot triple premiums for 50,000 policy holders who have had their policies since the late 80s and early 90s. The courts got involved because the proposed premium increases were so significant, but the complexities of universal life insurance include a lot of flexibility in terms of premiums. [...]
One of the advantages of permanent life insurance is that there are all sorts of riders that you can purchase along with the policy. Two that could be particularly useful are available through The Hartford: The LifeAccess rider and the Disability Access rider. The LifeAccess rider aims to take the place of a long term care insurance policy for people who have life insurance but not a separate long term care policy. The Disability Access rider provides a safety net for people who don’t have short term disability insurance coverage (the rider does not provide long term disability coverage). [...]
[...] 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?
[...] For some people, the benefit is worth it. But for most of us, it makes sense to buy a term policy and keep our investments separate from our life insurance. But either way, the Consumer Boomer article provides a good summary of how the various types of coverage work. If you’d like to get quotes for your particular life insurance needs, we’re be happy to help.
The first quarter of 2010 has seen an sharp increase in the number of life insurance policies purchased, compared with the first quarter of last year. It does make sense that after the economic problems of the last couple years, that people would be more focused on managing risk now than they were before the recession. Term life insurance is especially appropriate now for risk-averse clients, as it is an inexpensive way to provide financial security for one’s family, without concerns about stock market volatility. [...]
[...] Permanent life insurance is a good option for some people. But if you choose to purchase it, make sure that your decision is based on independent research or advice from a qualified professional who does not have a vested interest in your decision. The premiums – and thus the commissions – are significantly higher on permanent life insurance policies; if the person advising you to opt for a permanent policy is also making a commission based on the policy you buy, you might want to get a second opinion.
[...] If you have life insurance through your employer, be sure you know how much coverage it provides and how far that would go. If you need to add additional life insurance coverage, a basic term policy of 20 or 30 years will probably do the trick. Premiums are based on age at issue, so the younger you are when you get your policy, the less you’ll pay for the life of the policy. And since life insurance policies are medically underwritten, the healthier you are, the better rate you’ll get. The time to make sure that your family is protected is today.
Determining whether return of premium life insurance is a good choice depends a lot on your own habits, goals, and tolerance for risk. Let’s consider a hypothetical situation of a 35 year old female who is looking for a $1 million, 30 year term policy. Let’s say she can purchase a traditional term policy for $650/year, or a return of premium policy for $1175/year.
A term life policy pays out its face value only if you die during the selected term. Normally, if you have not used the death benefit when the term runs out, the policy expires. However, return of premium policies are becoming very popular as an alternative to typical term life insurance [...]