From Which Company Should I Buy a Life Insurance Policy?

admin — Wed, 30 Jul 2008 11:45:41 +0000

Today’s life insurance companies have transformed both themselves and their products in an attempt to protect against a repeat of the last decade’s financial dissonance. Universal Lite and Variable universal Lite policies shift the premium sufficiency risk to the policy owner; such policies represented roughly 50 percent of new sales in 2003.2 Whole Life and No Lapse/Secondary Guarantee Universal Life are backed by the carrier’s financial stability. Term (during its initial guarantee period) is also backed by the carrier’s financial stability, but sufficiency risk is shifted to the policy owner during the period beyond the initial guarantee in which death is more likely to occur.
While there are still unique product offerings that may be offered by some companies, the selection of an insurance company should follow standards of prudence and due diligence in an economic environment characterized by volatility and instability. The following standards for choosing a life insurance company are recommended:
Choose carriers with financial ratings from at least three of the major ratings services (e.g., A.M. Best, Moody’s, Standard & Poor’s, Fitch, and Weiss).
Choose carriers that have financial ratings of at least A+ from A. M. Best and that are not less than fifth from the top rating categories of the other agencies (e.g., Moody’s, Al or better; Standard & Poor’s and Fitch, A+ or better; Weiss, B or better). There is rarely a compelling reason to make exceptions.
Recognize that, while cheap term is often offered by small insurance companies, the cost difference is minor to acquire term from a larger company.
If buying term, consider policies offering conversion features that can solve the emerging problem of lessening insurability and longer time frames than initially expected when the term policy is first acquired.
Choose a carrier offering policy types and features that are attractive to you and that seem to fulfill your needs.
Do not choose a carrier based on its policy illustrations, appearance of competitive pricing, or other nonguaranteed representations.
If buying permanent life insurance, consider whether your insurance style suggests more comfort with a mutual insurer or a stock insurer.

Life Insurance. What is it?

admin — Wed, 30 Jul 2008 11:35:50 +0000

The life insurance industry seems to complicate this coverage. It is a shame, too, because it can be simple. Unlike auto and home insurance, life insurance is rarely required by the government or a bank. It is your choice to buy life insurance if you feel you have an obligation that might last longer than your life. I have read that you need 5 to 7 times your annual income.
Some people may want to deduct what social security would pay to the survivors from the annual income needs. Just remember Social Security pays a dependent child until he/she is 18 (up to age 19 if attending elementary or secondary school full time), and only pays the surviving spouse until your youngest child is 16. The benefits might change as the belt tightens on Social Security so be sure to check on line at http://www.ssa.gov/.
If you have a sizable estate, you will want to work with an attorney/ planner to look for ways to lower and pay the probable estate taxes. One more note, after you determine the insurance needed, figure out what you can afford to pay in premium to cover that need. Can you afford a dollar a day or two, three, four, five…, or annually a specific amount? Be honest with yourself. If you can buy all you need with that budgeted amount, great! If you can’t, buy what you can. The purpose of life insurance is not to make you feel broke; it should relieve pressure rather than create it.

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From Which Company Should I Buy a Life Insurance Policy?

Life Insurance. What is it?