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Everything About Life Insurance!

I want to start this 2010 with an article on Life Insurance. Many people find this topic awful but believe me when I say this contract is just as important as Will and should be taken as seriously as health insurance. Due to the length of the details of this article I have provided chapters for easy reading. I hope this will teach you about Life Insurance and its importance. (Note: For a better understanding "You" are the owner of the policy and the insured)


1 = Introduction

2 = When / If You Have Life Insurance

3 = Difference between Insurance Agent and Broker

4 = Basic Type

5 = What are the racers and types of riders that are popular?

6 = Medical examination

1) Regarding general insurance:

It is a contract between you and the insurance company to pay a certain amount (premium) to the company in exchange for a benefit (called Death Benefit, face amount or policy amount) to the beneficiary (the person you want to pay at the time of your death). This can be controlled based on the type of policy (which will be discussed shortly), your health, your hobby, your Insurance company, how much you can afford in premiums, AND the amount of benefits. It sounds great but not if you have the right agent or broker.

Now many people can say that Life Insurance is like gambling. You bet that you will die within a certain time and the insurance company will not eat it. If the insurance company wins, they save the premium, if you win ... both you die and the death benefit goes to the beneficiary. This is a very painful way to see it and if that happens, you can say the same for health insurance, auto insurance, and rent insurance. In fact, you need life insurance to ease the burden of your death. Example 1: A married couple, both professionals have a very good income for living with children and just like any other family has a monthly expenditure and 1 couple has a death. The chances of a couple coming back to work the next day are very slight. Most likely your ability to work in your career will lower your RISK because you cannot pay expenses or use someone's savings or investments to pay for these expenses NOT including death tax and funeral expenses. This can be financially detrimental. Example 2: lower middle-income families, death occurs to 1 income earner. How can families maintain their financial lifestyle now?

Life insurance is about the ability to reduce the risk of financial burdens. This can be in the form of cash or simple tax through real estate planning.

KEY Definition:

Insured Person: The person covered by the insurance company (He / She does NOT have a policy owner)

(Policy) Owner: Who pays the premiums, manages the beneficiaries, and basically has a contract (does NOT need to be insured ... please understand that it is either / or).

Face Face: Also known as death benefit. Amount due to beneficiaries.

Recipient: Is the person / person / organization that will receive the total amount (death benefit)

2) When / If You Have Life Insurance:

First, you need to review your beneficiaries once a year and your policy approximately once every 2-3 years. It's free! You need to make sure the beneficiary is the person / person you want to pay! Divorce, death, dissension, or any kind can make you change your mind about a particular person to receive the benefit, so make sure you have the right person, property / trust, AND / OR organization (non-profit) to receive the benefit. . Also, you should check every 2-3 years because many companies can offer lower premiums OR increase benefits if you renew your policy or if you find that competitors who have paid you premiums can compete for your business. Whether, this is something you should consider whether to save money or increase the policy amount! This is a win-win for you so there's no reason not to.

3) Life Insurance Broker or Broker, what's the difference?

The main difference is that Agents are usually independent sellers who usually work with different insurance companies to give their customers the best policy while the Broker works for a particular company. My personal advice: always choose an Agent. Not because I am alone but because an agent can see your benefits by providing quotes, types, riders available (explained later), and the pros / cons of each insurance company. If you don't like a particular insurance company, tell the agent and he or she should move to the next carrier (if he or she continues for some strange reason, fire him). BEWARE Buyer: The agent must be paid by the carrier selected, not by you. If the Agent asks for a down payment for anything, RUN! There are also Insurance Consultants that you pay for but to keep things simple, see Agents. Consultants and Agents are also good at reviewing current policies to reduce premiums or increase benefits.

4) Policy Type:

There are 2 main categories: Term and Term Insurance. Each of the 2 categories has sub-categories. I'll explain it at a glance so you can make the best choices for yourself and your loved ones. Remember, you can own an estate / trust or an organization as a beneficiary. (Note: There are more sub-categories in this sub-category but the differences are so small and self explanatory that I didn't include in this article. Once you talk to your agent you will have enough knowledge of this article that you will know what questions to ask and know if you're the right agent for you).

Term Insurance: A provisional policy in which the beneficiary is paid only upon the death of the insured (you) within a certain period of time (hence the term "Term"). Term Insurance is usually cheaper with less death benefits. Some do not require medical examination BUT they expect to pay higher premiums as insurance company risks are unknown. Also, term insurance usually does not collect cash value (described in fixed insurance) but can be purchased on your regular basis (for those who may have coverage):

Terms of Exchange: Ability to change policies permanently. There are some GOOD policies that do not require medical exams, driver's history or dangerous avocations at any given point in order to convert to guaranteed coverage with all the benefits offered by a fixed insurance policy.

Renewable Terms: May update the terms of the policy without proof of reliability.

Duration: Premiums stay within certain timeframe of the increase (great for young adults and expect 10 years for pay increases).

Increase / Decrease Period: The coverage of the increase or decrease over the period while the premium remains the same

Group Period: Usually used for employers or associations. This includes some people to reduce the premiums. (Great for small business owners)

Permanent Insurance: As the name implies, it provides coverage throughout the life of the insurer. This also creates great cash value for tax purposes because if you lend money to yourself using this cash value there are no tax implications. Some policies may have general tax exemptions. However, in most cases, if you withdraw the cash value, you only pay tax on the premium (the increased amount). Just make sure your agent doesn't know the cash value of the death benefit otherwise it is subject to 10% tax! Submission charges may also apply when you make a withdrawal so THEY consult with an agent who can assist you with these details. You should consider Permanent Insurance if you have a family and don't mind raising the premium (the amount you pay) by a few dollars over the period.

Whole Life Traditionally: Pay a fixed amount of premiums to cover the entire life of your life which includes accumulated cash value.

Premium-Life Premium Premium Life Insurance: Full life insurance for 1 premium lump sum (usually 1 lump sum is very great for the benefit of a great death).

Participating Life Insurance: Like Life Traditionally unless it pays dividends that can be used as cash OR pay your dividend for you! There is no guarantee that you will be paid a dividend, this is based on your performance in the insurance company.

Limited Lifetime Payment Insurance: Payment is limited to a lifetime but requires a higher premium because you actually pay for a shorter amount of time. This can be based on the amount of payment (10, 20, 30, payments etc.) or a certain age (all ages are paid at 65, 75, 85, and so on).

Universal Life Insurance: Flexible premium with flexible face count (death benefit) with non-accrued price factor. Example: If you pay X amount, you are protected for X amount.

Universal Life Indexed: Flexible premium / benefits with cash value tied to specific financial index performance. Most credit rate insurers (% growth) will not be below zero.

Variable Life Insurance: Mortgage Benefits and Cash Flow Depreciation on Investment Performance from a separate preferred investment account. Usually insurance policies guarantee their benefits will not fall below the minimum.

Convertible Universal Life Insurance (also known as Premium Life Premium Variable Flexible & Universal Life II / 2): Variable and Universal combination with premium / death benefit as well as investment flexibility.

Last Survivor Universal Life Insurance (also known as Survivorship or "Second to death" Insurance): Protects 2 people and the benefits of death are only paid when both insurers have passed away. This is FANTASTIC and quite important for families who pay property taxes (usually high value individuals).

5) Life Insurance Racers, what is it and why it matters:

Rider is the name of the added benefit to your policy. This gives a special addition to the base that can be mixed and arranged together. There are many types of riders that I need to write different articles about riders (and insurance companies add new types of riders) but I want to at least name the most popular (and in my opinion, most important) things to consider when choosing a policy . Riders add to the cost of premiums but do not take lightweight riders; it can be a life saver!

Accident Death Benefit Rider (AD&D): Additional death benefit will be paid to the beneficiary if you die as a result of the accident (ie: Car accident, falling down the stairs). This is especially important if the insurer is constantly moving, relatively young, and has a family. Please note: You can purchase AD&D Insurance separately.

Accidental Death & Breakdown: Same as above BUT if you lose 2 feet or your eyesight will pay for the death benefit. Some policies may offer smaller amounts if you lose 1 point or 1 limb. This is great for those who work with their hands.

Rider Income Disability: You will receive a monthly income if you have a permanent disability. You are guaranteed a certain level of income. Pay attention to these details, depending on the policy, whether they will pay you depending on how long the defect lasts OR the rider.

Guaranteed Insurability Rider: Ability to purchase additional coverage at intervals based on age or policy year without having to check insurance eligibility.

Term Rider Term: Provides you with the amount of fixed insurance added to your fixed term policy. This rider can add 3-5 times the benefit of your death or policy. Not a bad thing!

Premium Rider Exemption: If you become disabled due to inability to work / earn income, the exemption will exclude you from paying the premium while your policy is still in effect! There is a huge gap between the policy and the insurance company up to the devil in details with this rider.

Family Income Benefit Rider: In the event of an insurer's death, this rider will provide income for a specific period of time for your family.

Accelerated Death Benefit Rider: An insurer diagnosed with terminal illness will receive 25-40% of basic policy death benefits (Decisions are made between insurance companies and insurance companies). This will reduce the benefits of death however depending on your finances or lifestyle, this rider should not be taken lightly and seriously considered.

Long-term Care Rider: If an insurer's health is required to stay in a nursing home or receive home treatment, this rider will provide a monthly payment. Please note: Long-term insurance can be purchased separately for more benefits.

6) Medical Examination:

This section is not to scare you but to mentally (and possibly physically) prepare you for a medical exam so that you know what to expect and can get the lowest premiums when receiving the highest death benefit. This really doesn't matter if you work out regularly and maintain a healthy eating routine (notice I say habit and not diet. Diet does not work for long).

Exam is compulsory for most insurance policies. Long-term insurance requires no one but expects lower death benefits and / or higher premiums. The idea of ​​this exam is not just to find out if you can be insured but also to see how much they will charge the insurance / policy owner. The exam is conducted by a "paramedic" professional who is an independent contractor hired by an insurance company who either comes to your home or has an office where you / your insurer visits. They are licensed health professionals so they know what to look for! In some cases, the insurance company may request a "Doctor's Assignment (APS)" from your doctor. This must be provided by your doctor and NOT a copy by you. Hint: The "paramedical" job is to give the insurance company a reason to increase your premiums without giving you any unwanted details.

The first part (either called Part 1 or Part A) is completed by the Agent or by you. Part 2 / B is the paramedic or doctor's section. It's best to contact your agent with a specialist who specializes in mobile exams for an easier exam for you. Paramedical will contact you to schedule an appointment. The exam is not an option so it doesn't matter if you do it, but when and where. This exam will not burden you unless it takes time, life insurance is important!

Paramedics / doctors will take your medical history (questions), physical measurements of height and weight, blood pressure, pulse, blood, and urine. Additional tests will vary by age and number of policies (yes, the higher the death benefit = the more tests must be provided). Now if the policy is large, insurance companies cannot send paramedics but require a real Medical Doctor to test you. Of course, this is selected by the insurance company so remember my previous tip! These exams may include treadmill tests and additional crazy tests to see if you qualify for large amounts and low premiums. On the other hand, if you choose a low insurance policy, you will only have paramedics perform the aforementioned simple tests without additional exams.

What they are looking for: Paramedics / Physicians look for health conditions that can shorten your life. Remember, insurance companies are here to do business and if you are a liability then it may be a risk that they do not want to take or raise the premium to make the risk acceptable. Blood and urine are taken to see the following:

- your antibody or antigen to HIV

- Cholesterol and lipids are related

- Antibodies to hepatitis

- Liver / kidney problems

- Diabetes

- Immunity mess

- Prostate-specific antigen (PSA)

- Drug tests like cocaine

The result: They are sent directly to the underwriting office of the insurance company for inspection. Many times you can ask (must be in writing) to receive a copy of the decision but many insurance companies will do this automatically. Many times they will find the disorder but are usually not a concern and just talk to your medical professional for follow-up (remember: insurance companies will look at this exam with "fine teeth" to see what the risk is). The underwriter will look at the exam results and the application (remember part 1 / a? Well, now they want to see if you are lying too) and determine the premium amount. Smokers pay more; Any nicotine in your system will treat you as a smoker, even if it's just socially.

Premiums are determined by the category you are applying for. It really depends on the insurance company how they factor in but the general rule is that if you are at higher risk, you pay higher premiums. If you are a standard risk, you will pay a standard premium, and if you are a risk of choice, you will pay a lower premium.

You can reject the policy after you receive the final excerpt after the exam but keep this in mind: All results will be part of the MIB (Medical Information Bureau) database. This is an explanation of the medical information used by the insurer to retain the information after you apply for Life / Health / Disability Insurance / Long Term Care / Critical Insurance. So for seven years he will be in the database. You can receive a free annual report (such as a credit check) on their website which I have included at the bottom of this article.

Now you know almost everything you need to know about life insurance. I hope you realize how important it is. It may seem like a lot, but the hardest part is choosing the right type of policy for you. This can be done with the help of your Agent. Finally, everyone is different and everyone should analyze their own situation and the needs of the recipients. If you have little concern for your loved one about what will happen if you are no longer with us then you should consider life insurance. There is really a sense of relief when you know you and your loved one are protected no matter how much you or that person makes them. For many who feel that their loved ones do not need the benefits of death for whatever reason ("they earn enough money to survive" is the biggest reason I hear from life insurance), this can be the last simple signal "I love you" or appreciation for being a part of your life.

I hope I can educate you on Life Insurance and if you have any additional questions, feel free to email me.

MIB website:


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