Insurance Information : About AARP Whole Life insurance
Life insurance is great for individuals that have a family, dependents and earn the most income to support their family. Life is unpredictable and it is important to ensure your family and loved ones are taken care of financially in case anything happens to you.
When shopping for life insurance in South Carolina, searching online and using the internet’s resources are a great way to educate yourself on life insurance basics, shop and compare quotes for the best life insurance policy for you. There are three different types of life insurance policies – universal life insurance, cheap whole life insurance and cheap term life insurance.
- Universal Life Insurance – combines life insurance with savings. Insurers are able to have the benefits of term life insurance and combine that with tax-deferred interest accumulating savings account. Sometimes you may not even have to pay premiums during the entire policy. If your money to pay the death benefit and other costs accumulates in the tax-deferred savings portion of your policy, then premiums may not be required to keep the policy in force.
- Cheap Whole Life Insurance – this type of policy will cover you for your entire life. Your death benefit and premium generally remain the same. Whole life insurance also builds cash value, which could enable you to earn a return on a portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it and you are also able to borrow against that money.
- Cheap Term Life Insurance – this type of life insurance is low cost and great for young healthy individuals who are healthy and may not be able to afford cash-value life insurance premiums and want to ensure their dependents are taken care of in the event of death. Your policy will cover a pre-determined “term” which is normally one, five or ten years. Your premium payment and death benefits are only during that term. After the term you will have options to continue coverage and have the opportunity to convert to a cash-value life insurance policy.
Universal Life Insurance
Universal life insurance combines cheap term life insurance with a tax-deferred interest accumulating savings account. This life insurance plan provides insurers with death benefit as well as incorporating savings abilities.
Investing
Universal life insurance is also known as “flexible premium adjustable life insurance,” and gets this term because it is somewhat of a flexible version of cheap whole life insurance. Your insurance company will take a portion of your premiums and invest them in bonds, mortgages and money market funds. You earn the return on said investments which is credited to your policy tax-deferred. You usually receive a guaranteed minimum interest rate which is not dependent upon the performance of your investments so you will always get a certain minimum return on your money. When your investments do well, normally the insurance company will increase your interest rate return.
Death Benefit
You generally have two options when setting-up your universal life insurance policy. One option will pay your death benefit out of your policies accumulated cash value. This policy costs less in premiums, but it can take a while to build up sufficient benefit. The other option will pay you a face value that you agree upon in the contract plus your accumulated cash value. This option cost more in premiums, but you are guaranteed at least a specific amount of money in your death benefit. Most life insurance companies can set your policy up so you will have a no-lapse guarantee as long as you pay your minimum designated premium. The policy could stay in force to age 100 or above. Universal life provides you the flexibility to adjust your death benefit according to your needs allowing you to pay smaller or larger amounts depending on your finances.
Cheap Whole Life Insurance
Cheap whole life insurance policies cover you for life. Generally your death benefit and premium will always stay the same. Cheap whole life insurance builds cash value which is tax-deferred until you decide to withdraw it or borrow against it.
There are different types of cheap whole life insurance. These include traditional, interest-sensitive and single-premium whole life insurance policies.
- Traditional whole life insurance – this policy gives you a guaranteed minimum rate of return on your cash value segment.
- Interest-sensitive whole life insurance – provides a variable rate on your cash value portion which is comparable to an adjustable rate mortgage. This gives you the flexibility with your cheap whole life insurance policy such as increasing your death benefit without increasing your premiums depending on the economy.
- Single-premium whole life insurance – this is great for individuals who have a large sum of money who would like to purchase their policy up front. This cheap whole life insurance policy also accrues tax-deferred cash value.
One of the features that make cheap whole life insurance popular is that a portion of your premium money goes toward your cash value which could pay off your entire policy after a few years. Another advantage is unless you make a change to your cheap whole life insurance policy, you will be covered for life with no future medical exams.
Cheap Term Life Insurance
Cheap term life insurance is great for those individuals who want to protect their family in the event of their death. Cheap term life insurance is often referred to as “pure insurance protection” because there is no cash value like cheap whole life insurance or universal life insurance. Cheap term life insurance also expires at a certain time after either a set number of years or when you reach a certain age.
A medical exam will most likely be required when you are buying cheap term life insurance. Most exams cover height, weight and medical history. Sometimes test results can hinder your ability to get approved for term life insurance or it could potentially increase your rates, but if you are healthy you should be fine.
Watch the video related to whole life insurance
Whole life insurance through the AARP provides insurance coverage for a person’s entire life, often with increasing coverage over the years and increased cash value. Consider whole life insurance, which can be taken out in cash at any time, with advice from an insurance broker in this free video on insurance. Expert: John Pinelli Bio: John Pinelli is a financial service broker for Northwestern Mutual Insurance. Filmmaker: Bing Hu…
Help answer the question about whole life insurance
What is the benefit of whole life insurance?My husband and I have been advised to buy a significant amount of whole life insurance as a safe way to invest. We have just started our family and I am a little wary. I am not really sure I understand why it would be better to do this than to invest in bonds, annuities, etc. Any ideas? answers?
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9 Responses to “Insurance Information : About AARP Whole Life insurance”
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May 2nd, 2009 at 3:26 am
The best company to buy from is one that is financially secure.
The A.M. Best Company, an independent rater of insurance companies, has been rating them for over 100 years, since 1899. They assign grades to insurance companies, based on their financial strength, and ability to pay claims.
The best companies are the ones that have an A.M. Best rating of A++ (Superior), A+ (Superior), A (Excellent), A- (Excellent).
Here's my suggestion and recommendation:
http://free-best-life-insures-comparator-usa.blogspot.com/
And compare life insurance company at your place
May 2nd, 2009 at 4:35 am
Basically insurance only works when a large groups of people own that particular insurance. Everyone pays to protect their income, but not everyone is going to use their insurance. So that's how basically insurance companies stay in business, unless something extraordinary has happen in this country where there's lots of people are filing for claims and the insurance company can't pay them all (such as the Hurricane Katrina event).
What is whole life insurance?
1) Its a level term insurance to a specified age (usually to age 95, 98 or 100) plus cash value.
2) It is very expensive when compared to term insurance
3) Cash value grows at a very low rate of return. In the first 10 years, you see a negative return on your money. But long term average is anywhere between 1-4%, depending on the company.
4) If you want to take money out, you have to borrow it and pay loan interest of 5-8%.
5) If you die someday, the insurance company pay the face amount of the policy (minus loans and missed premiums) to the beneficiary, but they keep all the cash value.
6) If you do get to live by the end of policy date (when you around age 100), the insurance company pay you the cash value, but you lose the insurance.
There's only one reason why that agent is trying to sell you whole life insurance: MONEY!
Next thing you'll know, that agent would try to sell you universal life insurance, a product that is more horrible than whole life, but it pays out more commissions.
Go with your instinct and find a different company who would listen to your needs. Try this site
http://free-best-life-insures-comparator-usa.blogspot.com/
Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.
May 2nd, 2009 at 11:00 am
Any carrier with an AM Best rating of A+ or higher will do. More important than the company is who you purchase it through. Use a qualified financial advisor who determines your insurance need based on a comprehensive financial needs analysis. For most people, some permanent coverage, such as whole life, is advisable; but for working age adults, most of your coverage should normally be term.
Life insurance is a complex financial instrument to be acquired for specific purposes. As such, an insurance salesman is not qualified to advise you. Never purchase life insurance from an insurance agent or over the internet.
Added: In response to james m's edit, I am trying to do nothing but differentiate legitimate financial practitioners from salespersons who generally (many agents excepted) lack the knowledge, qualifications, and objectivity to engage in financial advisory services.
In all but a very few states, james' allegation of illegal use of the term "financial planner" is incorrect. The CFP designation is a registered commercial trademark, and not a credential regulated by any governmental body or law. A financial planner is an individual who is generally qualified in all major areas of personal financial management and makes his living offering objective, comprehensive, and independent financial advice. The FPA (the originator of the CFP designation) is not a legal authority in dictating who is qualified to engage in financial practice. I'm not convinced that they would even be competent to do so. I've known and worked with several fine CFPs, but none of them make the list of the best financial advisors I have known. In fact, few who top that list have any designations at all.
.
May 2nd, 2009 at 2:40 pm
Visit
http://free-best-life-insures-comparator-usa.blogspot.com/
to compare life insurance companies.
Whole life insurance is much more expensive than term life insurance. If cheap coverage is what you're looking for then term is the way to go. Agents will tell you that the disadvantage is no cash value, but the cash value builds up so slowly that you'd be better off pocketing the difference in premium or even better investing it (you want tax deferred I would advise a Roth IRA). There is also refund of premium term where if you make all your premium payments for the life of the term, 15-30 years, then you'll get back every penny you've paid.
Whole life is more meant for older people who want to tax shelter funds for their estate. If you're young term is the way to go, it's dirt cheap.
Term life + Roth IRA = long time financial security.
May 4th, 2009 at 9:58 pm
My suggestion is to get quotes from several companies by shopping around before you choose to buy with any insurer. Everyone is different so something which is good for me might not be good for you. You might want to ask your friends and family for recommendations since they know you better. Otherwise, look around the Internet, there are many quotes site available. Anyway, if you need more information or free quotes, you can visit this website http://www.insurancecentreonline.com/life-insurance-quotes.html
May 5th, 2009 at 3:40 am
As long as the policy is in force, the full $2 million should pay regardless of age at death. There are some exclusions, such as suicide typically being excluded for the first two years. You'd have to consult the actual policy to be sure of any exclusionary endorsements.
Also, if the insured reaches age 100 (or 121 for some newer policies) then the policy is considered matured and will pay the full cash value, which should be equal to or greater than the death benefit.
Those are general insurance practices, but each individual policy may differ. Hope this helps.
May 5th, 2009 at 6:28 am
Whoever said life insurance is good way to invest or save your money is totally wrong and possibly illegal. Life insurance only purpose is to protect you family from devastation of loss of income. If you are the main provider in providing source of income to the family and you die, life insurance will cover your income. Now most people are under-insured and so this death benefit may not last that long. That why term insurance is better so that you can buy the right amount of coverage versus what coverage can you buy base on income.
The money in your whole life policy is not safe at all. Its not FDIC insured, it gets a low rate of return, and you lose it all if you die someday. If you ever wanted to use it, you have to borrow it. When you borrow money, you lower the face amount of your policy. So it is better to save your money in a Roth IRA than in life insurance. If you die someday, your beneficiary will get your investments.
Investing is a complicated matter because there is no guarantee that your money will earn a return. You can't predict how the stock market will perform in the future. But base on past history of the stock market in United States, the long term trend is that the stock market continues to grow.
How should you invest? Have you heard about mutual funds? A mutual fund is an investment company that pools together investors money and invest it into various companies (could be as little as 25 companies or as high as 300 companies). Because mutual funds invest in so many different companies, mutual funds are said to be diversified. Mutual funds are affordable and you can invest as little as $25/month or you can put in a lump sum of $500 and just let it sit there.
There are many mutual funds out there and only a few of them can match your investment objective. Before investing, you should figure out your investment objective, meaning are you willing to accept higher risks to get higher returns? Once you figure out your investment objective, it is now time to pick the mutual funds that meets your objective.
Which mutual fund should you pick? Look at some of the popular mutual funds such as Fidelity, Legg Mason, Van Kampen, and so on. They offer all kinds of mutual funds with variety of different risks and objectives. Then obtain a prospectus of that mutual fund before investing into it. You should read this prospectus very carefully. Check its past performance, its expense ratio, its turnover ratio. top holdings in the mutual fund, and so on. Your financial advisor should be able to help you out in this.
Good luck in investing. The best tip you can take from me is invest systematically. That means you invest the same amount of money every single month. What this do is that it lowers the cost per share.
May 5th, 2009 at 11:26 am
You do NOT want to invest in whole life. First, your savings are generally going to gain very small interest amounts. Second If somthing happens and one of you passes away, your benefit will not be that large. Third, whole life is expensive and the amount of money can seriously effect a budget, especially for a growing family.
Instead of a whole life program you want to invest in term life insurance, and invest the difference. This is where you are only insured for thirty years or so and then the insurance ends. First, term insurance is cheap, it is not going to be a big piece of your monthly spending. Second of all your benefit if one of you dies is much larger, You can get ten times the coverage for less money. Third, you will not need tons of life insurance in thirty years when your children have left the house and made it on thier own.
For your savings, simply open a ROTH IRA account. When you make the term insurance payment take the extra money you would have spent on whole life and put it in the ROTH. If you do this you will see significantly more savings when you retire, and it will not be taxed as income when you take it out. This plan will leave you with more money in the long run,and more flexability in
the short run.
May 5th, 2009 at 1:52 pm
If the carrier goes bankrupt, the policy gets transferred to another insurance company licensed to do business in your state. It happens ALL THE TIME, companies going out of business and policies being transferred.
Yep, that "adjustment" happens, and if the policy is actually not whole life, but a different kind of policy, it's going to start costing every year as the investment returns won't be enough to pay the premium every year. I'd suggest that the policy is not "paid up".