Guaranteed acceptance term and permanent life insurance
If you are unsure about acceptance for life insurance, we have the answer for you! It is called Guaranteed acceptance term and permanent life insurance.
There are some good reasons why some people keep coverage for a long period of time. People sometimes believe they don’t need insurance after they pay off the mortgage and the kids are out of school. In fact, your spouse may live for many years after your death and will still incur daily living expenses. This is a very real possibility with modern medicine today. You have to know if your spouse would be able to maintain the life style that you worked to achieve. Also, would you want to have something to pass on to your children or grandchildren?
Another advantage to this plan is the cash value.
In fact, cash value or cash-surrender value are terms people sometimes use to describe permanent insurance. These terms are used because these policies not only provide a death benefit to loved ones but also, can build cash value over time.
The cash value of this plan accumulates on a tax-deferred basis. It is considered similar to the assets in most retirement and tuition savings plans. You can use the cash for anything you want in the future. Also, you can borrow against the cash value of the plan. You can use the cash either to pay for further education, a down payment on a home, or to provide retirement income. If you borrow money from a permanent insurance policy, you use the cash value of the policy for collateral. Usually, the borrowing rates are relatively low. These loans do not depend on credit ratings or other restrictions, this differentiates it from other financial lending institutions. You are required to repay the loan amount plus interest charges. If you do not, your beneficiaries will not receive the full death benefit and cash-surrender value.
In fact, if you either need or want to stop paying premiums, you can use the cash value for a limited time to continue your current insurance protection. If you choose to do this, the policy will provide a lesser death benefit amount to your beneficiaries. If you choose not to pay your premiums and surrender your policy, you will receive payment of the guaranteed policy value. Please note, if you do surrender your policy too early it may have little to no cash value.
Please be aware that the cash value is not the same thing as the face amount.
As with any permanent policy, the cash value of a policy and the policy’s face amount are two different things. The amount of the payment either upon death of the policy holder or maturity of the policy is the face amount. In most cases, permanent policies “mature” when the policy holder reaches 100 years of age. The cash value of a policy is the amount you receive if you surrender a policy either before death or its maturity. In addition, your insurance company’s experience or financial results (mortality rates, expenses & investment earnings) can have an affect on the cash value of your policy. The term Permanent insurance can actually apply to many types of life insurance products if they have the cash value feature
Universal Life rates Examples:
50 year old male: $10,000 of guaranteed issue Universal Life coverage is $18.77 a month (Example rate)
Term life insurance
What term life insurance does is provide coverage only during a certain period of time. This type of policy is sometimes referred to as, pure life insurance. This coverage is in place to protect your dependents in the event of your premature death. If you purchase a term policy and then die within the term, your beneficiaries receive the payout. Term policies have no other cash value.
When you purchase a policy, you decide how long the policy will be in effect and when it ends. Usually, the terms last for 10, 20 or even 30 years. In most cases, when you purchase a policy, the death benefit payout, as well as the premium cost, remain unchanged during the whole term.
Things to consider when you shop for term life:
- Be sure to choose a policy term that covers the years you would be supporting the household. In the event that you die early you want to make sure your dependents are able to maintain their standard of living.
- Consider what amount your family would need, if you were no longer there. The payout would help replace your income so your family can still use the services they need after you are no longer with them.
- If you plan carefully, by the time the term is over, your family will no longer need life insurance. Your children will be grown, you will no longer owe on a mortgage, and you’ll have plenty of savings for loved one’s to use as a financial safety net.
Comparison of Term life and Permanent life Policies
|Policies Offer||Term life||Whole life|
|Choice of policy length||✓|
|Provides coverage for life||✓|
|Premium cost stability||✓||✓|
|Low premium rates||✓|
|Guaranteed Life insurance payout amount||✓||✓|
|Cash value accumulates||✓|
|May offer annual dividends||✓|
Price Difference Comparison
Term life insurance is a less expensive alternative to permanent life. The price for term life is lower because, it is only for a specified time period and has no cash value. Usually, these policies don’t have to pay your beneficiaries. Because most people will live past the end of the policy term. In fact, the premiums for permanent life insurance are significantly higher. Permanent coverage lasts for a lifetime. The policy has cash value, as well as a guaranteed rate of investment return on a portion of your premium payment.
If you have questions or would like to enroll in a plan, please contact us. We can be reached either by phone(203)796-5403 or email Edward@croweandassociates.com.