Long Term Life Insurance
Long term life insurance is a very smart thing to have, especially if one is young and just starting a family. Insurance rates for life insurance or living indemnity policies are among the cheapest that they have been in decades. Once a person has locked in a rate that takes into consideration youth and no health problems, this low premium can be in place for several decades, while the children grow and then strike out on their own. At a time when a person is in his fifties or early sixties and the peak earnings years have enabled the insured the ability to save and invest, then there is no need for indemnity coverage anymore. In essence, the insured become self insured through the amassing of an estate.
Consider the fact that a five hundred thousand dollar long term life insurance policy for thirty years may only cost a twenty five year old married person a hundred dollars or so a month. For the next twenty years either the wife or husband, whichever is the policy holder, can know that in the event of his or her death, the family will be taken care of financially until the children are out of the house and on their own. The coverage is a defined parameter indemnity plan, the least expensive of the three options a person has in buying a living indemnity policy. In the meantime, as the family begins to handle their money wisely and begins making investments in stocks, bonds, CDs and money market accounts, the couple is amassing their own financial estate. Eventually, the family will have enough money to handle the death of one or both parents and the need for extended coverage will go away permanently.
A living indemnity policy is designed to help younger people have the protection they need for the years before their financial nest egg is complete. It is certainly not a product for those over fifty to begin looking at for coverage. By the time that age has been reached, health issues and sometimes a long list of medications has been compiled, wiping out actuarial confidence in the longevity prospects for a person. So the time to get a long term life insurance plan is when one is young, but make sure and get the right kind of policy. The seasons of life can quickly move from one to another but one can only see them as the wisdom of years makes it all clear. "To everything there is a season and a time to every purpose under heaven; a time to be born and a time to die..." (Ecclesiastes 3:1, 2a)
The life insurance industry, across the board, has three basic types of policies: term, whole and universal. These policies ranks in terms of premium expense from term to universal to whole, and each has its own identity in the indemnity world. If a person is never going to save any money in his life, never put money into a 401 (k) or an IRA, then maybe the choice of the whole living plan is acceptable. The whole plan pays the face value in case of death, but it also accrues value over a long length of time. The actual amount of the value is dependent on financial factors including interest rates. Basically, the plans often pay interest no greater than passbook rates, and financial experts do not recommended them over a disciplined savings strategy. A long term life insurance plan that is anything other than term insurance is a bad financial deal for the insured.
Oh yes, the universal plan. Various indemnity companies will call their universal products by various names, but they are all the same in basic structure. They are the second highest cost of premium product life indemnity product offered. They offer a mixture of term insurance and whole life, paying a lower rate of return, but offering both payments on the face value of the policy as well as a small cash value if the policy is maintained over an extended period of time. Financial experts also pan these options as a poor substitute for a combination of long term life insurance coverage from a term type of policy and a good investment program.
By all accounts, a long term life insurance plan ought to be the product of choice for long term life insurance needs. Called "pure" insurance by financial experts, this type offers low premium costs for the amount of coverage received. Pure because term policies are not trying to provide a poor return savings account cash value, but rather simply a maximum death benefit for the low cost. Remember that agents for large indemnity companies make large commissions on whole life plans. That will be the kind that each rep would love to sell, but they are not the smart financial choice to make. Stick with the term policy.
A long term life insurance policy should be part of an overall financial plan. The components should include a personal retirement account, a company 401 (k) and regular deposits into Social Security. A large sum term insurance plan can help fuel those accounts should a breadwinner suddenly be taken from a family. Make sure when buying one of these plans to choose a company that is strong financially. Some insurance companies have been known to go belly-up and a person would have to get a new plan with higher rates from a new provider. Rating agencies are available online to give an idea of the financial girth of the company you are considering.
Consider the fact that a five hundred thousand dollar long term life insurance policy for thirty years may only cost a twenty five year old married person a hundred dollars or so a month. For the next twenty years either the wife or husband, whichever is the policy holder, can know that in the event of his or her death, the family will be taken care of financially until the children are out of the house and on their own. The coverage is a defined parameter indemnity plan, the least expensive of the three options a person has in buying a living indemnity policy. In the meantime, as the family begins to handle their money wisely and begins making investments in stocks, bonds, CDs and money market accounts, the couple is amassing their own financial estate. Eventually, the family will have enough money to handle the death of one or both parents and the need for extended coverage will go away permanently.
A living indemnity policy is designed to help younger people have the protection they need for the years before their financial nest egg is complete. It is certainly not a product for those over fifty to begin looking at for coverage. By the time that age has been reached, health issues and sometimes a long list of medications has been compiled, wiping out actuarial confidence in the longevity prospects for a person. So the time to get a long term life insurance plan is when one is young, but make sure and get the right kind of policy. The seasons of life can quickly move from one to another but one can only see them as the wisdom of years makes it all clear. "To everything there is a season and a time to every purpose under heaven; a time to be born and a time to die..." (Ecclesiastes 3:1, 2a)
The life insurance industry, across the board, has three basic types of policies: term, whole and universal. These policies ranks in terms of premium expense from term to universal to whole, and each has its own identity in the indemnity world. If a person is never going to save any money in his life, never put money into a 401 (k) or an IRA, then maybe the choice of the whole living plan is acceptable. The whole plan pays the face value in case of death, but it also accrues value over a long length of time. The actual amount of the value is dependent on financial factors including interest rates. Basically, the plans often pay interest no greater than passbook rates, and financial experts do not recommended them over a disciplined savings strategy. A long term life insurance plan that is anything other than term insurance is a bad financial deal for the insured.
Oh yes, the universal plan. Various indemnity companies will call their universal products by various names, but they are all the same in basic structure. They are the second highest cost of premium product life indemnity product offered. They offer a mixture of term insurance and whole life, paying a lower rate of return, but offering both payments on the face value of the policy as well as a small cash value if the policy is maintained over an extended period of time. Financial experts also pan these options as a poor substitute for a combination of long term life insurance coverage from a term type of policy and a good investment program.
By all accounts, a long term life insurance plan ought to be the product of choice for long term life insurance needs. Called "pure" insurance by financial experts, this type offers low premium costs for the amount of coverage received. Pure because term policies are not trying to provide a poor return savings account cash value, but rather simply a maximum death benefit for the low cost. Remember that agents for large indemnity companies make large commissions on whole life plans. That will be the kind that each rep would love to sell, but they are not the smart financial choice to make. Stick with the term policy.
A long term life insurance policy should be part of an overall financial plan. The components should include a personal retirement account, a company 401 (k) and regular deposits into Social Security. A large sum term insurance plan can help fuel those accounts should a breadwinner suddenly be taken from a family. Make sure when buying one of these plans to choose a company that is strong financially. Some insurance companies have been known to go belly-up and a person would have to get a new plan with higher rates from a new provider. Rating agencies are available online to give an idea of the financial girth of the company you are considering.
Long Term Life Insurance
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Reviewed by Anonymous
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1:27 PM
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