Conversion from Term Life Insurance to Permanent Life Insurance- Part 1

People have always asked me "What's better- term life or whole life (permanent) insurance?" This is a difficult answer to a seemingly easy question. Let's look at the basic differences between these basic types:

Term life is designed for maximum coverage at a lower premium for a set period of years (e.g. 10 to 30 years). The insurance companies generally require a minimum policy of $100,000 coverage. At the end of the term period, the premiums paid skyrocket astronomically. Most people just walk away from this scenario and either shop for another term policy or carry no insurance at all. 

Permanent insurance (Whole or Universal Life) set premiums at a pre-determined amount which is designed to carry coverage for a person's lifetime, or when coverage may no longer be needed. Obviously, the premiums would be more, but in the long run, there will be noticeable  premium savings.

A real life application would be the difference between renting an apartment as opposed to buying a home. Renting requires little cash outlay and the responsibilities of paying taxes, utilities and repairs are not required. Buying a home requires a larger cash outlay and all responsibilities of home ownership. 

The big advantage between renting and owning your living space would be home equity. Same for life insurance!

So, what to do?  If you make a decision to purchase term life insurance, select a company which has automatic rights to convert the term policy to a quality permanent policy.  All conditions when the original term policy was purchased  will carry forward to the permanent policy selected. 

The next topic (Part 2)  will cover the process of converting your term life insurance to permanent. And there is a lot to consider!

Disability Insurance for Business Owners

Owning a business is challenging enough. Just imagine the possibility of not earning an income for months or even years due to a disability. Now compound this scenario with having to continue your business operations. With over 40 years of experience writing disability coverage policies you can contact me for full details on how to qualify for disability insurance and trust that you will receive quality service. You will be able to operate with a peace of mind and having possibly more than 100% of your premiums paid refunded is a great bonus!

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R.O.I: What does it really mean?

The traditional view of investments is how high they perform for your money. ROI's technical definition is return on investment

Let's look at this concept in a different way. ROI could also stand for reliability of income. 

Part of my assessment of client needs for disability, life, or long term care insurance has to do with the guaranteed income which you may be entitled to.

Some examples include:

  • Social Security
  • Pension
  • 401 (k)s
  • IRA
  • Blue chip stock
  • Government Bonds

Everyone wants to "make the most" return on their investments. What people should really be concerned about is the reliability of current or future income of their assets. Please call me to discuss your own personal situation! 

 

Return on All Premiums Paid

There  are times when my agency clients are so grateful to receive a benefits check, that they will send me actual proof.  

Here is a long standing client who passed away and both he and his wife have long term care policies that return 100% of all premiums paid upon death, less any benefits the insurance company may have paid. 

Not only did he not use his policy, but the insurance company paid interest due on the refund, since the claim took many months to process. His wife maintains her own policy and her children and grandchildren will be the beneficiaries. 

In over 40 years, I have always been a proponent of enhanced benefits with premium refunds, additional insurance with dividends or interest, and guaranteed options to purchase more insurance without any medical underwriting wheneer possible. 

These enhanced benefits certainly add to the policy cost, but no one ever complains when the insurance company pays the insurance check!

 

Whole Life & Term Insurance

Meals alone for a family of 3 for 10 years, at $10 per day, is almost $330,000. The average life insurance policy bought  in the United States is $250,000.  This does not include mortgage or rent, utilities, clothing, transportation and basic  education costs..

Do you rent? Maybe all you want is to cover the basics. 

Do you own a home? You paid a lot more, and had to go through a lot of details to qualify for a mortgage. 

Life insurance in ways, is similar to this. With one big exception: It does not take providing huge amounts of information to obtain quality coverage, and almost all reputable companies will issue you coverage within 1 month, with a minimum payment required at the application. And you are covered in most situations immediately!

Term insurance is renting for a fixed period of time. You can exchange a term policy to permanent within the fixed period of time, with no additional questions and favorable pricing.  

Whole Life insurance guarantees ownership to coverage issued- without re-qualifying. And the cost stays the same, with many additional benefits included. 

Not sure which type to buy?  Maybe it is a blend of both. Call me for impartial advice. 

 

Investments: Stocks, Bonds, and Life Insurance

A common misconception is that life insurance is an unnecessary and expensive cost that have insignificant results. While life insurance may be an additional cost, it is still considerably less than what the average person will spend on other aspects in his life.

To make a comparison, the average family of 3 will spend almost $330,000 in 10 years at $10 per day for meals alone. The average life insurance policy can be bought for $250,000 which is $80,000 less. Under this calculation, it seems to be a cost that is a good investment. Though the price may seem steep at first glance, it is paid over the course of a lifetime. 

Life insurance can provide a sense of assurance for the both the insured and the family. Not only will the policy benefit the policyholder at the end of the term, but also can be used for various cases during the life of the insured.

Some people invest in stocks AND bonds, but do not think invest in themselves with a life insurance policy. With whole life insurance, there is a guaranteed return on your investment, in the worst case with up to 100% return on premiums paid and in the best case, a profit of more than 100% return on premiums.

Stay tuned for more information on this subject. 

Life Insurance and Retirement Planning

Retirement planning is hard. Permanent life insurance is an additional, yet useful tool that is often overlooked. Life insurance ensures that the people we love have the life we planned for them. But life insurance can do far more than simply protect. Check out this article to see how you can make your life insurance help your retirement plan and needs. 

Benefits of Partially Self-Funded Health Insurance Plans

In certain states, partially self-funded health insurance plans are an option for business owners. In some cases, it has the possibility of bringing lower health insurance costs.

Partially self-funded health insurance plans are similar to standard health insurance, but there are a few key differences. Four main differences include: the ability to be medically underwritten, they can be less expensive, the plan includes a reserve account for medical bills, and the unused funds from the reserve can be kept. This plan is typically geared towards businesses with employees who see the doctor on a rare basis. Because of this, there is the potential to save money.

Though this plan is very similar to a standard insurance plan, there are benefits that might sway a business to pursue this option. 

  • Qualifies as major medical insurance and protects employers and employees from possible tax penalties for not having or providing health insurance
  • Must cover all essential health benefits according to the law
  • Premiums are usually tax deductible
  • Monthly costs can be based on the health of the group
  • Part of the monthly premium are stored in a reserve account
  • Money in the reserve account is used to pay medical claims should they arise
  • At the end of the year, the money in the reserve account is refunded or redirected to pay for the next year's premium

Finding out which health insurance plan to use can be challenging for business owners, but there are many options to choose from. The most important thing is to choose the one that works best for your business. 

10 Tips to Get Started with Life Insurance

Many people recognize the need for life insurance, but don’t take the next step because they feel they don’t have safe, pressure-free places to start. Here are 10 steps to help you get started:

1. If you have dependents — you need it.

2. Life insurance helps replace your paycheck if you aren’t there to earn it.

3. Some life insurance is better than no life insurance.

4. Life insurance is less expensive than you think.

5. Life insurance is a smart financial move.

6. Make sure you know how much life insurance you get at work.

7. Life insurance needs change over time.

8. Term life Insurance is an easy and inexpensive way to get started.

9. The financial strength and reputation of the company you buy it from matters.

10. There is no substitute for good advice.

For more information, click on the link below or call me at 508-580-9950.

How important is service?

Everyone focuses on the pricing of their insurance. Yup- this is important!

However, the geckos and White Pant Suited Spokespeople NEVER talk about service of your insurance!

Recently, one of my client's spouse passed away. To be brief, I provided TWO Registry forms to transfer ownership of the car, which was registered to the deceased. At the registry, my client was told  " I have  never seen a situation like this in 14 years!"  

My client called me from the registry to add this comment from the registry employee, " Your agent is a genius providing you the 2 forms. We need them both!" 

Anyone would be hard pressed to get such service from one of the National Chains, who can only provide limited options, service and questionable "savings" from their agent. 

You cannot put a price on quality service. Contact me to learn the difference.