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Advantages Of Single Premium Life Insurance

David — Mon, 05 Dec 2011 14:09:10 +0000

What Is Single Premium Life Insurance?

Find Out If SPLi Is Good For You!

This website has already explained single premium life insurance. If you are unfamiliar with the topic, you may want to go back and browse the basics.

One Payment Equals Lifetime Coverage

Basically, a lump sum of cash is put into a cash value life insurance policy a the very beginning. This is usually a whole life policy with some sort of indexed or percentage return.

This funds the actual coverage for the rest of the insured person’s life, and it should also start the policy with a cash value. Here are some basic things to note before we discuss the advantages of getting life policies this way!

This cash value will be somewhat less than the original cash funding amount because of administration feeds and the cost of coverage.
However, in simplest terms, now the cash account should have the opportunity to grow quickly because the coverage is already funded.

This probably all seems a bit odd. Most of us are used to purchasing our policies with an agreement to making monthly, quarterly, semi-annual, or yearly payments. For some people, this odd way of doing things can have some advantages though.

Single Premium Life Insurance Disadvantages

Here are the main disadvantages of single premium life insurance. They will only be disadvantages for some people, so you need to consider them carefully to see if they would be drawbacks for you.

You do need that lump sum of money to fund the policy, usually at least $5,000 – and probably more. If you do not have a sum of cash that you have set aside for long term use, then you should probably pass.
Since you fund the policy in one step, you may not get the full tax advantages of normal life insurance policies that get funded over a period of 7 years or more. Your earnings should be tax deferred while in the cash account, and your beneficiaries should still get tax free proceeds if you pass away. However, your withdrawals may be taxed. This is NOT meant to be tax advice, but just a heads up you need to look into the current rules where you live.

Single Premium Whole Life Insurance Advantages

Now we get to the good part! There are some benefits of being able to fund your lifetime coverage right away.

You may choose a fixed interest rate return (fixed) or a market return (variable), or some hybrid with market-like growth but guarantees. This means your cash account will have an opportunity to grow, tax deferred, within the account.
You will also, of course, immediately have fully funded life insurance for the rest of your life. Your own beneficiaries will be able to collect the proceeds without having to pay taxes, and without going through the hassle of probate, etc.
Many single premium life insurance policies also have provisions to withdraw some, or all of, the cash value in case of illness or long term care expenses. This means your policy may do double duty as a life insurance policy and a long term care insurance alternative.
Your policy may also allow you to withdraw some cash for daily living expenses. So it may be useful as an income source.
Since you have a funded cash value policy, you may also be able to use it in a senior life settlement, so you can get some percentage of the actual death benefit. This death benefit amount should be higher than the cash account or surrender value.

This article is intended as a very basic 101 of some of the disadvantages and advantages of single premium whole life (SPLi). Hopefully, now that you understand the basics, you can find a good life insurance agent who can give you in-depth information that has been tailored to your individual situation.

Retirement Planning Life Insurance Products To Consider

David — Sat, 08 Oct 2011 15:20:53 +0000

What Are Popular Life Insurance Products For Retirement Planning?

Can Life Insurance Products Provide You WIth Retirement Income?

There are many life insurance products that are popular with retirement planners. These products may give you several benefits that you cannot get from other financial planning products and services. Most retirees want to maximize gains while minimizing risks. They want to make a profit during good years, but also know that their savings are secure during down years.

Since we have had our share of downturns lately, the emphasis on minimizing risks may even be more important. We already know that we cannot count of getting good returns from our bank savings accounts or the appreciating value of our homes.

What Can Life Insurance Products Do For Retirees?

Here are some potential benefits of the life insurance products we will discuss. Not all of these products have all of the benefits, or some may emphasize some more than others.

An actual death benefit that provides a way to transfer wealth, or simply to provide beneficiaries with some security.
Most life insurance products come with some tax advantages over other types of savings.
Many products come with guaranteed returns, even when the market goes down. The trade-off here, is that these products will not make the greatest gains during good years. In recent years, many retirees have been satisfied with this trade-off.

Cash Value Life Insurance

When we are younger, with large mortgages and growing families, term seems attractive. It allows us to buy more coverage for less money. You can still find term life for older people. However, cash value life insurance policies, like whole and universal life, may start to seem more attractive to older people.

What are some benefits of whole or term life insurance policies as we approach, or enter, our retirement years?

Cash value policies can grow a cash value! This means that the policy provides life insurance for our whole lives. But it may also have actual money in it that can be used while we are still alive in a variety of ways.
Some ways to use the cash are borrowing against the account, surrendering the policy for money, or using it in a senior life settlement! Any of these transactions may reduce or eliminate the actual death benefit, but they give you the flexibility to determine which is more important at some future date.
Senior life settlements are transactions in which the policy owner may sell some, or all of, the death benefit in exchange for a payment that is some percentage of that death benefit. You can learn more about senior life settlements for seniors here.
In most cases, the death benefit will be a tax-free transaction for the beneficiaries. In many cases, you can also get money out of the policy without having to pay income taxes on the money.
Sometimes you can leave the death benefit as income over a period of time, or even income for life, for a beneficiary. This may be a good way to provide for a spouse or disabled child.
Some policies have riders that also allow the insured person to collect some of the death benefit while they are still alive. These riders may cover the person in the event of a severe illness. This may be used to help pay for medical or nursing care.
Of course, cash values policies also provide a death benefit as long as they are kept in force. That means you do not have to worry about the contract expiring at some future date, leaving you without coverage. `
Some older people do not have a lot of savings or a high income. They cannot depend upon their families to come up with cash for final expenses and funerals. They just want a burial insurance policy in order to provide cash to settle debts and pay final expenses.

Single Premium Life Insurance

There is another type of life policy, called single premium life, which has some attractive advantages for some retirement planners. It usually competes with annuities (discussed below) for attention. You may want to consider the pros and cons of single premium life vs. fixed annuities for retirement planning.

Fixed Annuities

In there basic form, annuities are meant to provide an income or account growth. Some are actually tied to a market index, so they can provide near-market returns. They may also have a guaranteed minimum payout, so they will actually grow during down years. The trade-off of being protected during downturns, but enjoying growth during good years, is attractive to many people who count on having this money for the future!

They are considered life insurance products, though they may or may not provide an actual death benefit for beneficiaries. Still, fixed annuities can provide you with some tax advantages over other forms of savings.

You can learn more about how fixed annuities can provide you with some security and growth here : Annuities Explained

How To Learn More About Life Insurance For Retirement Planning?

You can find a lot of good information on the web. We think this website has covered many of these topics, and you may just want to use the search feature. You can also find a good financial planner or insurance agent who can listen to your concerns, evaluate your current situation, and make valuable suggestions.

Why Compare Whole Life Insurance?

David — Fri, 21 May 2010 17:05:21 +0000

Should You Still Consider Whole Life Insurance?

First, it is very important to understand the different types of life insurance policies on the market. You read and hear a lot about term life. Term does tend to have cheaper premiums, so it is possible to buy a much larger amount of coverage at a lower price. It is a good solution for many people, especially younger families with mortgages to finance and children to protect.

However, standard whole life insurance, also called straight life, is the traditional product. There is still a lot of it around, and it does serve as coverage for a person’s entire life. In other words, it does not expire after a term and it will stay in force as long as the premiums are paid for or paid up.

Before you buy a policy, make sure you compare different types of life insurance so you can choose the kind that will be best for you. That decision depends upon your budget, financial plans, and needs.

For more help: Standard Whole Life Insurance Quotes

Perm or Term Life Insurance Over 50?

admin — Tue, 02 Mar 2010 17:02:16 +0000

Term Life or Permanent Life Insurance Over 50?

Many people over 50, or even well into retirement years, are considering the purchase of a new life insurance policy. Some people associate life insurance with younger people, but some of us reached middle age with many of the same obligations we had when we were younger. We are just older now, and we find that policies are a little tougher to find and more expensive when we do find them.

So how do we consider the alternatives now, and decide between term vs whole life insurance policies? And why do older people need to purchase a policy anyway?

We may have planned to pay off our mortgage and get our kids off on their own. But those things got delayed, and we do not have any coverage on our own lives. Why aren’t we covered? Well, we may have had a term policy that, thankfully, we outlived. Or we may have lost our group life insurance when we retired, quit, or were terminated.

Let’s consider some a few things before we start shopping for new coverage.

Term is Cheaper- Term premiums are bound to be lower than permanent life insurance premiums. Since we are older, and are rates are also likely to be a lot higher than they would be for a 35 year old,that is not trivial. But maybe we have a way to buy time. You can purchase term that is convertible to life without showing evidence of insurability. That means you could buy cheaper term now, and then decide to covert it to whole life in the future.
Why Do You Want Life Insurance Anyway? This questions is not trivial either. Do you just want coverage, or do you want to leverage other features of some policies like estate and asset building? If you want to use your policy as an asset, maybe a permanent policy would serve you better.

When you sit down with an insurance agent or financial planner, make sure you have some clear ideas about your reasons for purchasing your policy. Consider your immediate need for coverage, but also think about the future. Be very wary of any insurance professional who only fixates on one type of product without comparing other alternatives. He or she may be more interested in meeting sales goals than service you in the best way.

You should also walk in to any appointment with an idea about the cost of life insurance.That way you will not be surprised or make an impulsive decision that is just based upon the premium.

How Life Insurance Policies Work

admin — Tue, 08 Sep 2009 13:38:30 +0000

A life assurance policyholder pays a certain amount of money in his or her lifetime to an insurance company to safeguard their future or the future of their dependants. People do this by paying the insurance company a premium either at regular intervals or in one sum depending on the type of life assurance policy. In the event of the policyholder’s death, his or her dependants receive the stipulated amount that has been paid for in the policyholder’s lifetime, which helps greatly especially in case their children are young and incapable of looking after themselves.

Note: Term or Whole Life Comparison

Some life assurance policies pay back the premium paid during one’s lifetime in case of illness or any grave injury according to the agreements in the policy. There are various kinds of life assurance policies and before taking one, the policyholder should discuss all the pros and cons at length with their insurance agent, and fill out the life assurance form honestly, as there could be repercussions later such as non-fulfillment of claims.

Different life assurance products can confuse the individual who wants an insurance policy, hence choosing the right agent from a reputed insurance company helps settle qualms arising when making these choices. The most common life assurance product is the term policy, where you receive nearly 80% of your premium in case of any illness befalling you. In the case of death, the beneficiary gets the money that you have insured, provided it is within the period specified by your life assurance policy.

A whole life assurance policy allows the insurance company to invest your money in funds. Since you pay out more than the amount, you insure yourself. These rates change every 10 years and once you cross 65, you may have to pay premiums while the amount invested as stock in your name may or may not yield proportionate dividends. This is not a very popular life assurance policy unless you have many estates and are wealthy enough to want your dependants to reap maximum benefits from the estate.

Mortgage protection insurance and mortgage repayment protection are different types of life assurance products available with life assurance companies, which deal with repayment of loans for your home. There are several options with these types. Get the best life assurance deal as you shop around and always make sure you read the fine print at the bottom of any life assurance policy that you sign, as most often there are hidden catches, not spelt out by the insurance agent. Income protection insurance gives you cash benefits in case you are unable to work due to some serious illness and if you are self employed. The amount is non-taxable as long as your condition does not improve. Critical or serious illness insurance, on the other hand, will pay you a lump sum if you have one of the serious illnesses specified in your life assurance policy at the time of filling out the form. When choosing a policy, make sure you compare the costs against benefits before signing on the dotted line.

What is Senior Life Insurance?

admin — Thu, 11 Jun 2009 18:09:57 +0000

Have you heard of senior life insurance plans?

If you ever watched daytime TV, you must have seen ads for products like the Golden Plan or Platinum Care plan, or some colors that suggest silver hair and a pleasant old age. They promise to cover senior citizens in their retirement years, though some will market to people in their 40′s or 50′s too. You usually see a silver haired TV personality or a pleansant looking older couple discussing their worry about not having enough life insurance in retirement. If you are a senior citizen, or if you care for an older person, you must have noticed these ads unless you never watch tv during the day.

Whole Life Insurance With Smaller Face Values

Actually these tv spots are put on to get your interested in whole life insurance plans for seniors. They have smaller face values, from a couple of thousand to a couple of tens of thousands, that have been designed to be easy for most older people to qualify for, and also affordable for many families.

Sometimes these plans are also called burial plans or final expense insurance. They are intended as a way for older people to make financial plans for those expenses that come at the end of life. One large expense would be a funeral, of course. But the plans could also pay out cash to settle debts, help survivors travel, and they could even leave some extra money as an estate.

Who Buys and Needs Senior Life Insurance?

Sometimes an older person will purchase a policy for themselves. Sometimes the concerned children or other close family member will pay the premium. The insured person must still answer application questions and sign the application, but the policy could be owned by another person. It is, of course, a delicate subject to discuss. But many times the older person, who wants to be insured, will bring up the subject. The other family members have also been concerned about the high cost of funerals, realize that they don’t have that much savings, and are happy to cooperate.

How To Find Final Expense?

If you are curious, you can get more information on plans and policies that are marketed in your area. It is always good to do some comparison shopping because, as with any other type of insurance, the price and policy will vary by location.

Visit Here: Final Expense Insurance For Seniors

Is Final Expense the Only Option?

Actually some reasonably healthy older people can still qualify for other types of life insurance, and that even includes cheaper term insurance. The choice of policy will depend upon your own goals.

You may want to check out your options here: Term Life For Older People

Buying the Best Life Insurance For You and Your Family

admin — Wed, 08 Oct 2008 14:53:17 +0000

We always get the same question. What is the best type of life insurance for my family? I cannot give a one size fits all answer because the choice of coverage will depend upon your own needs and expectations for a life insurance product.

If you just want coverage, and especially if you are fairly young, then term life insurance is probably the product for you. Because it is a temporary product, usually lasting 10 to 30 years, and because it does not usually have any cash value, it is usually the cheapest coverage to buy. Find the best term life insurance quotes in your area here. If you are older, say middle aged or even in retirement years, you may be able to find term policies too. We are living longer, and insurers are promoting term life insurance for older people now.

On the other hand, you may want permanent protection that will not expire. The problem with term is that it tends to expire just when we are older and harder to insure at a low price. Consider adding a permanent policy to your coverage. If you are not familiar with permanent policies, look at whole life insurance explained so you can understand the product.

In a perfect world, a larger term policy would cover a family during their working and child rearing years. It would have enough of a death benefit to pay off a mortgage, plus more included to replace income, help pay for the chidren’s education, and provide money for burial expenses. In addition, I would want a smaller permanent policy to build cash value and be available in senior years.