Friday, March 2, 2007
Online term life insurance quotes have played a dramatic role in driving down the cost of term life insurance rates. Why is this? Term life rates have decreased substantially due to the increased price transparency of the Internet, the highly competitive nature of the insurance industry, and the convenience of the online quoting process. All of these three factors have helped many Americans to find very affordable term life quotes online.
Price Transparency of the Internet
10-20 years ago shopping for term life insurance could be a gigantic hassle. When you consider that an appointment would need to be scheduled, illustrations would need to be prepared, and a sales presentation endured all simply to see some concrete numbers. (And that is not even taking into consideration the fact that it was next to impossible to compare more than two different companies side by side). Now with the price transparency of the Internet rates have dropped quite a bit as insurance shoppers can now just compare online price quotes in less time that it takes to brush your teeth.
Highly Competitive Nature of the Insurance Industry
The insurance industry is extremely competitive, especially in the area of term life insurance. With the exception of Return of Premium (ROP) term and a few other term insurance variations there is not really a whole lot of difference in one term life insurance policy versus another. Yes, you want to choose an insurance company that is rated an “A” or higher by AM Best for their financial strength and yes, you want a big company that you can trust but once those criteria are satisfied then term life insurance is a very commoditized product. This ability to compare “like to like” and “apples to apples” puts tremendous downward pressure on insurance companies to maintain competitive term life insurance rates.
Convenience of the Online Quoting Process
No appointment is necessary. No traveling is necessary. No sales presentation is necessary. No requirement to request information during standard 9-5 business hours is necessary. All of these positives are reasons why the online life insurance quoting process is fast becoming a preferred avenue for many Americans. You can now request life insurance quotes from multiple insurance companies and view some solid numbers from the comfort of your own home or office 24/7 – all in less time than it takes to brush your teeth!
Wednesday, February 28, 2007
Are you in the market for a whole life insurance policy? If so, you can take advantage of accessing online a free life insurance quote. Here is some information which can help you find the best insurance for you and your family.
A whole life insurance policy covers you for life, not just for a specific period of time as in the case of term life insurance. While the death benefit and premium will remain the same, whole life insurance builds cash value. Not only is the cash value tax-deferred until you withdraw it, but you can borrow against it. In addition, your premiums are invested in stocks and bonds which generate additional cash value. You also have the right to borrow against the cash which has accumulated for whatever reason you choose. Perhaps you need to make a large purchase, or cover unexpected expenses; if so, whole life insurance will suit your every need.
When taking a look at the free life insurance quote for a whole life insurance policy, you will notice the premiums may seem a bit higher than you would normally pay. However, they will be smaller than the premiums you would eventually pay if you were to renew a term life insurance policy. Whole life is suitable for long-term expenses, such as your surviving spouse's needs; which can include income; paying for your burial; or other expenses which may not have been anticipated. After all, good protection for your family and your assets is essential.
As you know, insurance rates and coverage are different from state to state, and therefore it will be necessary for you to obtain a free life insurance quote by researching the various companies online, or calling your insurance representatives directly. While there are other less permanent types of insurance available, the benefits of a whole life insurance policy are invaluable to you and your family. You are guaranteed a minimum rate of return on the cash value. You also have more flexibility with your policy in terms of increasing your death benefit without raising your premiums. You can even purchase the entire policy outright, depending upon whether or not you have a large cash sum on hand.
Accessing a free life insurance quote can be an important step in deciding which insurance company will afford you the best whole life insurance policy available. Remember, your premium will remain constant during the time you are covered unless you choose otherwise. In addition, unless you make a change to your policy, you have lifelong coverage with no future medical exams. Whole life insurance is not only a wise choice, but provides relief in knowing you have provided for your family in any eventuality.
For some it means security, knowing that their family or business is safe should they unexpectedly pass away. For others it conjures up images of pushy salesmen and confusion about what they are buying.
By learning about the different life insurance policies available you can make an informed decision that will give you peace of mind and satisfaction with your responsible decision.
There are three main types of policies. Here is a brief explanation of what they mean:
Whole life insurance is a permanent insurance. This means that the policy stays in effect for your ‘whole life’ as long as premiums (payments) are up to date.
The cost of whole life insurance premiums will usually be more than the cost of an equivalent amount of term insurance because the cost is averaged. While the cost of term insurance goes up with each renewal, whole life insurance never needs renewing. Instead of paying smaller premiums when you’re young and high premiums as you age, whole life premiums stay the same.
In some policies a savings option can be added which can be used to borrow against.
Universal life insurance is another form of permanent insurance. Like whole life the policy is in effect until you die. You never need to renew the policy (regardless of health) and the premiums will never go up.
Universal life also incorporates other financial services including a savings plan that can be made in addition to the policy. Otherwise the policy can be surrendered in exchange for the savings that have accumulated. Policy owners can often choose from many options including adding another person to the policy, managing their own investments or using the savings to cover the costs of premiums.
Universal life insurance is the most expensive option because of the amount of flexibility and options.
Term insurance is the least expensive life insurance policy option. Term insurance is selected for a certain period of time (term) such as; 1 year, 5 years, 10 years or 20 years.
Term insurance is a good choice for young families with dependants and high debts (such as a mortgage) that they will be no longer be responsible for in 15 to 20 years when the policy ends. Term insurance has no cash value – it cannot be borrowed against or cashed in. If the policy ends and the individual wants to renew the policy the cost of premiums will be higher.
Using term insurance to cover the basic financial requirements of an individual while also instituting a separate savings plan may reduce the need for insurance later in life.
Cheap term life insurance is not an oxymoron. In the past 5-10 years term life insurance rates have dropped dramatically. Why is this?
It is well documented that the price transparency that the Internet brings in allowing consumers to view competing companies prices has dramatically decreased the cost of term life insurance rates over the past 10 years. According to Kerry Hannon in the July 5, 1999 issue of Business Week, “What costs less than half what it did two years ago? Term life insurance. Term-insurance buyers have been enjoying some of the lowest rates in history thanks to increased competition and the ability to buy policies over the Internet or the phone without going through an agent.”
Even as far back as 1999 the affects of the price transparency of the Internet on the life insurance company’s rate was clearly evident. What was once a matter of thumbing through the yellow pages and listening to an agent’s spiel over a dusty paper proposal is now a matter of a few mouse clicks away and instant rates from multiple insurance companies can be compared side by side online.
If an insurance company cannot compete on price alone or differentiate its product or company from the commoditized term life insurance arena then they do not stand a chance in this hyper competitive and highly transparent insurance environment. There are many top notch insurance companies with stellar AM Best ratings (a rating used to measure the financial strength of insurance companies) and affordable term life insurance product offerings. Be a discriminating and smart consumer and be sure and do your research. Take advantage of the price transparency of the Internet to find cheap term life insurance!
Losing a family member can create both emotional and financial hardship on the entire family - whereas having a secure life insurance plan can help mitigate the costs involved. This is a benefit with both short and long-term plans. As you plan for your future, learning about the value and extensive benefits of your life insurance policies can help you maximize your investment.
Term life insurance can help your family with any costs in the event that you pass away, and can help minimize the risks involved with financial hardship on loved ones. When a key family member passes, their employment benefits cease to exist. Although some employers extend special insurance coverage to the employee's immediate family, this may not be enough to cover long-term needs and expenses.
Term insurance is commonly known as a ‘pure' form of life insurance because it only covers the insured for a specific period of time. The insurance policies will expire after a certain date, making sure that the policy holder's family and immediate beneficiaries are covered completely. It can help to protect a family's financial standing, or make money immediately available for children's college education or living expenses.
Determining Term Insurance Coverage
If you invest in a term insurance plan, you'll need to consider the length and type of the policy you want to invest in. The insurance policy is a legal document, and each type of insurance will vary by state or country. Term insurance is an affordable way to cover any potential risks in your future years; if you have numerous dependents, you really cannot afford not to have it. The best coverage for your family will depend on how many assets you own; if these are not valuable enough to provide cash after a sale, your family can be at a severe financial risk. Another factor to consider is whether you require a death benefit for a business. Any outlying businesses will require some form of coverage in the event that you are no longer the owner. Ultimately, term insurance is designed for complete financial protection in the event that you pass away.
Annual Renewable and Level Term Insurance
The beneficiaries of your insurance proceeds will receive the funds free of federal and state income taxes. The money can be used for any expenses, costs, and even pay off some debts such as a mortgage or outstanding revolving accounts. Term insurance can be renewed each year, while other premium policies can be extended for a specific period of time. Annual renewable term policies are ideal for short-term needs and the premiums will fluctuate each year upon renewal. However, this may become unaffordable if it is started too early. A level premium term life insurance plan may be a better option, since this will cover the insured for a set of years: 10, 15, or 20 years at a time will be covered at a set rate so there will not be any fluctuations in payments. Renewals may require an evidence of insurability, but you will have a chance to take advantage of more favorable rates.
Key Benefits of Term Insurance
A number of benefits exist for term insurance policies, and finding an affordable plan can help minimize the costs involved with alternative options such as permanent life insurance. Key benefits of term insurance include:
• Beneficiaries are paid the face value of the policy when the insured dies during the term
• Term insurance generally costs less than permanent life insurance plans and policies, making it more affordable in the long-term
• Some policies are renewable and may even be converted to a permanent insurance status
• A level term life insurance policy can last up to 30 years
• A higher cash value after proceeds are distributed to beneficiaries
Death benefits are not paid at the end of the term, so establishing the right amount of the policy is important during the selection process. Term insurance is the simplest and easiest type of insurance available. Most have a renewable feature that will allow you to increase the premium if any health concerns or life changes occur, and locking in a secure rates becomes much easier. Qualifying for various policies can be challenging, but once the medical evaluation is completed, the physical examination will easily approve a certificate of insurability.
What Term Insurance Proceeds May Be Used For
Once the insured has passed away and the beneficiaries receive the proceeds, term insurance can be used for a variety of purposes that can maintain your family's financial health and protect them from hardship. Common uses for proceeds may include:
• Paying off a mortgage
• Setting up a retirement fund for a spouse
• Covering children's school and college expenses
• Paying off debts such as credit cards or auto loans
• Purchasing stocks for long-term investments
• Covering business expenses
• Cover health costs of immediate family members
• Pay for personal expenses
When, how much and what kind of life insurance should I buy? Many people buy too much life insurance without any regard to having money to live on in their latter years. You should be thinking about all the income you would have earned in the event of your premature death.
The rates for life insurance for a young person are typically quite small due to the fact that their odds of death are small but increase as they age. So typically what a life insurance salesman will do due to the low rates with a whole life policy convince the buyer they also need a saving feature. Of course this adds a lot to the cost of the monthly premium. Let me illustrate to you here what happens in the event you die plus what happens to your savings portion.
Let’s assume you had a next door neighbor that came over and explained that he was starting an investment club. Naturally he wanted you to participate but first he had to explain the rules of the club. Rule 1, the initial amount you deposit into the club account will be retained as an operating expense for the first couple of years. Rule 2, after your account grows after the first couple of years the club will pay 2 1/2 % to 3 1/2 % interest. Rule 3, in the event you experience some hard times the club will loan you your own money and charge 5 to 6 % interest. Rule 4, in the event of death the club will keep your savings account!
These four rules apply to any whole life policy. Even though you may have accumulated $9,999 in your savings (cash value), upon death the insurance company keeps your savings! Would you knowingly enter into any kind of investment like this! Buy insurance for protection only not savings or investment!
Basic Reason for Whole Life Insurance
The purchase of whole life insurance online can present certain challenges for both the consumer and insurance agent looking to achieve that individual’s goals of protection. While this financial product offers many different options and plans, one very simple fit for both is structuring a small whole life insurance plan for funeral costs.
Many of my clients are people looking to secure a small amount of whole life insurance to offset the costs associated with their funeral so that their family members will not need to shoulder the costs. In most cases, a person will purchase a $25,000.00 policy that will provide an initial death benefit to cover those costs and continue to grow each year with an annual payment that, in most cases, can be as low as $500.00.
Growing Your Whole Life Insurance Policy Over Time
Furthermore, many clients also attach an option which allows them to purchase a guaranteed amount of additional insurance later in time without any further medical underwriting. This is certainly common with a person looking to leave a small tax-free gift to their respective family members.
Obtaining such an insurance policy was tailor made for the internet. Rather than meeting with an agent or broker in their office for an hour where they most likely will try to ‘up-sell’ you with more coverage an options than you need, applying online through an online site couldn’t be easier. You can obtain a free quote from a reputable, secure online site with solid financial ratings and complete the underwriting process without leaving your home. The application in most cases can be taken over the phone with the agent or completed on your end at another time convenient to your schedule.
If you are looking to obtain a small amount of guaranteed permanent insurance for funeral costs, search online for a collection of quotes and consider applying online. The underwriting process generally takes about 4 weeks and will provide you the convenience and privacy without an agent trying to push you into a whole life policy you DON’T need.