Category: universal life insurance

The need for life insurance

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September 9, 2011

1:07 PM

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Age 56, Age 61, Age 66, Age 71, Estate Planning, guaranteed universal life, Term Life Insurance

Since September is life insurance awareness month, here a few thoughts on the need for life insurance.

Real life testimonials of life insurance beneficiaries are compelling.  Neil Frankle of the WealthPilgrim.com has a memorable personal story of being orphaned at 17 and unexpectedly receiving $25,000 in life insurance that his father inadvertently signed up for as a loan condition.

Yes, but aren’t the odds of dying before one’s time fairly rare?  Modern life is certainly not as prone to unexpected death as it was 100 years ago with tuberculosis, cholera, typhoid scarlet fever and pneumonia.   There was the flu pandemic of 1918 and another could conceivably happen.  The West Coast could see an earthquake on the order of magnitude as the San Francisco earthquake of 1906.

But in America today, on a day to day basis, the main risk to one’s life is in a car.  It’s routine to travel at speeds above 50 mph, trusting your life to drivers passing by who may be drunk, distracted, unskilled or infirm. Fatalities run around 33,000 a year in the US.   It’s possible to be another one, and entirely not your fault.

If you are raising children, get some life insurance.   Term is cheap.  Don’t let your kids down.

For example, Genworth, preferred non tobacco, 10 year term rates for men, $100,000 in coverage:

age 31 – $8.11 a month
age 36 – $8.37 a month
age 46 – $13.64 a month
age 51 – $19.68 a month

Genworth has $50,000 10 year term that’s even cheaper.   Woman’s rates are even less than for men.

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Small permanent life insurance in your 60’s and 70’s

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August 8, 2011

2:42 PM

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Age 68, guaranteed universal life, In your 60's, In your 70's, Whole Life

Looking for a smaller life insurance policy for final expenses?   What’s best?   It depends on how much coverage you need.

American General Life recently sent agents and brokers a notice that they were lowering their prices on the whole life product, called American Elite Whole Life.   They had pretty good prices already, so I looked into it.  For example,  a $10,000 whole life policy with American General for a female 68 non tobacco is $48.20 a month.   That beats Liberty Bankers Life $51.97 a month.   Both are “non par” or non participating whole life: no dividends and so the face amount is level; it will always be a $10,000 benefit.  American General has paid up insurance.  That’s a plus if you decide to stop paying premiums.  You would have the option to surrender the policy for its cash value or keep a smaller paid up policy.   For example, after 10 years this 68 year old female would have the option of taking $2,330 in cash value or keeping $3,918 in paid up insurance. American General however requires full underwriting, meaning a blood test and possibly a review of medical records, for people over 55.  Liberty Bankers life is simplified issue, no blood test.

In contrast a $25,000 guaranteed universal life policy with North American is $47.68 a month at their best rate, $50.26 at preferred non tobacco and $64.03 at standard non tobacco.   This required full underwriting: blood test and usually medical records.

$25,000 of coverage for $50.26 a month or $10,000 for $48.20 a month?   Easy choice.  You pay about the same for a $25,000 guaranteed UL as a $10,000 whole life.  Both offer permanent life insurance coverage at a fixed rate.   American General’s whole life only real advantage is if you terminated the policy.  You have the choice of the guaranteed cash surrender value or reduced paid up coverage.  North American guaranteed UL builds little or no cash value, but if you pay on time the coverage is guaranteed to age 120.  Guaranteed Universal Life is a better deal.

What if all you need is something like $5,000 or $8,000 in coverage?   Let’s use female age 68 non smoker again as an example.   For $5,000 it’s $24.10 a month with American General and $28.22 with Liberty Bankers Life.  For $8,000 it’s $38.56 with American General and $42.57 a month with Liberty Bankers Life.   American General is less expensive.  It would depend on your individual health situation, because American General requires more underwriting.   Regardless, look to whole life for coverage amounts less than $10,000.

Face amounts as low as $5,000, $1,000 for term conversions.

8/8/2011, quotes , non tobacco, rates subject to change, quote accuracy or completeness not guaranteed

image source: Wikimedia commons

Term vs. Permanent it’s all a matter of age

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July 29, 2011

11:43 AM

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Below Average Health: Substandard, Impaired Risk, Estate Planning, Final expenses, guaranteed universal life, In Your 20's or 30's, In your 40's, In your 50's, In your 60's, In your 70's, In your 80's, Term Life Insurance

Should one choose term or permanent life insurance?   Granted every situation is different, but a general guideline is simple.  Go by the age you need to cover.

Term before retirement and permanent after retirement –  Term to replace a breadwinner’s lost income: permanent for final expenses or estate planning.

Term –   pre-retirement

  • 20’s:  30 year term
  • 30’s:  30 year term
  • 40’s:  20 or 25 year term
  • 50’s:  10 or 15 year term
  • 60’s:  10 year term

7 to 10 times annual salary is general rule of thumb. Most important: get something with affordable premiums.  If need be, drop back on the term length, rather than the face amount, for affordability.

If you have children, get term long enough to cover your youngest child past college age.  For example, if your youngest is 9,  a 15 year term.   9 + 15 =  age 24.    It used to be that age 22 was the benchmark year for college graduation, but since the 5 year plan is more the norm, so you may want stretch it out a bit more.

Permanent  –    post-retirement:  60’s, 70’s, 80’s, 90’s

Ideally, start a separate permanent policy in your 30’s, 40’s or 50’s.  If not, permanent is available into one’s 80’s.  If unhealthy, you can convert your term policy into permanent in your 60’s.

First choice: fully underwritten life insurance, which requires a blood test and medical records.  It’s less expensive, and you get more coverage.  There’s a big industry out there, including AARP, that misleads seniors into needlessly expensive no exam term and permanent. That coverage is only plan B if very unhealthy and for permanent only.  Don’t be fooled into no exam term.

North American currently has the best policy for final expenses, a $25,000 guaranteed universal life.

For estate planning purposes there are guaranteed universal life policies at whatever coverage level that suits your objectives.  The most choices are for coverage at $100,000 or more.  Please refer to my sample quotes by age.

Images: Wikimedia Commons

Two life policies to save money

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July 21, 2011

5:43 PM

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Age 59, guaranteed universal life, In your 50's, Term Life Insurance

There’s no rule against getting two life insurance policies at the same time. It may fit your situation and help save money. For example, take someone in their late 50’s wanting to protect their spouse by having $500,000 in coverage. One safe and secure option is to have permanent policy, a guaranteed universal life with a lifetime fixed rate no lapse guarantee .

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Heading off trouble to life insurance policies in estate plans

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July 20, 2011

3:55 PM

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Estate Planning, guaranteed universal life, Indexed Universal Life, Permanent Life Insurance, Policy Review, Variable Life Insurance, variable universal life, VUL

The 2008 “market shock” may have an unwelcomed delayed effect on variable life insurance policies according to an article recently posted by the Wall Street Journal.  Variable life insurance usually refers to variable universal life or VUL.

One key point is the policy holder may only get 30 or 60 days notice that the policy requires more money. Another interesting point was that estate advisers should consult a good life insurance agent.

Edward F. Koren, chair of private wealth services at Holland & Knight in Tampa, Fla., also recently helped a client deal with a troubled policy. Because the policies are complicated, he says, an estate adviser should turn to a very good insurance agent for help. “You need someone who deals with insurance every day,” says Koren.

That advice goes for financial advisers as well.  They may sell life insurance on the side, but it’s doubtful they keep up with it full time.  Get a second opinion by contacting an independent life insurance agent and broker; it never hurts.

A variable life insurance policy owner, or any universal life policy holder, should request from their carrier a current illustration to see how a policy is performing.  A current illustration is much more clear picture of a life insurance policy than an annual statement.

I don’t recommend variable life insurance. It poses too much downside risk to the client, and puts too many eggs in one basket. Life insurance should be a more conservative element to an overall estate plan. There is guaranteed universal life that guarantees coverage to age 121 at a fixed rate.  Also there are universal life products with strong guarantees that build cash value.  Besides now there is indexed universal life that correlates to market performance but has a floor against market losses and is not directly involved in the stock market.

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Review of best life insurance companies for quitting tobacco

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June 22, 2011

2:03 PM

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Cigarette users, electronic cigarette, guaranteed universal life, life insurance for smokers, quitting smoking life insurance, Smokers Life Insurance, Survivorship Life Insurance, Survivorship Universal Life, Term Life Insurance, tobacco life insurance, Tobacco smoker, Tobacco Users, Universal Life

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Non smoker Plus rates for Prudential  no cigarettes within the last 12 months, may smoke cigars, pipe or chew tobacco, nicotine patch, nicorette gum

John Hancock:  “Protection UL” Quit Smoking Incentive: receive standard non smoker rates first three policy years, with satisfactory evidence quit smoking for 12 months during those years receive permanent reclassification of standard non smoker

 

 

Preferred Plus:   No Tobacco for 3 years

Banner Life
Lincoln National
North American   (ages 70 and under)
Aviva   (permanent products)
Axa/Equitable  (permanent products)
Preferred Non-Tobacco:  No Tobacco for 1 year

Nationwide
Principal
Symetra


Preferred Non-Tobacco:   No Tobacco for 2 years

Banner Life
John Hancock
Lincoln National
North American  (ages 70 and under)
Protective Life
Transamerica

Standard Plus:  No Tobacco for 1 year

American General

 

 

 

last revised: 5/21/2013, accuracy or completeness not guaranteed; please check with company for full details, terms and conditions may vary

Life insurance bundled with long term care and critical illness

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June 16, 2011

11:32 AM

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Accelerated Benefit, Accelerated Benefits, Accelerated Death Benefits, Alzheimer's, Chronic Illness Rider, Critical Illness, In your 50's, In your 60's, In your 70's, life insurance and long term care, Living Benefits, long term care insurance, long term care plans, Universal Life

Life insurance can now fund long term care or critical care expenses. Turn your death benefit into a living benefit. American National now offers an impressive group of accelerated benefit riders at no extra charge.

There are three living benefits:

  • Chronic   –  Payment of an accelerated benefit if the insured cannot perform 2 of 6 activities of daily living or cognitively impaired. This is the criteria for long term care insurance benefits with traditional LTC plans.   Use your life insurance to augment your LTC insurance, cash comes in handier than expense reimbursement, or have your life policy serve as your contingent LTC insurance.
  • Critical   –  Payment of an accelerated benefit if the insured experiences a critical illness. American National says 16 different illness, but details and definitions must be referred to on the specific rider
  • Terminal  –  Payment of an accelerated benefit  if insured has less than 24 months to live. Most life insurance coverage has this terminal illness rider.   It’s 12 months in certain states.

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Woman buying most life insurance plus long-term care insurance

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June 1, 2011

1:41 PM

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Accelerated Benefit, Accelerated Benefits, Accelerated Death Benefits, Chronic Illness Rider, guaranteed universal life, In your 50's, In your 60's, In your 70's, life insurance and long term care, Living Benefits, long term care insurance, long term care plans, Universal Life

Woman buy 60% of the life insurance plus long-term care insurance policies, according  to research by the American Association for Long-Term Care Insurance.  34% of the woman were between 55 to 64, and 40% were between ages 65 to 74.

North American has the best deal for life plus chronic illness benefit.   It’s a universal life policy that can accelerate out 24% a year in cash for chronic illness.   End up not needing long term care?   Your beneficiaries get the full policy face amount or whatever you haven’t accelerated out for long term care.    Also North American policy face amounts start at $25,000 of coverage, so premiums can fit any budget.

For larger face amounts there are single premium policies with Genworth and Lincoln National that offer many advantages such as return of premium.  There are also annuities that offer long term care riders which extend long term care coverage 2 or 3 times higher than the  face amount.