Life insurance is a contract between an insurer and the insured, whereby the former agrees to pay a sum of money in case of death or disability. The premium paid by the insured for this protection is called a life insurance premium.
Life Insurance Premiums are the amount of money you pay to a life insurance company in exchange for the right to receive a certain sum of money upon your death, called an “Insured Amount.” The premium is paid each month or year, and it is usually based on how much coverage you want (the level of protection), when you plan to die (your age), and how long you want to insure yourself for (how many years).
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The most common types of life insurance policies are whole-life policies and term policies. Whole-life policies provide permanent insurance coverage that will continue until the policyholder dies. Term policies offer temporary insurance coverage for a fixed period of time, such as 10 or 20 years.
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Life insurance premiums can be either paid up front or deducted from an existing bank account. When you purchase life insurance with a monthly payment option, you have the choice between paying a single lump sum at the beginning of the policy period or making one annual payment. If you choose to make payments over time, you may also have the option of paying more than one monthly installment.
For example, if you buy $100,000 worth of life insurance for $10 per month, you would pay $1,200 annually ($120 per month). If you were to pay off the entire $10 per month in 12 months, you would only pay $1,080 annually ($90 per month).
You may also decide to pay a higher premium by increasing the amount you pay each month or each year. For example, if you pay $10 per month for a $100,000 policy, but you increase your monthly payment to $15 per month, you would still pay $1,200 per year ($120 per month) but now you would pay $1.50 per day ($150 per month) instead of $1.00 per day ($100 per month).
If you pay a higher premium, your policy will last longer because you’re paying more every month. However, your premium could go up even further if you wait too long before buying life insurance. This is called lapse.
Lapse occurs when you don’t renew your policy within its original term. You may not realize you’ve lapsed until you need to file a claim.
Lapse rates vary depending on your age and gender. In general, men tend to lapse sooner than women do. Rates also rise after age 40.
In addition to lapse, there’s another way to lose out on life insurance benefits. It happens when you die without having made any payments toward the cost of the policy.
This is known as nonpayment. Nonpayment means you didn’t pay the full premium due under your policy. For example, if your policy was supposed to cover $100,000 for 30 years, and you had been paying $10 per month for the past five years, then you would owe $3,300 more than what you actually paid.
When you die, the insurer pays the benefit due under the terms of the policy. The amount of the benefit depends on the type of policy you purchased and whether you paid the premium up front or later.
Why you need Life insurance
It’s important to understand why you should get life insurance. Here are some reasons:
- Your family needs financial security.
- You want to secure your retirement savings.
- You need to protect loved ones who depend on you financially.
- You want to leave something behind for future generations.
- You want to ensure that your business assets are protected.
- You want to minimize income tax liability.
- You want to reduce the risk of losing money through lawsuits.
- You want to provide protection for your business partners.
Life Insurance Retirement Income Long Term Care
The combination of life insurance and long-term care coverage provides peace of mind for many people. A life insurance policy offers financial protection against the loss of earnings and other expenses associated with illness or injury. With long-term care coverage, you can receive help from caregivers while recovering from an illness or injury.
Long-Term Care Coverage
Most life insurance industry policies offer limited long-term care coverage. Some policies have no limit on how much they’ll pay for long-term care. Other policies have limits ranging from $5,000 to $25,000. If you have a policy with a large limit, it may be difficult to find affordable long-term care coverage elsewhere.
Many employers include long-term care in their health plans. If you work at a company where this option is available, ask about it. Your employer might even contribute to the premiums.
Some companies offer supplemental long-term care insurance. These policies usually have lower premiums than traditional long-term care policies. They’re often sold by agents who represent both life insurance and long- term care providers.
Life Insurance Retirement Planning and Wealth Management
If you’re thinking about buying life insurance, consider using it to fund your retirement planning. You can use the cash value of your policy to supplement Social Security benefits or make additional contributions to IRAs and 401(k) accounts. Or, you can invest the proceeds in mutual funds or stocks.
A good rule of thumb is to keep enough life insurance to replace 50% of your current annual salary. This will give you enough money to live comfortably during retirement.
If you don’t plan ahead, you could run out of money before you retire. That’s because most people spend all their money within 10 years of retiring. So, if you haven’t saved enough to support yourself when you stop working, you won’t have any extra money to enjoy retirement.
Consider getting life insurance as part of your wealth management strategy. It can help you achieve your goals without having to sell off investments. Plus, it gives you more options for funding your retirement.
For example, you can use life insurance to:
- Pay down debt. Life insurance can help you pay off credit card bills, medical debts, and student loans.
- Fund college savings. The death benefit from a life insurance policy can cover tuition costs.
- Cover funeral expenses. Funeral expenses are expensive. But, if you die unexpectedly, your family may not be able to afford them. By purchasing life insurance, you can protect yourself and your loved ones financially.
- Provide income for children. If you leave behind a widow or widower, life insurance can provide a steady source of income until the surviving spouse remarries.
- Provide income for aging parents. If you have elderly relatives who need assistance, you can use life insurances to provide them with a monthly income.
- Give away assets. If you want to reduce the taxes that you owe, you can give away life insurance policies to someone else.
To learn more about how life insurance can fit into your overall financial picture, talk to an advisor today.
How much does Life insurance cost
The amount of insurance depends on several factors including age, gender, and your state of residence. Some states require auto insurance, while others do not. In addition to standard car insurance, some states also require homeowners insurance.
In general, life insurance coverage amounts depends on your zip code, health history and also, increase with age. For example, a 40-year-old male can expect to pay around $1,500 per year for his policy. A 70-year-old male will pay roughly $13,000 annually.
An important factor determining life insurance pricing is whether you smoke. For every 5 grams of tobacco smoked, the price of life insurance increases by 2%. So, if cigarettes account for half of your daily intake, smoking raises the premium by 10%.
You can see what are the things to remember when comparing quotes:
- Review each quote thoroughly. Compare apples to apples—not apples to oranges.
- Include term, universal, convertible, whole, and variable life insurance. Choose the one best suited to meet your needs.
- Find out what kind of coverage you want (e.g., Term, Whole Life, Universal).
- Check the company’s customer service rating. Companies with higher ratings often offer better terms.
- Use online calculators to compare different policies, then call an agent so you can ask questions directly.
What are the things not covered by life insurance
If your life insurance policy covers accidental death and dismemberment (medical expenses in case of an accident), this type of coverage will still apply even if you commit suicide. Also, your insurance won’t pay out if your life ends because of sickness or old age. However, if your policy has a rider called “rider benefits” or “accidental death benefits,” it might payout if you were murdered or died as a result of a motor vehicle accident.
In short, insurance only pays out when you die, but does not pay anything for death due to natural causes such as old age, illness, etc.
Best Life Insurance providers
Haven Life of America (HLICA), based in San Francisco, California, is one company that offers this type of insurance coverage. HLICA provides life insurance coverage for people with intellectual disabilities. They offer five different types of insurance products:
- Whole life insurance
Whole life insurance is a type of coverage that provides financial protection for the insured’s family. It can be used to pay off debts, provide income in retirement or help cover wide range of medical costs after an accident.
- Universal life insurance
Universal Life Insurance (ULI) is a type of whole-life insurance that provides coverage for the insured’s entire life. It differs from traditional term or permanent policies in that it does not have an end date, and therefore can be renewed.
- Variable universal life insurance
A variable universal life (VUL) is a type of whole-life insurance policy that pays out an annuity, or a series of payments over time. VUL policies are similar to traditional whole-life policies in that they pay out an annual premium, but unlike traditional whole-life policies, VULs also pay out a lump sum upon the death of the insured.
- Indexed universal life insurance
An indexed universal life (IUL) is a type of whole life insurance policy that combines an index-linked cash value with a guaranteed minimum death benefit. The cash value increases as the insured person ages, and the amount of the guarantee decreases.
- Term Life Insurance
A term life insurance policy is designed to last for a fixed period of time, usually 10 years. This type of insurance covers only death benefits. The insured person pays premiums throughout his or her lifetime. When he or she dies, the beneficiary receives the benefit amount.
Northwestern Mutual is a leading provider of insurance and annuity products in the United States. It offers life, health, disability, long-term care, dental, vision, group benefits, retirement savings, investment advice, and other financial services to individuals, businesses, and institutions.
Globe Life Insurance Company
The Globe Life and Accident Insurance Company (GLA) is a life insurance company based in the United States. It was founded by John H. Glenn, Jr., who also served as its president from its founding until his death in December 2016. GLA has been involved in the development of several new forms of life insurance since its establishment. In addition to providing life insurance, GLA also provides annuities, supplemental health insurance, and long-term care insurance.
In 2010, Globe Life Insurance Company introduced a new form of life insurance called “Accidental Death Benefit” (ADB). ADB is a type of insurance that is designed to protect against accidental deaths. It is often referred to as a “death benefit”. Unlike most conventional life insurance policies, ADB provides a payout when the insured person dies due to an accident rather than dying during the normal course of events.
State Farm Insurance
Farm Bureau Mutual Insurance Company of Wisconsin, doing business as State Farm Insurance (SF), is a major American insurance company. The company was founded in 1912 by James T. Farrell and his wife, Mary E. Farrell, who were both farmers. SF sells property and casualty insurance, auto insurance, homeowners insurance, renters insurance, life insurance, and personal finance products.
State Farm Life insurance plans are available through State Farm’s direct sales force and insurance agent. These plans include:
Standard Term Life
- Whole Life
- Universal Life
- Variable Universal Life
- Indexed Universal Life
- Accidental Death & Dismemberment (AD&D) Insurance
Transamerica is the nation’s leading provider of life insurance and annuities. Its core product lines include individual life insurance, variable universal life insurance, and annuities. Transamerica also offers other types of insurance such as home, automobile, small business, and commercial insurance.
Transamerica Life insurance plans are:
- Term Life
- Whole Life
- Variable Universal Life (VUL)
- Universal Life (UL)
- Accidental Death & Disability (AD&D)
- Health Savings Account (HSA)
New York Life
New York Life is one of the largest mutual life insurance companies in the world. New York Life Insurance Company is headquartered in New York City and has over $1 trillion worth of assets under management.
New York Life Insurance plans cover all areas of life including term life insurance, whole life insurance, universal life insurance, indexed universal life insurance, variable universal/variable indexing life insurance, and annuity products.
Mutual of Omaha
Mutual of Omaha is one of America’s oldest insurers. Founded in 1866, it is now part of Berkshire Hathaway Inc. Mutual of OMAHA Life Insurance Company offers three basic types of life insurance:
- Term Life
- Life with Guarantee
- Whole Life
USAA is a financial services organization offering auto, home, life, and retirement products. USAA was established in 1936 and is headquartered in San Antonio, Texas. USAA currently operates more than 1,000 branches nationwide.
USAA Life Insurance Plans cover all areas of life. They include:
- Term Life
- Universal Life
- Whole Life
Ladder is a type of permanent insurance that pays out benefits based on how much you pay into your policy. This means that if you make higher monthly payments for a longer period of time, you will receive larger lifetime benefits.
A ladder plan can be used to provide income protection or savings for the future. For example, a parent may purchase a ladder life insurance policy for their child so that they will have money to help them in case something happens to the primary breadwinner.
A ladder plan can also be used to fund a college education. If you take out a loan to pay for school, you will need to repay it at some point. However, with a ladder plan, you will not have to start repaying until after you retire.
Lincoln Financial Group is an American financial services company founded in 1856 by John Galt. It provides consumer financial products and services primarily through its subsidiaries, which operate credit unions, banks, mortgage lenders, and insurance companies. The group employs approximately 80,000 people worldwide.
Lincoln Financial Life Insurance covers all aspects of life including Term Life, Whole Life, Variable Universal Life, Indexed Universal Life, Accident and Health, and Annuities.
MassMutual is a leading provider of individual and small business life insurance policies throughout the United States. It is the second-largest property and casualty insurer in the United States.
The company offers traditional life insurance coverage as well as investment options. Its most popular product is Variable Universal Life (VUL). VUL combines flexible premium financing with guaranteed death benefit features.
The company also offers universal life insurance, which allows customers to invest in stocks, bonds, real estate, and other assets.
MassMutual Life also offers accident and health insurance, long-term care insurance, disability insurance, and supplemental medical insurance.
Pacific Life is a large Canadian insurance company. It has been operating since 1864. In addition to life insurance, Pacific Life offers annuity, mutual funds, variable annuity, and fixed annuity plans.
Pacific Life Life Insurance Plan covers all areas of life including term life, whole life, universal life, indexed universal life, variable universal life, indexable universal life, and adjustable universal life.
Life insurance plans from Pacific Life are available to individuals and families. These plans are designed to meet the needs of both young and old. They offer flexibility and convenience.
Life insurance plans offered by Pacific Life include:
- Term life insurance – Provides protection against loss of earnings due to death during a specified period of time.
- Whole life insurance – Provides lifetime benefits.
- Universal life insurance – Combines term life insurance with an accumulation account.
- Indexed universal life insurance – Similar to universal life insurance but includes a guarantee of a minimum rate of return on the cash value of the policy.
- Variable universal life insurance – Offers a choice between immediate or deferred payment of premiums.
- Indexable universal life insurance – Allows an insured person to choose among different types of investments that provide income.
- Adjustable universal life insurance – Provides a combination of term life insurance and an accumulation account.
- Accidental death benefit – Provides a lump sum payment upon the death of the insured.
- Disability income insurance – Provides monthly payments for up to 10 years if the insured becomes disabled.
- Supplementals medical insurance – Provides additional coverage for expenses not covered by Medicare or private health insurance.
- Long-term care insurance – Provides monthly payments to help pay for nursing home costs after age 65.
Brighthouse Financial is one of the largest financial services companies in the world. The company provides products and services to consumers, businesses, institutions, and governments through its subsidiaries.
It operates in four segments: consumer banking, commercial banking, wealth management, and insurance.
Brighthouse Life Insurance Company sells individual and group life insurance policies.
The company also offers property casualty insurance, accidental death and dismemberment (AD&D) insurance, and other insurance products.
The company’s life insurance products include:
- Individual life insurance
- Group life insurance
- Variable universal life insurance
- Accident & Health
- Long Term Care
- Supplemental Medical Insurance
John Hancock Financial
John Hancock Financial was founded in 1847. Its headquarters were located at 6 Beacon Street in Boston.
John Hancock Financial Co. provides life insurance, annuities, long-term care insurance, supplemental medical insurance, accident and health insurance, and disability income insurance.
- Offers group life insurance as well as individual life insurance.
- Offers variable universal life insurance.
- Offer AD&D insurance.
- Offers long-term care insurance.
- Offers supplemental medical insurance.
- Offers accident and health insurance.
- Offers disability income insurance.