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Home Posts tagged "Term Life"
Life Insurance Myths

Life Insurance Myths

By Ed Crowe | General Articles | 0 comment | 9 October, 2023 | 0

 Life Insurance Myths

Life insurance is not required by law like many other types of insurance, and many people choose to forgo these policies. However, it can be an extremely valuable investment in your financial health and that of your family. Let’s clear up some of the life insurance myths.

Only the elderly need life insurance

Life insurance policies are more affordable for younger applicants!  Don’t be fooled by this mythIt makes the most sense to purchase earlier rather than later. Many term life insurance policies are also made with the option to be rolled over into whole life policies once the beneficiaries are older.

It’s too expensive

Polls show us that this myth is so pervasive that over 50% of people overestimate the cost of life insurance. Just like with other types of insurance, policy cost is determined based on age, driving record, health, gender, etc. so there is a lot of variation in plan premiums. There are many affordable options for life insurance that can fit your budget.

If you don’t work outside the home, you don’t need it

Life insurance policies aren’t just about covering lost wages.   That is one of the life insurance myths.  They’re about being able to replace critical work, including domestic work. A stay-at-home parent can be a driver, tutor, cook, day-care, cleaner, and babysitter that goes uncompensated. If that person were to pass away unexpectedly, all of those roles would have to be replaced and compensated.

I have group life insurance – that’s enough

Some people get group life insurance through their work. But what happens if they’re laid off, or the company goes under? In addition to that risk, many employer-provided policies offer only several thousand worth of coverage, which wouldn’t put much of a dent in more than funeral costs.

Personal savings is the same thing – life insurance myths

Personal savings can be a great thing to have, but it is not the same as a life insurance policy. For one thing, personal savings can often be easily drained with one unexpected hospital stay. For another, there is no need to limit the amount of support a family receives after the death of a loved one. The more financial support there is, the fewer things there will be to worry about during that difficult time.

I can’t buy life insurance with my pre-existing condition

Do not fall prey to this life insurance myth.  If the pre-existing condition is minor or the beneficiary is managing the condition with medical treatment, there are many policies to choose from that will simply charge slightly more for coverage despite that condition. There are also guaranteed issue policies, which guarantee coverage without any disclosure of medical history or exam, meaning that they will be more expensive, but provide the coverage regardless of pre-existing condition.

Life insurance can be a powerful tool in planning for the financial security of a family, and it’s helpful to understand exactly what it is and what it can do before making any decisions about it.   Don’t let any life insurance myths confuse you.

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Myths About Life Insurance

Myths About Life Insurance

By Ed Crowe | General Articles | 0 comment | 19 May, 2023 | 0

Myths About Life Insurance

Life insurance is one of the most misunderstood types of insurance policy.  Misconceptions and partial truths circulate in the public imagination. Here are the top five myths about life insurance, and the real information:

 

It is Expensive

Many people are surprised by how affordable term life insurance can be. Price policies vary from person to person, which is why people are encouraged to shop around when they apply. Different companies may offer different costs for a plan. But, the average yearly cost of a $500,000 policy (20 year term) for a 30 year old female is $252 a year. That calculates out to less than $25 a month.

 

Only the Elderly and Parents Need Life Insurance

Another common misconception: the beneficiary of a life insurance policy does not have to be a child. Parents are not the only people who need life insurance.   Partners can be beneficiaries, as well as anyone else who depends on the policyholder. And, the sooner one applies for a policy, the cheaper the policy is likely to be. The one factor that determines how much the policyholder pays is their health; health is likely to decrease as a person ages.

 

It’s Difficult to Apply for Term Life Insurance

Like many other things, the internet has changed how people apply for term life insurance. In the past, people may have needed to see a doctor in person to qualify for term life insurance policies. With the rise in telehealth accessibility, the vast majority of companies have ways of applying for policies over the phone or online.

 

My Employer Offers Me Enough

For those people who have access to a life insurance policy through their work, the coverage is still likely to not be enough for their family. The median workplace life insurance policy is approximately one year’s salary. It is best to consider workplace life insurance a supplement to a life insurance policy rather than the entirety of the coverage. Online tools exist to calculate how much coverage your family may need, but one guideline is to aim for five to ten times the policyholder’s annual salary.

 

I Only Need Life Insurance If I’m Working

Even if a policyholder isn’t employed outside the home, the value of the labor they provide in the home is enough reason to consider a life insurance policy. Despite life insurance typically being thought of as a replacement for lost income, it can be vital to pay for childcare or housework, especially if the policyholder is the one performing those tasks now. Plan coverage with all of the family’s contributions in mind, not just working benefits.

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Guaranteed acceptance term and permanent life insurance

Guaranteed acceptance term and permanent life insurance

By Ed Crowe | General Articles | 0 comment | 25 May, 2017 | 0

Guaranteed acceptance term and permanent life insurance

If you are unsure about acceptance for life insurance, we have the answer for you!  It is called Guaranteed acceptance term and permanent life insurance.

We list below some of the differences between guaranteed acceptance term insurance and permanent life insurance

Permanent Insurance

Some of the advantages to permanent insurance are, it will provide lifelong protection, as well as a way to accumulate a tax-deferred cash value. Unlike term insurance a permanent insurance policy will be in effect as long as you pay your premiums. This policy may not be the best choice for you, because the price and structure are kept over a long period of time.  You may want to choose alternate coverage,  if you don’t have a need for long-term life insurance coverage.

There are some good reasons why some people keep coverage for a long period of time. People sometimes believe they don’t need insurance after they pay off the mortgage and the kids are out of school.  In fact, your spouse may live for many years after your death and will still incur daily living expenses. This is a very real possibility with modern medicine today.  You have to know if your spouse would be able to maintain the life style  that you worked to achieve.  Also, would you want to have something to pass on to your children or grandchildren?

Another advantage to this plan is the cash value.

In fact, cash value or cash-surrender value are terms people sometimes use to describe permanent insurance. These terms are used because these policies not only provide a death benefit to loved ones but also, can build cash value over time.

The cash value of this plan accumulates on a tax-deferred basis.  It is considered similar to the assets in most retirement and tuition savings plans. You can use the cash for anything you want in the future.  Also, you can borrow against the cash value of the plan. You can use the cash either to pay for further education, a down payment on a home,  or to provide retirement income. If you borrow money from a permanent insurance policy, you use the cash value of the policy for collateral. Usually,  the borrowing rates are relatively low.  These loans do not depend on credit ratings or other restrictions, this differentiates it from other financial lending institutions. You are required to repay the loan amount plus interest charges.  If you do not, your beneficiaries will not receive the full death benefit and cash-surrender value.

In fact, if you either need or want to stop paying premiums, you can use the cash value for a limited time to continue your current insurance protection. If you choose to do this, the policy will provide a lesser death benefit amount to your beneficiaries. If you choose not to pay your premiums and surrender your policy, you will receive payment of the guaranteed policy value.  Please note, if you do surrender your policy too early it may have little to no cash value.

Please be aware that the cash value is not the same thing as the face amount.

As with any permanent policy, the cash value of a policy and the policy’s face amount are two different things. The amount of the payment either upon death of the policy holder or maturity of the policy is the face amount. In most cases, permanent policies “mature” when the policy holder reaches 100  years of age. The cash value of a policy is the amount you receive if you surrender a policy either before death or its maturity.  In addition,  your insurance company’s experience or financial results (mortality rates, expenses & investment earnings) can have an affect on the cash value of your policy.  The term Permanent insurance can actually apply to many types of life insurance products if they have the cash value feature

Universal Life rates Examples:

   50 year old male: $10,000 of guaranteed issue Universal Life coverage is $18.77 a month (Example rate)

  60 year old male:  $10,000 of guaranteed issue Universal Life coverage is $22.41 a month (Example rate)
  70 year old male:  $10,000 of guaranteed issue Universal Life coverage is $50.16 a month (Example rate)

Term life insurance

What term life insurance does is provide coverage only during a certain period of time. This type of policy is sometimes referred to as, pure life insurance.  This coverage is in place to protect your dependents in the event of your premature death.  If you purchase a term policy and then die within the term, your beneficiaries receive the payout. Term policies have no other cash value.

When you purchase a policy, you decide how long the policy will be in effect and when it ends. Usually, the terms last for 10, 20 or even 30 years. In most cases, when you purchase a policy,  the death benefit payout, as well as the  premium cost, remain unchanged during the whole term.

Things to consider when you shop for term life:

  • Be sure to choose a policy term that covers the years you would be supporting the household. In the event that you die early you want to make sure your dependents are able to maintain their standard of living.
  • Consider what amount your family would need, if you were no longer there.  The payout would help replace your income so your family can still use the services they need after you are no longer with them.
  • If you plan carefully, by the time the term is over,  your family will no longer need life insurance.  Your children will be grown, you will no longer owe on a mortgage, and you’ll have plenty of savings for loved one’s to use as a financial safety net.

 Comparison of Term life and Permanent life Policies

Policies Offer Term life  Whole life
Choice of policy length ✓
Provides coverage for life ✓
Premium cost stability ✓ ✓
Low premium rates ✓
Guaranteed Life insurance payout amount ✓ ✓
 Cash value accumulates ✓
May offer annual dividends ✓

Price Difference Comparison

Term life insurance is a less expensive alternative to permanent life.  The price for term life is lower because, it is only for a specified time period and  has no cash value. Usually, these policies don’t have to pay your beneficiaries.  Because most people will live past the end of the policy term. In fact,  the premiums for permanent life insurance are significantly higher.   Permanent coverage lasts for a lifetime.  The policy has cash value, as well as a guaranteed rate of investment return on a portion of your premium payment.

If you have questions or would like to enroll in a plan, please contact us.  We can be reached either by phone(203)796-5403 or email Edward@croweandassociates.com.

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