Personal Finance Tips

When you take the opportunity to insure your life you will have to go through a thorough medical examination. The main reason for insurance providers to require a thorough medical check from their customers is to determine how much to charge for their services. If you have a high risk of death at an earlier stage then the company will charge a higher premium in order to collect more money for the service while you are still around. If the risk is low they will put a lower premium because you will be considered a lower risk that isn’t likely to require death benefit payout anytime soon.

Insurance providers use two main factors for defining how it is likely that their client will cease to exist: longevity charts and medical examinations (including history as well).

Longevity charts represent a statistical interpretation of mortality rates across different demographical groups. In other words, by using these charts the insurance company is able to learn how it is likely that a person will die at a certain stage of life and in a certain region. This is crucial for determining how much of a risk a person is when they come to the insurance company’s office. For example, the longevity chart shows that a man of 50 years old is much likely to decease than a woman of the very same age and living in the same area. Taking this into account, the insurance company will charge a man with a higher rate than a woman because the higher is the risk, the higher is the premium paid. That’s why older people always have higher life insurance rates than children, because they represent a higher risk to the company.

Medical examination and medical history give a more personalized and in-depth understanding of the customer’s risk potential to the company. In most cases the examination is undertaken directly at the office or at your home, unless your life insurance provider requires a more thorough examination of any particular system or condition. The following are the most common things you will be asked about when getting your life insurance quotes:

1. Personal medical history
2. Family medical history
3. Your primary physician’s contact information
4. Lifestyle factors (drinking, smoking, substance abuse)
5. The amount of insurance coverage you want to get

The following procedures are very common for the medical exam held by your insurance provider:

1. Height and weight measurement
2. Blood pressure and pulse measurement
3. Blood and blood vessel condition (lipids, glucose, hormones, viruses)
4. Urinalysis

After you pass the medical exam the insurance provider will analyze the results and set a corresponding premium according to the state of your health. Sometimes it takes up to a couple of months to analyze this information. In case you feel that there was something wrong or the company refused you, it’s better to ask the insurance to send you a copy of their final conclusion to you and your doctor. This might be very important especially if you want to get cheap health insurance from another company.

Term insurance: simple and affordable

When it comes to comparing different types of insurance policies for covering your life term insurance policies turn out to be the most simple and inexpensive. If your insurance needs don’t require sustaining a policy for your entire life, you may find it very appealing to get a term policy especially with the price tag being times smaller than of continuous policies.

Why term policies are the cheapest option for life coverage?

Term insurance policies will cover you only for a specific period of time. They also usually have pre-set premiums and fixed amounts of benefits to receive. Term policies can last from one to 30 years, but the most popular options are 10 and 20 year term policies. The vast majority of these policies cannot be renewed and the chances for the insurance company to pay out death benefits on term coverage policy are minimal. In fact, only about 1% of all term insurance policies actually give out a death benefit to their clients. That’s why the insurance company can place a significantly lower price tag on such a product.

Why taking term insurance coverage?

Term insurance policies are aimed at covering certain types of debts in case the policyholder is disabled or dies. Some debts that term insurance coverage may pay for include:

• Consumer credits
• Mortgage loans
• College education for children
• Funeral expenses

That’s why people who get 30-year mortgage deals are looking for 30-ear term life insurance policies. The most widespread options in terms of policy duration are those of 10, 15, 20, 25 and 30 years. Short-term policies are also available but they are rarely purchased.

Types of term insurance policies

Decreasing term insurance policies, also referred to as mortgage insurance policies, have a fixed premium over the entire term, however the death benefit is constantly decreasing with the time passing, being often connected to your mortgage debt. And as you pay out your mortgage, your insurance amount is decreased respectively. Insurance experts are not very enthusiastic about this type of policies although it’s a cheap life insurance option. But keeping in mind the low percentage of death benefit payout there’s not much sense in having such a policy.

Other types of term life coverage include:

• Burial insurance: such small insurance are aimed only for covering funeral costs.
• Group term insurance coverage: suitable for enterprises as it is designed to cover more people than standard policies.
• Specified age term insurance: such policies provide coverage only until the policyholder reaches a specified age.
• Return of premium: such policies will reimburse a part or all the premiums you have paid during the term if a claim is not filed. However, the premiums with such policies are usually higher.

Although, term life coverage is a relatively inexpensive compared to other types of insurance, your policy can still cost you much in premiums if you don’t take some time and shop around for a good policy. There are numerous insurance companies providing term insurance policies, and the rates can differ significantly for the same type and amount of coverage. That’s why it really pays off shopping around and getting as much life insurance quotes as you can, in order to find the perfect term insurance policy to purchase. Be smart, and don’t get the first policy you are offered with as there may be numerous offers way better than that.

We all want to make sure our family and loved ones are protected and safe no matter what. This is why there are so many companies out there offering you to insure your life. Life coverage is a good way to protect your spouse, children, family members and loved ones from financial hardships in case of your death or disability. But besides insurance features, there are more and more policies providing with additional benefits that have money distribution and investment features to the underwriter. And the question is whether it’s reasonable to use insurance as a form of investment or there are better options for this.

Insuring your life as a form of investment

At first sight, having your life insured is a very good thing to do as you accumulate a good amount of money for your family that can be used for different purposes in case something happens to you. But there’s more to it than just that. In contrast with term policies that have no investment options, cash value (also known as whole life) policies have additional benefits, which make them a good investment instrument. These benefits allow withdrawing money from your account after a certain period if time has passed. You can obtain these funds in different ways:

• Withdrawing cash from the final coverage amount of the insurance policy. For example you have a $200,000 policy and want to withdraw $10,000. This means that the insurance company will pay out $190,000 in death benefit in case of your death.
• Paying insurance premiums from the accumulated cash value of your policy. This is a good way to have a relatively cheap life insurance in terms of whole life insurance. And there are no penalties for doing so.
• Using the cash value of your policy as a loan. This usually provides you with lower interest rates compared to loan products offered by lending institutions. You can even be free of any payments, however the money will be taken from your final death benefit, including a certain interest.

How much does it cost?

Of course, these possibilities give much food for thought as you may use the money withdrawn for multiple purposes, making your personal and your family’s life better. However, all these options come with a certain price tag, lowering your death benefit, which is obviously the initial purpose of insuring your life in general.

Withdrawing money from your insurance account can be proportional to the amount of money your death benefit will be lowered by, However, in some cases it can cost you much more than that. Sometimes there are additional fees and interests included, making your death benefit even smaller than you would expect. From this perspective there’s not much rationality in getting whole life policies, making them a simple waste of money.

And it’s not only this. Experts state that such policies have lower return on investment if compared to other investment tools, and suggest that it’s cheaper to get term insurance policies and an additional savings account or a loan rather than using costly cash value policies for that purpose.

However, it’s always better to shop around. Use life insurance quotes to find a less pricey whole life insurance policy so that you could use all the benefits for a lower cost.