Monday, April 30, 2018

Whole life, Universal Life, or Term - How to Decide What's Best for You

A whole life insurance policy covers you for your entire life. Your death benefit and premium in most cases remain the same. 

Whole life also builds cash value, which is a return on a portion of your premiums that the insurance company invests. This tax-deferred cash value can be borrowed to help finance your children's education and is self-completing if either parent unfortunately experience an untimely death. 

Whole Life
A whole life insurance policy may be used as a part of your estate planning. Consequently, whole life insurance is a good choice for you if you want to ensure that you have a life insurance policy in place for your entire lifetime and can comfortably afford the premiums, 

While whole life insurance is designed to provide coverage on the insured for the insured's entire life as long as the premiums are paid and the policy has not been surrendered, 

Universal Life
Universal life is a type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element, like whole life insurance, which is invested to provide a cash value buildup. 

The death benefit, savings element and premiums, can be reviewed and altered as a policyholder's circumstances change. 

In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.

Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. 

Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. 

For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums.

Universal Life and Whole Life Compared
Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly. As an example, the Indexed Universal Life may base the performance of its cash values on one of several indices, including the S & P 500 or the Dow Jones Industrial Averages. 

Moreover while it provides an opportunity for growth, it has guaranteed returns and provides considerable stability. In that it provides both growth potential and a safety net, it is excellent for college planning or retirement supplemental planning.

Term Life
Term life insurance provides coverage only for a fixed period 10, 15, 20, or 30 years, as stated in the policy. And, it has no cash build up. While it can be extremely affordable for a person in good health up to the age of fifty. After that age, the premiums start to get progressively more expensive. 

Term should be purchased if you only need insurance for a specific period of time, such as if you want an outstanding fifteen or thirty year mortgage balance paid off in the event of an untimely death.

Any comments on the needs for  life insurance? Leave them below. If you need a quote, call (773) 614-3201.

Friday, April 13, 2018

11 Rules for Reading any Insurance Policy

I know you don't like to read your insurance policies, but let's face it you do need to. You're paying for them and you may eventually need to make a claim.  

Rarely do insurance brokers, even those who have been in the business for decades, take the time to read an entire policy. 

When they do so, they are generally seeking a specific answer or researching a problem -- undertakings that require them to review only individual parts of the coverage form and/or its applicable endorsements to determine the required answer or opinion.

Whether reading an entire policy or only sections, these 11 Rules can be applied in reading the policy form to make finding the needed answer easier and quicker.

These are not shortcuts to reading the policy, as there is no shortcut to reading any legal document, just pointers towards correct policy interpretation and application. Here are the 11 Rules for Reading any Insurance Policy:

  1.  Ascertain who qualifies as an insured.
  2.  Confirm that all Forms and Endorsements are attached.
  3.  Read the Insuring Agreement first
  4.  Read the Exclusions.
  5.  Read the Exceptions to the Exclusions.
  6.  When the policy refers to another section, read that section immediately.
  7.  Pay attention to the conjunctions used in a list.
  8.  Pay attention to key words and phrases.
  9.  Read and understand the Definitions of Specifically Defined Terms.
  10.  Understand and make sure all the policy conditions have been met.
  11.  Confirm the coverage limits are adequate for the loss.

Do you have any questions concerning any of your policies, email me your questions. 
If you have any comments, leave them below.