Unbaised Advice on best Life Insurance Plans
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Who can take out a policy on my life?
Only someone who has an “insurable interest” can purchase an insurance policy on your life. That means a stranger cannot buy a policy to insure your life. People with an insurable interest generally include members of your immediate family. In some circumstances your employer or business partner might also have an insurable interest. Insurable interest may also be proper for institutions or people who become your major creditors.
Must my beneficiary have an insurable interest?
No. If you buy a policy on your own life, you become the owner of the policy. As the owner, you can name anyone as beneficiary, even a stranger!
Why is term life often called "temporary" insurance?
Insurance agents sometimes refer to term insurance as “temporary” because the term policy lasts only for a specific period. It is probably no more "temporary" than your auto or homeowner insurance. Just like term, those types of policies provide coverage for a specific period of time, and must be renewed when that period ends.
Why are some insurance agents reluctant to sell term insurance?
An agent may believe term is risky, but only because you could have a hard time buying a policy in the future if your health deteriorates or you cannot afford the higher premiums. Commissions could also be a reason for an agent who discourages term.
What do I get when I buy term insurance?
You have bought and received the company’s guarantee that if you die during the term of the policy, it will pay a death benefit to your beneficiary.
Does that mean I’ve wasted my money if I don’t die?
No more than you have wasted money by buying car insurance but never having an accident. You’ve purchased peace of mind. With term life insurance, if you die during the term, you know the company will pay your beneficiaries.
I understand my permanent policy would be "fully paid up" at age 65. What does that mean?
"Fully paid up" means just that. You have made enough premium payments to cover the cost of insurance for the rest of your life.
What is a "participating" policy?
That is a policy that may pay you dividends. You have a chance to “participate” in the company’s earnings. A life insurance dividend is actually a refund of part of your premium. When a company collects more money in premiums than it needs to pay death claims and maintain the insurance pool for future claims, the company may pay dividends at the end of that year.
What happens to the cash value in my policy when I die?
When you die, the insurance company will pay the death benefit. No matter how much cash value you may have had in the policy the moment before you died, your beneficiaries can collect no more than the stated death benefit. Any loans you have not repaid (plus interest) will be subtracted from the death benefit.
Who needs it?
If someone will suffer financially when you die, chances are you need life insurance because it provides cash to your family after your death.This cash, known as the death benefit, replaces your income and can help your family meet many important financial needs like funeral costs, daily living expenses and college funding. What’s more, there is no federal income tax on life insurance benefits.
Whole of Life Insurance, by contrast, provides lifelong protection. As long as you pay the premiums and no loans, withdrawals, or surrenders are taken, the full amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep it over a long period of time.