Free Life Insurance FAQs | Free Life Insurance Legal FAQs

What Are Some Important Initial Considerations?

Tue, 29 May 2007 21:19:00 GMT

Decide how much insurance protection you need and can afford.
Make informed decisions when you buy a policy.
Choose the kind of policy that has benefits that most closely fit your needs.

What Is Credit Insurance?

Tue, 29 May 2007 21:19:00 GMT

Credit life insurance pays in the event of the debtor`s death. Credit accident & health (or disability) insurance covers loan payments due while the debtor is ill or disabled. The most commonly sold credit insurance is referred to as credit life or credit accident and health (or disability) insurance. Credit life insurance may be purchased by itself or in a combination policy also providing credit accident and health (or disability) coverage. Credit accident or health (or disability) insurance is not available except in combination with credit life coverage.

Credit Life and Credit Accident & Health Insurance is frequently offered to consumers financing the purchasing of an automobile. The purchase of credit life and credit accident & health insurance is strictly optional. A lender may not refuse to give a consumer the loan simply because the consumer declines to purchase credit life and credit accident & health insurance.

What Are Some Important Considerations In Choosing My Policy?

Tue, 29 May 2007 21:19:00 GMT

Ask an agent or company to help you. The service and reputation of the company and the agent you select is important.
Review the application carefully with the agent; be sure all the answers are complete and accurate before you sign.
Don`t buy life insurance unless you intend to stick with your plan. Your decision to protect your family may involve the purchase of a new policy or the replacement of existing coverage.
Although replacement can be beneficial, it may be very costly in the early years of a new policy if you cancel an existing policy. Don`t drop one policy and buy another without a thorough evaluation of both the new policy and the one you have now.
Read your policy carefully! Most states require an insurance company to provide a free look period that begins at the delivery of the policy. The agent should explain anything not clear to you.

What Should I Consider When I Actually Buy Life Insurance?

Tue, 29 May 2007 21:19:00 GMT

When you buy life insurance, first decide how much you need to cover the financial effects of an unexpected or untimely death.

Here are some questions to ask yourself:

How much of the family income do I provide? If I were to die early, how would my survivors, especially my children, get by? Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
Do I have children for whom I`d like to set aside money to finish their education in the event of my death?
How will my family pay final expenses and repay debts after my death?
Do I have family members or organizations that I would like to leave money?
Will there be estate taxes to pay after my death?
How will inflation affect future needs?
Remember to include individual, employer group insurance, veteran`s insurance and any other assets such as savings and investments. Don`t forget Social Security and pension plan survivor`s benefits.

What Is The Right Type Of Life Insurance For Me?

Mon, 04 Jun 2007 21:51:22 GMT

There are two basic types of life insurance: term insurance and permanent cash value insurance. Term insurance generally has lower premiums in the early years, but does not build up cash values that you can use in the future. You may combine cash value life insurance with term insurance for the period of your greatest need for life insurance to replace income.

It makes sense to consult with a life insurance agent. An agent can explain what policy features are best suited to your needs.

What Is A Level Term?

Tue, 29 May 2007 21:19:00 GMT

Level term insurance means that the amount of coverage and the price of the premiums will not go up or down during the covered period of time.

What Is An Annual Or Yearly Renewable Term?

Tue, 29 May 2007 21:19:00 GMT

Under this type of policy, the premiums will increase on a yearly basis. The premiums will initially be low and the premiums will increase with the age of the insured.

What Are The Benefits Have Having Term Insurance?

Tue, 29 May 2007 21:19:00 GMT

Term insurance is beneficial because it can provide security to families and businesses at a reasonable cost. The cost of buying term insurance is low compared to whole life insurance and the benefits paid out can be as high as you want. Term insurance is also an inexpensive method to add on additional coverage to an existing whole life insurance policy.

How Are The Premiums Determined?

Tue, 29 May 2007 21:19:00 GMT

The premiums are determined by looking at the individual`s age, medical history, family medical history and career.

Life insurance is a complex subject that has its own language. In order to shop intelligently, it would be helpful to be familiar with the types of life insurance products available. Please refer to the question What are the different types of life insurance policies? for a brief explanation of life insurance policies.

How Do I Select An Agent And A Life Insurance Provider?

Tue, 29 May 2007 21:19:00 GMT

Simply stated, by doing your homework. You must be certain to research the credential of any potential agent or insurance company. It is important to remember that most agents are reputable professionals trained in their areas of expertise. Insurance agents must take and pass certain tests to become licensed. Besides the license exams, to maintain an agent license, most states required that all agents complete continuing education courses to maintain their license. These courses can lead to professional insurance designations such as the following:

LUTCF Life Underwriting Training Council Fellow
CEP Certified Financial Planner
CEBS Certified Employee Benefits Specialist
CIC Certified Insurance Counselors
CLU Chartered Life Underwriter
RHU Registered Health Underwriter
ChFC Chartered Financial Consultant

What Should I Do With My Current Policy?

Tue, 29 May 2007 21:19:00 GMT

If you are thinking about terminating life insurance coverage that you currently have in force, here are some things you should consider.

If you decide to replace your policy, don`t cancel your old policy until you have received the new one.
It may be costly to replace a policy. Much of what you paid in the early years of the policy was the company`s cost of selling and issuing the policy. You may pay this type of cost again if you buy a new policy.
Ask your tax advisor if dropping your policy could affect your income taxes.
If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable.
You may have valuable rights and benefits in the policy you now have that are not in the new one.
If the policy you have now no longer meets your needs, you may not have to replace it. You might be able to change the policy or add to it to get the coverage or benefits you now want.
At least in the beginning, a new policy may pay no benefits for some causes of death covered in the policy you now have.

In all cases, if you are thinking of buying a new policy, check with the agent or company that issued you the one you have now. When you bought your old policy, you may have seen an illustration of the benefits of your policy. Before replacing your policy, ask your agent or company for an updated illustration. Check to see how the policy has performed and what you might expect in the future, based on the amounts the company is paying now.

What Are The Different Types Of Life Insurance Policies?

Tue, 29 May 2007 21:19:00 GMT

The following are different types of life insurance policies and their characteristics. Keep in mind that the intent of life insurance is to provide for the life of your heirs and/or beneficiaries for such things as payment of debts and to provide family income. In addition, the policy can provide supplemental income for retirement.

TERM LIFE
Low initial premium.
May be renewable and convertible to whole life insurance.
Protection for a specified period.
Premium increases with each new term.
Typically no cash value.
TRADITIONAL WHOLE LIFE
Permanent protection.
Fixed premium.
Fixed cash value.
Fixed death benefit.
You can defer taxes on the earnings generated by the policy until you withdraw cash, take out a loan policy, or receive annual interest earnings on dividends.
UNIVERSAL LIFE
Flexible premium.
Flexible death benefit.
Cash value reflects premiums paid and current interest after deducting the cost of death benefits and other expense charges.
You can defer taxes on the earnings generated by the policy until you withdraw cash or take out a policy loan.
EXCESS INTEREST WHOLE LIFE
Permanent protection.
Fixed premium.
Fixed death benefit.
Cash value growth depends on current interest credited to the cash value account. If you have a fund and your insurance company credits excess interest to the fund it will grow faster.
You can defer earnings generated by the policy until you withdraw cash, take out a loan policy, or receive annual interest earnings.
VARIABLE LIFE
Longterm protection.
Fixed or flexible premiums.
Policyholders sometimes control the investment of their cash values in stock, bond, money market or other accounts and bears all the investment risk.
Death benefits and cash values vary in relation to the performance of funds in a separate account.
You can defer taxes on the earnings generated by the policy until you withdraw cash or take out a policy loan.
ACCELERATED DEATH BENEFITS
Some life insurance companies offer to pay a portion of the death benefit of a policy before death occurs if the policyholder is diagnosed as terminally ill and wants to use the money. Upon the death of the insured, the beneficiary receives the remainder of the death benefits.
The policyholder may pay an additional premium on the base policy for this option; or the insurer may assess a charge against the death benefit or accelerated payment.
VIATICAL SETTLEMENTS
Some terminally ill patients may hold life insurance policies with companies that do not offer accelerated death benefits. A viatical settlement can provide cash benefits prior to death.
A viatical settlement is a contract in which the terminally ill owner of a life insurance policy sells the death benefit of their policy to a third party in return for immediate cash payment.

The investor or investors who purchase that right become the beneficiary in exchange for a negotiated amount, which is lower than the face value or death benefit of the policy. In addition, the investors take over the premium payments. Investors in viatical contracts recoup their investment when the full death benefits are paid upon the death of the original policy owner.

A viatical contract requires close scrutiny by the original policy owner since these agreements are complicated financial and legal transactions. If you are considering such a contract, you may want to consult with your attorney, physician, life insurance agent or company, and accountant or financial planner. Proceeds from the settlement may create tax liability and affect Medicaid eligibility.
DISAPPEARING PREMIUMS
Life insurance policies with accumulated cash values frequently offer the policyholder the option of using the policy`s cash value or dividends to cover premium payments at a future date. Although the premiums seem to disappear, payments are still being made from the policy`s cash values.
If you elect this option, you should carefully monitor your policy`s cash value. Changes in interest rates, cost of insurance, policy expenses and loans can quickly eliminate your policy`s ability to pay for itself. Such changes could force you to resume premium payments to keep your policy.

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