Final Expense Life Insurance

Final expense life insurance is available in both term and whole life policies and is intended to cover funeral costs, medical bills and any other debts left when an insured dies. The death benefit is usually between $10,000 and $50,000 to cover all final expenses. Most people who purchase final expense life insurance are over 50 or suffering from a life-threatening illness.

No Medical Exam Life Insurance

The average applicant for final expense life insurance might not be eligible for other types of life insurance due to age or a medical condition. Final expense insurance does not require applicants to undergo a medical exam, similar to no exam life insurance.

The lack of medical screening reduces the company’s underwriting costs, and policies are generally issued without undergoing the standard underwriting process. Some applications will ask medical questions or refer to your medical history, but most guaranteed issue life insurance policies have no medical questions, physical exam, or lab test results on the application.

Guaranteed Issue Life Insurance

Although applicants for guaranteed issue life insurance may not have to undergo an exam, some companies require you to answer medical questions during the preliminary screening process. Once the application is completed, the applicant is guaranteed to be issued a policy for the requested death benefit amount.

Some individuals will be refused an application during the screening process, so while the policy is guaranteed, the opportunity to apply for the coverage may be denied for reasons stated by the insurance company. Regardless, no medical exam life insurance is one of the best policies for the elderly, those with preexisting medical conditions, or applicants just looking for an alternative to final expense life insurance.

Graded Benefit Life Insurance

Some guaranteed issue life insurance policies have graded benefits. This means that the full amount of the death benefit will not be paid within a specific period, usually two years from the date of policy issuance, which is called maturation.

If the insured person dies within that period, the family is entitled to a refund of premiums paid into the policy, and in the case of whole life insurance, any interest earned on the policy.

Simplified Issue Life Insurance

Simplified issue and guaranteed issue life insurance are very similar. While no medical exam is required for simplified issue life insurance, the applications do have medical questions regarding your health record and history. There is no underwriting involved in guaranteed issue or graded benefit life insurance policies, but simplified issue life insurance does undergo an underwriting process which assigns applicants to a health class.

Simplified issue life insurance is often more affordable than guaranteed acceptance or graded benefits coverage, but may not guarantee that a policy will be issued.

Who Buys Final Expense Life Insurance?

Anyone can buy final expense insurance, but it is most often purchased by retirees who have no dependent children and by those with chronic, debilitating, and terminal illnesses that will probably result in their premature death. These applicants may be unable to get life insurance due to their pre-existing condition, or the cost may be prohibitive.

Guaranteed life insurance has a relatively low death benefit amount, which makes it cheaper than other types of life policies.

How Much Final Expense Insurance Is Needed?

The average cost of a funeral in the United States is about $10,000, and that does not include any expenses associated with burials, medical bills, or other final expenses. Those who suffer from prolonged illnesses may leave medical expenses behind that can amount to a huge liability for family members, surviving spouses, or children. There are also usually a few normal bills, like the final utility, phone or credit card bills. Young families can even consider survivorship life insurance.

The final expense life insurance policy usually has a minimum policy limit of $10,000, but many applicants opt for higher limits to ensure their survivors are not left with expenses or to leave a small inheritance.

Prepaid Funerals Still Leave Final Expenses

In recent years, the pre-planned, prepaid funeral has become popular. Many seniors make and pay for their arrangements well in advance of their death. There are still extraneous expenses involved, like flowers or a reception following the service, that are not covered by the funeral expense payment.

However, early planning will not pay final medical, utility or other credit card bills that are left behind. Even those with prepaid funeral plans should consider final expense life insurance to cover these additional bills.

Term Life Insurance Policies

Term life insurance has the cheapest life insurance rates, and is in effect for a specific amount of time, usually between 5 and 30 years. If an insured policyholder has a 30-year, final expense term life policy and he/she outlives the term of the policy, he/she is left without life insurance coverage and may not be able to renew their policy again.

The lower premiums make term life insurance affordable for most families, and applicants who buy this kind of coverage will not outlive the policy term. The alternative is whole life insurance, which is not as cheap, but offers additional features and builds cash value.

Whole Life Insurance For Final Expenses

Whole life insurance is permanent and has a cash value which accrues over time. Premiums may be paid as a single sum, over a limited period or monthly, quarterly, or annually. Single payment life insurance is paid up and permanent on the date of inception while limited term requires regular, scheduled payments over a period of time like 10 or 20 years, after which, the policy is paid off and permanent.

The cash value in whole life insurance is invested and may be used as collateral for a loan, down payment for a house, college tuition payments for children, or withdrawn from the policy. There are many different types of whole life insurance, and the only way to find which type of life insurance is best for you is to get life insurance quotes and compare coverage from insurance companies.

Life Insurance Quotes

Final expense life insurance is a gift to family members that are left behind. Final expense policies cover bills and funeral expenses survivors would otherwise have to pay. Life insurance benefits are non-taxable may be used to cover probate costs, estate taxes or simply to leave a small inheritance to children or grandchildren.

With MyLifeInsuranceQuotes101, consumers can enter their zip code and compare life insurance quotes. By getting free, instant online life insurance quotes, applicants can compare final expense life insurance from many companies and choose the best, affordable policy. Enter your zip code to begin a life insurance quote now.

Survivorship Life Insurance

Survivorship life insurance is a way to insure two people under one whole life insurance policy, and is most often used to insure a married couple or two business partners. The two types of survivorship life insurance polices are first to die policies, most often used by business partners, and second to die life insurance, where the death benefit is not paid until the death of the second insured. First to die life insurance policies generally have higher premiums than second to die life insurance policies and are more appropriate as business insurance.

Survivorship Life Insurance For Estate Planning

The advantage of survivorship life insurance as an estate planning tool is that the proceeds of the policy are usually exempt from estate taxes, allowing beneficiaries to keep all of the money paid from the policy. Estate taxes in the United States are 35%, which takes a substantial amount out of investments that may be inherited by children or other legatees. Survivorship policies allow the insured to preserve more of their estate for their heirs or beneficiaries, and they can be used to pay estate taxes on taxable assets.

Survivorship Policies For Business

When two partners own a business and one of them dies, the estate of that partner can claim his half of the business’s assets. This can create a financial void, making it difficult for the business to continue operating. A first to die policy can offset the loss of assets and keep the business functioning for the surviving partner. In first to die policies, the surviving business partner receives the death benefit, which protects the proceeds from any claims from the deceased partner’s estate.

Economic Advantages of Survivorship Life

The cheap premiums on survivorship life insurance policies are lower than the premiums on two individual permanent life insurance policies, which allow couples and business partners to save money. People who are considered uninsurable for standard term life insurance or whole life insurance policies may qualify for a second to die life insurance policy, since the death benefit is only paid when the second person dies. The second to die life policy is a relatively cheaper way to cover estate taxes which can reduce the amount that heirs inherit.

Tax Laws and Survivorship Policies

The tax laws concerning second to die survivorship life insurance are ambiguous, so it is important to consult an attorney specializing in estate planning to ensure that the proceeds of the policy are exempt from estate taxes. It may be necessary to place the policy in an irrevocable life insurance trust to avoid estate taxes. Second to die life insurance is most useful in estate planning when the parties have a relatively large estate, and may not offer much advantage to small or moderately-sized estates.

Disadvantages of Survivorship Life Insurance

Second to die life insurance may not be appropriate if the surviving spouse will suffer significant financial loss when the first spouse dies. A term life or whole life policy naming the surviving spouse as the beneficiary will provide funds for burial expenses and the financial needs of the survivor. When couples divorce they may not be able to change the terms of the policy. Finally, the surviving spouse may have to continue to pay premiums on the policy until they die in order to keep the policy in force.

Other Premium/Payment Options

Survivorship life insurance is a relatively new type of life insurance policy, and each of the best life insurance companies offer different coverage options to their customers, so consumers do need to research and compare a variety of life insurance policies, rates, and carriers. Some companies offer a single payment survivorship policy, where a lump sum is paid at the inception of the policy and no further premiums are due. This option may be attractive to couples that wish to leave a gift for a favorite charity, a bequest, scholarship, or a financial windfall for their children when the second spouse passes away.

Unique Benefits of Survivorship Life Insurance

Survivorship life insurance offers unique benefits that can help in estate planning or in planning for the future of a business partnership. Lower, more affordable life insurance rates make it a good choice where one spouse may be in poor health since the requirements for survivorship life insurance are less stringent than those for other policies. Those considering a survivorship life insurance policy should compare and weigh the advantages and disadvantages of the insurance policy before making a decision.

Life Insurance Quotes

For life insurance quotes on all types of plans and policies from the best life insurance companies in the U.S., simply enter your 5-digit zip code in the box provided above. MyLifeInsuranceQuotes101 provides free, instant life insurance quotes on many different types of life insurance and there is never any obligation for using our online quote service. By comparing multiple life insurance quotes, rates, and policy coverage from different life carriers, consumers can be certain they are buying the most affordable life insurance policy available on the market.

Term Life Insurance Rates By Age

While life insurance companies consider many risk factors when determining insurance rates, the single biggest factor is the age of the insured person and medical health and history. Because younger individuals have lower mortality rates than older people or senior citizens, and life insurance rates are based on statistical probabilities that an individual will die during a certain time frame, carriers calculate life insurance rates by age.

Term life insurance rates are determined a little differently, since they only consider the term the policy is in effect. However, age is still important for determining rates on all types of life insurance, especially whole or universal policies – which are permanent. Bottom line is life insurance companies determine life insurance rates by age as the single biggest factor affecting your premiums.

Term Life Insurance Rates By Age

Here are the average term life insurance rates by age per year, including non-smoker vs smoker premiums, for a 20-year term life policy worth $250,000.

  • 25 Years Old – $330 (non-smoker) and $669 (smoker)
  • 30 Years Old – $335 (non-smoker) and $722 (smoker)
  • 35 Years Old – $360 (non-smoker) and $809 (smoker)
  • 40 Years Old – $432 (non-smoker) and $1,175 (smoker)
  • 45 Years Old – $620 (non-smoker) and $1,882 (smoker)
  • 50 Years Old – $919 (non-smoker) and $2,799 (smoker)
  • 55 Years Old – $1,455 (non-smoker) and $4,470 (smoker)
  • 60 Years Old – $2,492 (non-smoker) and $6,669 (smoker)
  • 65 Years Old – $4,172 (non-smoker) and $11,860 (smoker)

Please remember, all rates are average annual premiums, so your life insurance quotes may be lower or higher based on your health.

Cheap Life Insurance Rates For Young Adults

In the absence of any congenital health issues, the cheapest life insurance rates by age are afforded to children. One way to guarantee the lowest rates for life is to buy a permanent life insurance policy for a child or infant. Permanent life insurance rates are based on the average life span of the person and their age when they buy the policy.

Since the average person lives to between 75 and 80 years of age, life insurance companies charge less per year for children because they can expect to collect more premiums over the years. Consumers can expect to get whole life insurance for children, young adults or parents at very affordable rates.

Probabilities and Statistics

Mortality tables used by insurance companies reflect the number of people of a given age that die in a given year. For instance, if a mortality table shows that 2% of 25-year-olds die before their 26 birthday, the company can expect that 2 out of every hundred 25-year-olds they insure will die, and carriers set their rates accordingly. The same mortality table may show that 5% of 35-year-olds die so life insurance rates by age for 35-year-olds are thus higher to cover the increased number of claims in that age group.

To get specifics, consumers can compare life insurance rates online. By entering your zip code, we can provide free, instant life insurance quotes so you can compare companies, coverage, policies, and rates to learn more about the cost of life insurance for you and your family.

Spreading Life Insurance Risk Gets Cheap Rates

Insurance works by spreading the risk of financial loss among many people or policyholders. This applies to all kinds of insurance including home, health and auto insurance. While some people will suffer losses, most will not and the money collected from the majority pays for the losses suffered by the few individuals. Instead of charging everyone the same life insurance rates, companies weigh the risk of financial loss for each individual and those with the highest risk of loss pay the highest premiums, which is why life insurance rates by age results in seniors paying the most for insurance coverage.

Spreading The Risk Over Time

Term life insurance rates are determined by calculating the risk that an individual will die within the term of the policy. Since the risks increase with age, short term life insurance policies have cheaper rates than long term life policies.

On the other hand, permanent life insurance bases rates on the anticipated life span of an individual versus his current age. Both types of life insurance consider mortality, but term life insurance is usually cheaper since payment of the death benefit is not guaranteed as it is in permanent life insurance policies.

However, life insurance rates should not be the only factor that determines which policy a consumer chooses. Though each type of policy has its own pros and cons, term life insurance is temporary, while whole life insurance offers permanent coverage with a cash value and investment component. Depending on your family’s needs and future financial goals, whole life insurance may offer the best coverage despite cheap term life insurance rates. The only way to be sure about the cost vs. benefit is to compare life insurance quotes online.

Life Insurance Quotes

Other risk factors that are considered when determining life insurance rates are family medical history, general health, lifestyle and habits, hobbies or occupations which could shorten an individual’s life span. Life insurance rates by age never decrease so it makes sense to buy life insurance at the youngest possible age you can afford.

To help you find the best life insurance, MyLifeInsuranceQuotes101 offers consumers free, instant life insurance quotes for all types of life insurance and from multiple insurance companies, so consumers can find the most affordable rates at any age. By comparing life insurance rates online, you will avoid agents and customer representatives and be able to get quotes from the convenience of your home. Enter your zip code to start a life insurance quote now and find the best, cheap life insurance for your financial needs.

Modified Life Insurance

Traditional term life insurance offers cheap monthly premium payments when you are young, healthy, and low-risk. However, as you age, your rates on a renewal policy will increase. With modified life insurance, there are several available payment options, which means you may choose to start with low payments that increase over time, or start with higher payments that decrease over time.

These flexible payment options allow you to structure your premiums based on your current and anticipated future income, making modified life insurance similar to universal life insurance.

Benefits For Young Families

Young adults may need higher policy limits on their life insurance coverage to protect their growing families, but their incomes are often limited. Modified whole life insurance allows you to purchase the amount of insurance your family needs at a monthly payment you can afford.

Most young families can expect to see an increase in their income as parents gain experience and advance in their careers so they will be able to afford the higher premiums over the term of the policy. However, policyholders shouldn’t be overly optimistic in relation to their income, and should plan carefully.

Benefits for Maturing Families

Policyholders in their late 40’s and 50’s may need extra coverage to ensure that their children will be able to complete their education in the event of the their premature passing, while simultaneously anticipating a decrease in their income as they near retirement. Older adults can begin by paying higher premiums and have the payments decrease over the term period (in the case of modified whole life insurance, over the course of their entire lifetime). Your dependents will have ample financial protection and you will be able to save and invest more of your money as you approach retirement.

Advantages of Modified Life Insurance

The ability to structure payments to match anticipated fluctuations in income is only one of the advantages of modified life insurance. Policies can be set up to automatically renew at the end of the term, whether it is 5, 10, 20, or 30 years, which means that you will never be without a life insurance policy.

Modified whole life insurance allows you to purchase as much coverage as you need to protect your dependents, while structuring the payments to meet your increasing or decreasing income levels. It provides the financial flexibility that is convenient for any family in any financial situation, while offering the benefits and security of life insurance.

Financial Planning

The decision to purchase modified life insurance should be part of your overall financial planning for the future. The amount of the policy will depend on your current and anticipated future financial obligations, and the payment structure should take into account your current and future earning potential. Like all term life insurance policies, modified term life has no cash value, and failure to make monthly premium payments will result in cancellation of the policy.

While finding the best modified life insurance may take some research and planning, comparing life insurance quotes from the best companies is easy, instant, and free. A life insurance quote is available online to any consumer interested in learning more about rates, policy options, and providers.

Life Insurance For Children

For many people, the idea of buying life insurance for children is taboo: no one wants to think about the death of their child. Despite the emotional nature of the subject, there are reasons for and benefits of buying children’s life insurance for both the child and the family.

Learn more about life insurance for kids to get the pros and cons of offering protection and building a financial asset for your children dependents.

Best Type of Life Insurance For Children

The type of insurance purchased for a child will depend on the ultimate goal sought by the parents. If the family simply wants financial protection in the future for potential medical costs, burial expenses and other incidentals which might surround the death of a child, the family should probably choose term life insurance for their kids.

These policies have no cash value and are relatively cheap insurance protection for a set period of time. Once the initial term expires, it can be changed into a renewable term policy or a type of permanent life insurance.

Whole Life Insurance

Whole life insurance, or a permanent policy, has an investment component which accrues cash value over time. A portion of the premium payments are diverted into the cash value which is invested by the insurance company. Some whole life policies offer a guaranteed return on investment.

These funds remain in a tax-free “savings” account until the time is right for your child to make use of them. Whether it is for education, college, travel, or a down payment for a house, whole life insurance for children is a good investment toward a real future, not a death.

Saving For College

Life insurance for children can be an important part of planning for the future. The cost of a college education is high and increasing, and student loans take years to pay off. Whole life insurance for a child can be used as a method to save for future expenses the child may incur.

Many families and parents with good intentions do not make regular deposits in savings accounts, but always pay insurance premiums on time. A whole life policy provides a nest egg for a child’s future education and college expenses.

Why Is Insurability Important?

Another reason for buying child life insurance is to give your kids a history of insurability. Some families have genetic pre-dispositions toward conditions such as diabetes and heart disease, which can be seen as pre-existing conditions by health and life insurance companies. Due to this, your family medical history could be used to exclude your kids from coverage.

A term or renewable term life policy will give the child a history of insurability, which is especially important if there is a family history of potentially exclusionary medical conditions. Term and renewable term life insurance quotes are quick and easy online, helping parents compare rates and coverage options to find the best available.

Cheap Premiums For Life

Some types of life insurance for children require that the policy be paid each month or each quarter to remain in effect. The rates are fixed and remain the same for the entire term period. A policy taken out on your son or daughter will have the same premiums for the life of the contract. Since premiums are much cheaper for children than adults, securing affordable premiums for life is one of the advantages of whole life coverage for a child.

Low Cost Loans

Most permanent or whole life insurance policies also allow insured families, parents, or children to secure a loan against up to 90% of the cash value. It isn’t necessary to redeem the cash value of the policy; you may simply borrow against it like collateral.

Typically these loans have very low interest charges and the policy remains in effect, although the death benefit is reduced by the amount outstanding on the loan. When the loan is repaid, the death benefit is fully restored.

Compare Life Insurance Quotes

Although term life insurance offers some advantages for children, permanent or whole life insurance policies can provide needed cash for college, interest free loans and cheap premiums when the child grows into an adult. Parents should review the costs and provisions of child life insurance to determine which one will best meet their needs and goals.

Types of Life Insurance

While the different types of life insurance may be confusing at times to understand, life insurance is a vital part of financial and estate planning for everyone. People are often uncomfortable with the subject of life insurance since no one wants to ponder their own mortality or compare the different types of life insurance. The truth is that everyone should have protection regardless of their age. Young people with families need it to protect their loved ones from financial loss and seniors need it to cover the cost of final expenses so they don’t leave their loved ones with debts. The difference is the type of life insurance each individual needs. Below, we will discuss the pros and cons of the different types of life insurance to help you decide the best coverage for your needs.

Life Insurance Types

Family

The death benefit of a policy should be enough to allow dependents to continue in their current lifestyle. When deciding on a policy limit, consider savings and checking account balances, the income from Social Security benefits, retirement accounts such as IRAs and 401Ks, and any pensions the family would receive following an unexpected death.

Compare this income stream with the backdrop of mortgage payments, daily living and credit card expenses, medical bills, education and tuition costs, and any other liabilities you may have.

Make sure that the interest on the death benefit would provide a regular monthly income to cover any shortfall and remember to include the cost of final expenses, such as funeral costs, which can be much higher than anticipated.

Individual

Single people or individuals with no financial dependents may think they don’t need life insurance, but singles have financial obligations which could impact survivors as well. The death benefit for an individual should be enough to pay any financial obligations they might leave behind with an additional amount to cover funeral expenses.

Individuals without financial dependents still have loved ones that should not be left with an unnecessary financial burden. When buying individual life insurance, also consider the future and whether family protection may be a better choice.

Term Life Insurance

Term life insurance is the least expensive type of coverage for young, healthy individuals. It is temporary insurance which may remain in effect for 5 to 30 years. When the policy expires, it is necessary to take out a new contract which usually means completing a new application and undergoing a medical exam.

Since premiums are based on the age of the insured at the time the policy is issued, the premiums will be higher and will increase each time the policy is renewed.

Whole Life Insurance

Whole life insurance is permanent and has a fixed premium which is paid over the lifetime of the insured. This type of life insurance has a savings and investment component and builds cash value over time. Some whole life contracts may offer a single lump sum premium or a limited term premium.

Once the policy is paid up it remains in effect until the insured dies or redeems the cash value. Fixed premiums and an investment component make whole life insurance a good choice for financial planning.

Universal Life Insurance

Universal life insurance is a form of permanent coverage with an investment and savings component. This kind of coverage offers a minimum premium and payments over the minimum are diverted to the cash value. The more premium paid, the faster the cash value grows.

Cash value can also be used to pay premiums if the insured is unable to pay them due to the loss of a job or other financial emergency. Consumers with seasonal incomes may particularly appreciate the flexibility of these payments.

Variable Life Insurance

Variable life insurance is a type of universal life policy which allows the policyholder to be actively involved in determining how the money in a policy will be invested. Many variable insurance policies allow you to set up two or more investment accounts and choose stocks, bonds or mutual funds as investments. This kind is ideal for policyholders with experience in the field of investments and the desire to control their finances as much as possible.

How Are Life Insurance Rates Determined?

Rates are based on the age and health of the policyholder at the time the policy is issued. This is one reason that it is ideal for consumers to buy life insurance when they are young and rates are low and affordable. Whole life insurance is an especially good investment for younger consumers since the low fixed rates are locked in for their entire lives. Almost all policies allow you to change the death benefit if their circumstances change.

Life Insurance For Children

While most people don’t want to consider buying life insurance for children or babies, it is a great opportunity to provide the child with an investment for the future. Endowment life policies are a form of whole protection with a limited payment term which pays a lump sum of cash at the end of the term. Low cost endowment policies which have a decreasing death benefit are also an affordable method of providing children with a small nest egg.

Life Insurance For Seniors

Most seniors have fewer financial obligations and dependents than their younger counterparts, but they should still carry senior life insurance. For those who may need a small death benefit, a term policy will provide the necessary coverage for final expenses.

Seniors with larger estates may want to consider higher limits to cover estate and income taxes their heirs might be required to pay. Death benefits are not subject to taxes.

Seeking Financial Advice

While most people don’t think it is necessary to seek advice about financial planning, a financial adviser can help map out a lifetime plan to cover expenses like college and retirement. Financial planners can offer suggestions about the right type of life insurance and which family members should be insured. They can also help determine how much coverage each family member should carry to protect the family’s financial future.

Talking To An Agent

Life insurance agents can discuss different types of policies and the pros and cons of each. They are trained to assist individuals in determining how much insurance they need and how much they can comfortably afford. Some agents are paid on commission and may urge consumers to buy more coverage than is really necessary, but most are genuinely helpful.

Once a consumer has compared life insurance types, decided on the policy that best meets his or her needs and how much coverage is needed, comparison shopping with online life insurance quotes is highly recommended. The rates on similar policies can vary widely between life companies.

Second To Die Life Insurance

Second to die life insurance is also known as survivorship life insurance and it provides protection for two people, husband and wife, spouses, or business partners, for a lower cost than two separate policies.

Second to die coverage is usually chosen by business partners or affluent married couples where the death benefit is not financially necessary on the death of the first partner or individual. Second to die policies only pay the death benefit upon the death of the second insured person or policyholder.

Why Buy Life Insurance?

Second to die life insurance is most often used in estate planning. Survivorship coverage can be used as a tool to provide a trust for the care of a special needs child after both parents have died, to pay for education or college for children under the age of 18, leave a significant gift to a favorite charity, or to pay estate tax and income taxes for heirs of affluent couples.

Since death benefits are not taxable, a second to die policy will keep the bulk of the estate intact for heirs. It is also cheaper than insuring two spouses with separate contracts, while providing for the needs of surviving heirs.

If A Spouse Cannot Qualify For Life Insurance

If one spouse cannot qualify for life insurance, second to die coverage may be an option. Since two people are insured on this type of policy and the company makes no payments until the second person dies, this type of protection may be easier to qualify for.

A second to die life insurance policy is only practical if the surviving spouse will have adequate funds to live on when the first spouse dies, since payment is only made on the death of the second spouse. If the second spouse will need the death benefit proceeds upon the death of the first, buying separate life insurance is better.

Protecting Family-Owned Businesses

Businesses with sizable assets need protection from estate and income taxes when the owners die. A spouse can transfer business interests to the surviving spouse on his or her death without any tax liability, but when the second spouse dies, the taxes due fall to heirs and can decimate the assets of the business.

A second to die policy can be used to cover estate and income taxes and preserve the business for surviving family members or beneficiaries. Protecting a family owned business is one of the most common uses for this policy.

Business Partnerships

Business partnerships are often small concerns, much like family owned businesses. If the partnership is designed to prevent the heirs of either partner from claiming business assets at that person’s death, a survivorship policy may be a good choice.

The business must be able to continue with only one of the partners and the insurance should be sufficient to cover inheritance taxes for heirs. It can work for estate planning for business partners in the same way it works for married couples.

Is Life Insurance A Good Choice?

A good estate planner may be able to mitigate tax liability for heirs and may even advise a couple to buy life insurance.

Some types of protection have a rider that allows the policy to be split in the event of a divorce, but some do not, so it is wise to thoroughly review your contract before buying it. Each company creates and develops its own model, coverage plans, and terms and conditions.

Estate tax laws may change, making the policy unnecessary, but for those who want to ensure that an estate or family owned business remains intact for their heirs, second to die coverage is your best bet.

Compare Quotes and Companies

By comparing life insurance quotes online, potential consumers can see what life insurance companies and policies are available, quickly get rate quotes, and find the best, yet cheapest life insurance available. Individuals simply answer a few questions and the life insurance quotes are provided instantly and free.

Getting the best rates is another way to help preserve an estate, and comparing premiums is the key to getting the lowest prices on any type of life insurance policy you may be interested in.

Second to die life insurance is not the best choice for every couple, but families who want to keep their assets intact for their heirs can benefit from using survivorship in their estate planning. A professional financial advisor can help couples decide if life insurance is the best way to preserve their assets or family owned business.

Mutual Life Insurance

There are two types of life insurance companies: publicly traded (also known as stock companies) and mutual companies. Mutual life insurance companies are completely owned by policyholders and are not traded on the stock market.

These companies are at a disadvantage when they need capital for growth since most of their end of year profits are distributed as dividends to participating policyholders. This is the reason many mutual companies have decided to change their status to stock companies.

Who Has Ownership Rights?

As a rule, only policyholders with permanent policies have ownership rights in a mutual company. Term life policies are generally not considered permanent and do not pay any dividends.

Publicly-traded companies have to pay dividends not only to permanent policyholders, but also to investors who own stock in the company. Since mutual companies have no investors or shareholders, all of the dividends are paid to the policyholders.

Here is a list of popular mutual insurance companies:

  • American Family Insurance
  • Ameritas Life Insurance Company
  • Liberty Mutual
  • Massachusetts Mutual Life Insurance Company
  • Nationwide Mutual Insurance Company
  • New York Life
  • Northwestern Mutual
  • PEMCO
  • Penn Mutual
  • Sentry Insurance
  • State Farm Insurance
  • USAA

Which Type Is Better?

Both publicly-traded and mutual companies offer the same life insurance benefits. The difference is in the way the dividends are paid and some publicly-traded companies may pay higher dividends than some mutual companies.

If whole life insurance is being purchased as an investment, it is best to check the financial performance of the insurance company over recent years to determine which one is likely to pay the best and most consistent dividends.

How Does A Policy Pay?

All life insurance has a death benefit which is payable to a named beneficiary when the insured person dies. Whole life insurance also has a cash value which increases over time and may be withdrawn from the policy, resulting in a cancellation.

Policyholders can opt to cash out their dividends each year instead of reinvesting them. The cash value can be used as collateral for a business or personal loan, but the death benefit is reduced by the outstanding balance on the loan.

The Death Benefit vs. Cash Value

If the insured person dies, the policy pays only the death benefit. The cash value counts as the premium used to cover the company’s cost. If the company refuses to pay the death benefit because the cause of death was not covered, the policy application contained a material misrepresentation, or fraud was used to obtain the policy, your carrier may have to return the cash value to the policyholder’s estate. Life insurance companies do not pay both the death benefit and the cash value.

When Can The Death Benefit Be Denied?

All policies have exclusions which may include suicide, death while committing a criminal act (felony) and members of the armed forces killed during combat. A lie on the insurance application of such a nature that the company would not have issued the policy if they had known the truth (material misrepresentation) is grounds for denial of coverage. If a beneficiary is criminally responsible for the death of the insured he cannot collect on the policy.

Can Someone Purchase Life Insurance For Another Person?

If an individual has a financial or compelling interest in the life of another person, they can purchase a life insurance policy for that person. A wife may buy a policy for a husband, grandparents may buy a policy for a grandchild or a business owner may buy a policy for his partner.

As a rule, the person buying the policy cannot be named as beneficiary. A business owner can name the business as beneficiary or a wife may name her children as beneficiaries.

Common Exclusions

There is usually a two-year exclusion for suicide, but once the two years have elapsed, suicide becomes a covered cause of death. Individuals engaged in high risk hobbies like rock climbing, car racing and sky diving may find accidental as a result of these particular activities is excluded on the policy. Most policies also exclude death resulting from a private plane crash from reimbursements as well.

Conclusion on Mutual Insurance and Companies

Both mutual and publicly-traded insurance companies offer similar coverage and investment opportunities. The most important part of choosing the right life insurance company is to choose one with a good reputation and a stable financial history.

By comparing policy coverage, companies, and premiums, consumers can make certain they buy the best protection for their family’s needs.

Life Insurance Quotes

There are many different types of life insurance policies to suit the needs of individuals, and rates may vary widely depending on the amount and type of policy a consumer buys. Term life insurance is cheap and affordable for almost everyone, paying a death benefit without building a cash value; meanwhile permanent life policies are more expensive depending on your budget and income, but accrue cash value and may be used as an investment for retirement. However, you wouldn’t know that before purchasing a policy unless you compare life insurance quotes online.

Determining which policy to purchase, how much of a death benefit you need, the cost, policy options and riders, and which insurance company to buy from requires online research. Like any other product or service, consumers need to shop around for free, instant life insurance quotes to compare rates, policies, and carriers to find the best coverage for their needs.

Term Life Insurance

Term life insurance is temporary insurance and is the cheapest and most popular type purchased. There are many different term plans available, each addressing a specific need for the applicant and family.

A term life policy pays a death benefit, also known as the face value of the coverage, if the policyholder dies within the term specified on the policy. If the insured lives beyond the expiration of the policy or the policy lapses due to default or lack of payment, the company does not pay the death benefit.

Term life insurance does not build cash value and is not used as an investment. Term coverage is usually issued for 5, 10, 15, 20, 25, or 30 years, and the longer the term, the higher the premium rates. Rates are based on the age and health of the insured over the entire term of the policy, and purchasing a policy young is one way to get the cheapest rates.

Consumers are able to compare life insurance right from home, ranging from level term, mortgage, and final expense to decreasing term, guaranteed, and no medical exam coverage.

Whole Life Insurance

Whole life insurance is the more expensive type of coverage because it is permanent and the death benefit is guaranteed to be paid as long as the policy premiums are current. Whole life insurance rates are higher than term rates because part of the premiums are diverted to a savings account and the policy builds cash value, making it an excellent tool for financial and estate planning.

Whole life as an investment is safe and reliable. Interest and dividends are paid on the cash value of the policy and the cash value can be used as collateral for a no interest loan, down payment on a home, or the money can be pulled out at any time for your use.

Whole premiums, similar to level term life insurance, remain the same over the insured person’s life. Though whole life is more expensive, it does offer additional benefits term life does not.

In a term vs. whole life insurance comparison, families who can afford a permanent policy and want the cash value feature to build a nest egg for retirement may prefer to purchase whole life over term.

Universal Life Insurance

Universal life insurance is also permanent, similar to whole coverage, but with an investment feature instead of a savings component. The premiums are flexible with a minimum and maximum payment instead of fixed premiums.

An online comparison will show that universal life has cheaper rates than whole life because the amount of the death benefit is tied to the success of the investments, with no guarantees.

Universal life insurance as an investment can yield high returns or losses with fluctuations, since the cash value is invested in the stock market, including equities, bonds, commodities, and currencies.

With whole insurance, the death benefit is a fixed amount stated in the policy. Depending on your investments, universal coverage can be high risk, high reward while offering the benefits of insurance protection.

How Much Life Insurance Do I Need?

Choosing a death benefit is one of the more difficult decisions a policyholder needs to make. Agents and experts typically recommend 5 to 10 times your annual pre-tax, or gross, income, depending on your family’s debts and liabilities.

Some financial advisers will base your death benefit amount on your age, suggesting that 20-30 year olds get 20 times their income, 30-40 year olds buy 15 times, 40-50 purchase 12 times, 50-60 buy 10 times, and 60-70 purchase 5 times. Home mortgages, business and personal loans, credit card and daily living expenses, medical bills, and college tuition for dependents can all skew the amount you need to buy towards the higher end of that range.

Insurance quotes can help consumers answer the question “how much life insurance do I need” by allowing them to compare different types of policies and death benefits and determine the amount of coverage they can comfortably afford.

The best coverage will be low cost in order to avoid financially crippling you while you enjoy your life, but still provide you and your family enough life insurance in case of a tragedy.

Compare Online

Free quotes are available online and consumers can compare the rates and coverage of different types of life insurance from multiple carriers; a consumer simply enters their zip code, completes a brief questionnaire that asks for age, gender, general health and medical history.

Life insurance quotes are available in an instant, and can help individuals decide which kind meets their needs while remaining affordable. If you have no idea what your costs may be, a free cost comparison online may be the easiest way for you to figure out your potential premiums.

Lastly, agents and brokers are usually paid a commission which is added to the cost of the policy. Buying or just comparing life insurance quotes online eliminates the agent’s fee and helps consumers get lower rates. By taking the time to research and compare policy options, individuals can find the perfect protection for their families.

Term vs. Whole Life Insurance

Life insurance is one of the most important purchases an individual makes in their lifetime. Life insurance can provide financial security and protection in case of a tragedy, while being utilized as an investment opportunity for retirement, financial or estate planning. It is vital that consumers have an understanding of the advantages and disadvantages of different types of life insurance, particularly term and whole life insurance, before deciding which kind best meets their needs and financial goals.

When comparing term vs. whole life insurance policies, both have pros and cons that make each the best option for a family with specific needs and future financial goals.

Researching each type and then getting free online quotes to compare rates, policies, and companies is the only way a potential policyholder will know whether they are buying the best coverage.

What Is Term Life Insurance?

Term life insurance is temporary insurance that covers an insured person for a specified period of time, which can be anywhere from 3 months to 30 years. If the insured person does not die within the policy period, no payments are made and the insurance company retains the full amount of the premium payments; otherwise, if a tragedy does occur and the insured person dies, the insurance company will payout the death benefit to the beneficiaries.

In the event that an individual still needs protection when the policy expires, a new term life contract will have to be applied for and purchased, usually at higher rates that are adjusted for new medical conditions and the applicant’s older age.

Term policies with shorter terms are cheaper, but new policies will have increasingly higher costs as the insured person grows older. Buying a 30 year policy at a young, healthy age is usually the best way to get the cheapest premiums and get insurance coverage for most of your life.

Advantages

When comparing term vs. whole coverage, term life insurance has cheaper initial premiums for young individuals, making it more affordable for young families or individuals with limited incomes. If the policy is renewed, the amount of the death benefit can be increased or decreased, making it more flexible than the fixed death benefit of whole life.

Term life insurance is an inexpensive and flexible way to cover financial obligations that have a definite time limit, like mortgages and loans, and ensure survivors are not left with debts or loans they may be unable to pay off.

Disadvantages

While the cost is higher, whole life insurance returns a portion of the premiums, with interest, in the form of a cash value or equity, while term protection offers no return of premiums. Because whole policies are permanent, payment of the death benefit is guaranteed. Term only pays the death benefit if the insured person dies during the policy period.

When comparing the total cost of term and whole life insurance rates, experts estimate that, in a lifetime, premiums are comparable due to the fact that whole coverage is an investment with a return, and term rates increase with age. Again, term products are the most popular types, and for good reason, but some families may find that whole insurance better suits their financial and future needs.

What Is Whole Life Insurance?

Whole life insurance is permanent insurance which cannot be cancelled by the insurance company unless the policyholder fails to pay the premiums. Whole features a fixed premium and death benefit that does not increase or change as the insured person ages.

Part of the premiums are put into an equity account called the cash value. A guaranteed rate of interest is paid on the cash value, which appreciates over years and can be withdrawn or used as security for low or no-interest loans. Overall, whole life insurance as an investment is considered to be a good one, and can help force families to save for retirement.

Advantages

Since whole life insurance is permanent, it does not expire and cannot be cancelled due to age or illness. This means that, if for any reason, the insured person becomes uninsurable, the whole life coverage will still provide protection, but term policies expire and the person may be unable to buy a new one.

The cash value feature is an advantage that can provide income in emergencies and help meet long-term financial goals such as a down payment on a home. If the cash value of the policy is withdrawn, the equity does not even need to be paid back, and will simply be subtracted from the death benefit payout in the future.

Disadvantages

Whole life insurance has a fixed death benefit which cannot be increased or decreased as your needs change over time. Term life rates are usually more affordable for young people. The premiums continue over the insured person’s entire life, which can present a hardship to older individuals who live on fixed incomes.

However, when considering term or whole coverage, term premiums for older people may be higher than those of a long-term whole policy. When comparing the pros and cons of term and whole life insurance, just remember to take into consideration every detail, especially the whole cash value.

How Rates Are Calculated

Insurance companies use the age of the applicant, health issues or medical conditions, the length of the policy term and the value or death benefit to determine your life insurance rates. Term policies have lower premiums for young applicants, but when new insurance policies have to be purchased, premiums can be significantly higher, though that may be an issue some policyholders and families will want to deal with in the future instead of now.

Whole life insurance rates are higher in the early years of the policy, but a portion of the premiums are returned to the insured as cash value, offsetting those higher premiums and offering good, long term value. Since whole life premiums never increase, over a lifetime, experts and financial advisers suggest the costs of term and whole life are about the same.

Modified Whole Life As An Alternative

When comparing the advantages of term vs. whole life insurance, term offers lower initial costs and more flexibility, but whole provides permanent coverage and long term investment potential.

One alternative is modified whole life insurance, which offers lower initial premiums that increase over time. The death benefit is still fixed, but for individuals that want the investment advantages of permanent coverage and expect their income to increase in the future, modified whole protection may be the best type to buy.

Complementary Coverage

Since the biggest disadvantage of whole life insurance is its lack of flexibility, using term life insurance to supplement a whole policy can provide enough extra insurance when coverage needs are greatest. When needs decrease, the term policy can be allowed to lapse while the whole life policy continues to provide coverage.

Instead of comparing term versus whole life, it is often smarter to use the advantages of both together to give families the best possible protection.