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| Please click one of the following questions to see the answer or ask a question here. |
Questions:
• What is the "incontestability clause"?
• What is Universal Whole Life Insurance
• How do I know if I need coverage?
• Who are the quality companies?
• Lowest Term Rate for a 40 Year Old Male 20 Year $250,000 Policy?
• Lowest Term Rate for a 45 Year Old Male 20 Year $250,000?
• Lowest Term Rate for a 30-35 Year Old Male 20 year term $250,000 Policy?
• How do I get rid of a bad policy?
• Permanent or Term Insurance?
• How much Life Insurance do I need?
• How do I prepare for my medical exam?
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What is the "incontestability clause"?
A: A clause in a life insurance "contract" preventing the insurer from revoking the policy after it has been in force for a specified time period, typically two years, if the life insurance Company discovers any important facts that the Policyholder may have concealed, such as experiencing a stroke or alleged misstatements by the insured.
Of course, this is not a license to commit fraud, and the discovery of fraud will lead the company to contest any claims and possibly pursue criminal charges.
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What is Universal Whole Life Insurance
A: A portion of the universal life
insurance monthly premium is put into
the cost of the life policy which will
provide the death benefit to your
beneficiary and another portion of the
premium is invested so it can be used
as investment savings. The concept is
that the investment will grow over time
and eventually may even be able to pay
for the premiums of the life portion of
the policy. The advantage in this
situation would be that you could pay
into for a certain number of years and
the investments would eventually start
to cover the cost of the premium, then
you end up getting life insurance for
whole life, yet don't need to keep
making those payments. Conversely, term
Life pays no interest and has no cash
value
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How do I know if I need coverage?
A: An important question to ask yourself is, Would my death leave anyone in a financial bind? For most young married couples, the answer is yes. Many people become serious about life insurance in preparation for the birth of their first child. If they should meet an untimely end, purchasing a sufficient face value of insurance might let their surviving spouse stay home with the children and not have to uproot their lives entirely.
Once you become a parent, any adult in your house earning income should have life insurance coverage that will last until your youngest kid gets through college. And in a family without a lot of money saved, a stay-at-home parent may need a small policy, to cover child care costs that would be created by that parent's absence.
Even if you belong to the dual-income, no-kids crowd, you may need life insurance to cover large shared financial obligations such as a mortgage. For older empty-nesters, though, life insurance is often an expense you don't need — as long as your retirement nest egg is big enough to support your surviving spouse. But if that nest egg is really big — at least $1.5 million, enough so that your assets will generate estate taxes — it's worth staying insured, because your heirs can use the proceeds, which are tax-free, to pay off those liabilities.
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Who are the quality companies?
A: Cheap premiums are attractive, but they aren't the whole story. Signing on with a fiscally fragile insurer can cost you. When insurers go bankrupt, state-administered guarantee funds make sure any claims get paid, but there are often huge delays and disputes over payments. And most states set a $300,000 cap on the death benefits they'll pay on behalf of a failed insurer. Even if a foundering carrier gets bought, there may be problems. Hundreds of California families are still tangled in legal disputes surrounding the 1991 collapse of ExecutiveLife Insurance. Owners of its permanent life policies lost much of their retirement savings when the company that purchased ExecutiveLife slashed the value of their cash accounts.
Once you've reviewed the quotes, and carriers with your Gold Mountain insurance agent, check out their financial ratings on your own too. You can do so at Standard & Poor's (www.standardandpoors.com) and A.M. Best (search by company name at www.ambest.com). Firms with Best ratings of A- or better, or S&P grades of at least AA, are the safest bets. You'll also want to find out whether your would-be insurer is leaving a trail of irate customers. The statistic you're looking for is the "complaint ratio," which compares the number of grievances filed with the number of policies or amount of premiums the insurer earns in the state. In California, for example, 16 life insurers have a complaint ratio of 0, meaning no gripes have been filed that the state has found to be justified. But on the other end of the spectrum, Conseco Life, still troubled by questionable finances, has a whopping 16.9 complaints per 100,000 policies. Many state governments track such information. Some states, including New York and Pennsylvania, either don't keep tabs on gripes or make it difficult to compare insurers. If your state is one, you can find national complaint stats for bigger insurers on the Web site of the National Association of Insurance Commissioners.
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Lowest Term Rate for a 40 Year Old Male 20 Year $250,000 Policy?
A: Genworth Life Insurance Company
AM Best A Rated Company
* $204.50 per Year
Banner Life
AM Best A+ Rated Company
* $210.00 per Year
Transamerica Life Insurance Co
AM Best A Rated company
* $250.00 per Year
American General Life Companies
AM Best A Rated Company
* $239.00 per Year
West Coast Life
AM Best A Rated Company
* $262.50 per Year
*Rates effective January 2011 |
Lowest Term Rate for a 45 Year Old Male 20 Year $250,000?
A: Genworth Life Insurance Company
AM Best A
* $344.50 per Year
ING ReliaStar Life Insurance Company
AM Best A
* $350.50 per year
American General Life Companies
AM Best A
* $351.80 per Year
North American Company for Life and Health Insurance
Am Best a
* $367.50 Per Year
West Coast Life
A Rated Company
* $382.50 Per Year |
Lowest Term Rate for a 30-35 Year Old Male 20 year term $250,000 Policy?
A: Genworth Life Insurance Company
AM Best A rated company
* $159.50 per year
American General Life Companies
AM Best A Rated company
* $171.50 per year
North American Company Life Health Insurance
AM Best A rated company
* $180.00 per year
Transamerica Life Insurance Co
AM Best A+
* $182.50 per year
*Rates Effective of January 2011 |
How do I get rid of a bad policy?
A: Getting out of a term policy is easy: Just stop paying your premiums. But dumping permanent coverage is much more complicated. For that, you can blame the surrender charge, which insurers take out of whatever cash savings you've built up. This fee can range from a year's premium to as high as 10% of the policy's payoff value, and it stays in effect 10 to 20 years after you buy in.
If you're in the first year or two of a contract and want out, no sweat. You haven't built up any cash value, so all you'll lose are the premiums you've already paid. After that, you're better off staying put for a while. Surrender charges usually decline as the policy matures, and once they hit zero, it's fine again to consider cashing out. If the math is confusing you, submit your plan to the Consumer Federation of America, and for $50 to $75 its analysts will walk you through the surrender decision.
There's another way out of a bad policy: A maneuver called a Section 1035 lets you swap the savings in your current policy into a cheaper one, or into an annuity. Under some circumstances, that move is tax-free. Unfortunately, some insurance agents use this technique to roll customers from one high-commission policy to another, a crooked practice called churning. This practice costs the consumer untold amounts of their hard earned money.
If you're considering the switch, make sure you have help from a financial adviser — someone who won't earn a commission off the swap. At Gold Mountain Insurance Services, our founders maintain investment advisory experience too, and can direct you to unbiased sources.
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Permanent or Term Insurance?
A: Here is a likely story by permanent life insurance salespeople which you might hear, and is sometimes represented as solving all of your financial problems. The pitch will go like this: Yes, a permanent policy costs more than term insurance (four to 15 times as much), but over time, it builds a "cash value" you can borrow against, withdraw or use to pay future premiums.
The money grows tax-deferred, in fixed-income investments with whole life coverage, or in mutual funds with variable life. But here's the missing part: It'll be a while before you see any of that cash. For the first two to 10 years, part of your premiums are paying the agent's commission. Even after that, the average variable life policy has annual maintenance charges of more than 2% of your cash value, and many states charge taxes of 2 to 3% of your premiums. Given that, most people are better off buying term and using the money they save on premiums to invest in other tax-deferred vehicles such as IRAs, 401(k)s or Section 529 college-savings plans. So why do agents push permanent life so hard? Simple: Higher premiums mean higher commissions. That said, permanent life can make sense for select groups of people. It could be used as a savings vehicle for people who consistently have income left over after maxing out their other tax-deferred accounts. But even these types of consumers should be sure to cover their baseline insurance needs — the money to protect their families — with cheaper term life. Permanent life is also often a better option for older people because term's price advantage fades as you reach your late 60s. For the vast majority of families, level-premium term life is the best option. With that as your foundation, annual-renewable term(ART) can be a good supplement if your family takes on any big short-term obligations. Maybe you're amassing debt while earning a midcareer MBA. The premiums on ART policies grow slightly as you age, but for periods of up to five years, they're usually cheaper than level premium.
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How much Life Insurance do I need?
A: The average insurance-owning household had $196,200 worth of life coverage in 2000 — and if that seems like a thin lifeline in the age of the $400,000 mortgage, you're correct. Most people are significantly underinsured! But the solution isn't simply to buy all the insurance you can afford. Even in today's viciously competitive, sometimes softly priced market, the extra premiums you'd pay could be earning large returns elsewhere.
To find the right amount of coverage, you must weigh your dependents' spending needs against their future income and assets. Some costs to be reminded of include: additional child care for a suddenly single parent, education expenses, funeral charges. Other sources of help which might OFFSET those expenses include investments and Social Security benefits for survivors. Because the projections for this exercise are not an exact science and change with your lifestyles and incomes, you should run the numbers every two years or so to see if your needs have changed. Ask a Gold Mountain agent to assist you in this process.
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How do I prepare for my medical exam?
A: To buy a life insurance policy, you'll likely need to take a basic physical. Two things your prospective carrier will be checking are your cholesterol levels (a predictor of heart disease) and blood-sugar scores (a sign of potential diabetes). What you may not know is that your short-term diet and exercise can skew the results. Blood-sugar levels, for example, can swing by up to 50% depending on what you just ate. And even a small change can push you into a more expensive rate category.
So while sucking in your gut won't help you save on your insurance, avoiding a steak dinner and other high-salt-and-cholesterol foods for 24 hours before the exam just might. And to keep sugar and caffeine out of your system, don't consume anything other than water for at least eight hours beforehand. Also, for your blood pressure's sake, forgo strenuous exercise for 24 hours. It may even be wise to fast, and if you forget and eat something, then try to reschedule the appointment with the paramedic for another day.
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