Just about everyone. Ideal for those seeking affordable life insurance to payoff debts like mortgages, car payments, and credit cards or those seeking a cheap way to protect their family’s finances for a limited period of time.
Your Affordable Life Insurance Policy Made Simple
There is a huge difference between finding a life insurance policy and finding an affordable life insurance policy. You can go almost anywhere and get life insurance, but is it the best on the market? Does the policy being offered meet your needs and goals, or are you being sold a policy just for the sake of selling an insurance policy? Who can you trust to give you the best life insurance rates and be honest about it? Many of these questions go through the minds of thousands of customers everyday when it comes to insuring the financial future of your family.
While “affordable life insurance” is relative based on the customer’s perspective, we aim to help our customers find balance between low cost and high quality.
Term Life Insurance
When it comes to affordable life insurance, term meets that balance of low cost and high quality. Many of these policies come with riders available (additional benefits) and offer living benefits to help you access the benefits of your policy in the event you are terminally or critically ill with less than 1-2 years left to live.
Term life insurance is also one of the most simplest forms of life insurance available. Straight-forward and easy to understand, term gives you the protection you need for a defined period of time (up to 30 years in some cases) without the costs associated with other types of life insurance policies.
Whole Life Insurance
Whole life insurance is an popular option for many when it comes to securing their family’s financial future. Since it covers them for their entire life instead of a limited period of time, whole life is not the most affordable life insurance option for you. While more expensive, whole life does offer a way to accumulate cash value and, in some cases with mutual life insurance companies, dividends paid out in the form of additional face value.
While term life insurance is similar to “renting” life insurance, whole life insurance is similar to buying an asset as it can increase in value over time and belongs to you until you pass. Whole life insurance should only be considered after you have maxed out your contributions to retirement funds like 401(k)s and IRAs.
Universal Life is a more complicated life insurance product that mimics both term and whole life. When you pay the premium for your policy, part of the premium is used to cover the cost of insurance and the other portion is placed into a cash account. As the cost of insurance increases year over year, the growth in the cash value account helps offset the increase in cost of the coverage. In most cases, universal life policies offer a guaranteed minimum growth rate of around 3% on the cash account which helps ensure the money in the policy is able to be used pay on the rising cost.
Many of the affordable universal life policies (guaranteed universal life) offered act similar to a term life insurance policy with a focus on level premiums for up to age 121 and less focus on the cash value accumulation. Because of this, we see ULs being used more for those by older audiences who want coverage for the rest of their life are aren’t concerned about growing their cash value.
Guaranteed issue life insurance is a policy created largely with older audiences in mind but some companies offer these policies to people of all ages. These types of policies are more expensive than other forms of life insurance and carry a much lower death benefit (usually up to $25,000). This coverage has no medical exam and no medical questions involved in underwriting and are approved quickly.
People with medical conditions that are not eligible for more standard forms of life insurance can often qualify for this type of policy. The down side to guaranteed issue is that the total amount you pay in premiums can often end up being more than the death benefit pays out, so it is advised that customers consider other more affordable life insurance options before buying a guaranteed issue life insurance policy.
The cheapest life insurance policy you can ever buy is an Accidental Death & Dismemberment policy. Similar to guaranteed issue life insurance policy, these policies have no medical exams or medical questions because it only provides coverage for a death by accident, not health related. Because it only covers accidents, the price for accidental death is usually the lowest of all insurance policies.
This type of policy is recommended especially for college students and those who have a higher risk of exposure to accidents like frequent travelers. Many of these accidental death life insurance policies also offer double the payout if you are killed on a “commercial carrier” like plane, train, or bus.
As one of the least talked about life insurance policies out there, return of premium term insurance policies operate just like a normal term life insurance policy but at the end of it you get all your money back. While more traditional term life insurance policies offer coverage at a lower cost, a return of premium policy provides the exact same coverage yet the price is much higher.
Much of the price difference has to do with the insurance company not being able to keep your money after the term policy expires. In order to maximize their potential, these policies are priced more aggressively to ensure the insurance companies costs are covered. Return of premium policies act as a “forced savings account” and provides a lump sum payment of the premiums at the end of the term.
As the technology age advances, the ability to instantly write a life insurance policy becomes more and more commonplace. With instant issue life insurance, you can start request a quote in the morning and have your policy in place by dinner (or even sooner). Using consumer reports and databases across the United States, life insurance companies are able to analyze your risk quicker and underwrite your policy instantly.
This process is often not the most affordable life insurance option; however, as the technology used evolves and gets better, the better the cost for the life insurance becomes lower. Instant issue is a great option for someone needing a quick life insurance policy per legal orders or for securing a business loan.
Simplified Issue Life Insurance
Simplified issue is typically a life insurance policy that provides coverage for less than $300,000 to $500,000( depends on the insurance company) without a medical exam. Underwriting for simplified issue focuses more on electronic records and a few health questions to make their determination and set the rates according to the information they have.
These types of life insurance policies are slightly more expensive than fully underwritten policies but they are a more affordable life insurance option when compared to policies like instant issue and guaranteed issue.
Question About Your Affordable Life Insurance Policy
Can a life insurance policy be cashed in?
If you have a permanent policy like a whole life or universal life policy, there will often be a cash value element to the policy. For term policies, there is no cash value accumulated in those types of policies. If you have a life insurance policy that has a cash value attached to it then you may be able to surrender (cancel) the policy or take out loans to access the accumulated cash value amount.
Can a life insurance policy be used as collateral?
In some cases the cash value in a permanent life insurance policy can be used as collateral to secure a loan, dependent largely on the requirements of the entity issuing the loan. For businesses loans, it is common for the lender to request to be made the beneficiary of the policy as well.
Do life insurance policies expire?
Term life insurance policies do expire at the end of the “term” or period of time. Permanent policies like whole life or universal life do not expire, but can be cancelled if premiums aren’t paid.
Can you sell your life insurance policy?
Yes. Life insurance settlement companies will buy your policy in certain situations and usually only whole or universal life policies are what they buy. These life insurance settlement companies primarily look for people who have permanent policies with some level of cash value attached. Depending on the policy and the life insurance settlement company, it is not uncommon for those selling their life insurance to receive 50% to 70% of their total death benefit when the policy is sold.
Can anyone take a life insurance policy out on you?
At one point in time, anyone would have been able to take life insurance policies out on another person; however, the laws regarding this have changed and the insurance companies are strict on complying with these regulations. Currently, one must not only prove that another person’s death can cause some sort of financial impact to them but they also have to obtain authorization of the proposed insured (the person being covered) for this coverage.
A great example would be if you were wanting to get life insurance on an aging parent. While there may be a financial impact to their death (e.g. the family home is being left to you, but it still has a mortgage and their death would pass this burden on to you), you would still be required to obtain their authorization for this coverage. Even in this situation, it would be easier for all parties involved to have the parents get their own policy and make you the beneficiary
Can I have multiple life insurance policies?
Yes. Many people carry multiple life insurance policies for various different reasons. Some will carry a whole life policy, a term policy for their business, and an accidental death insurance policy. Others may have a group term life insurance policy through work and own another term life insurance policy on the side.
How does a life insurance policy work?
Life insurance policies are simply legal contracts. The life insurance company (the insurer) offers to cover you (the insured) per the terms in the contract and pay the person(s) listed in the policy (beneficiaries) the agreed upon amount in the contract (death benefit) in exchange for an paying agreed upon amount (premium).
Which life insurance policy is best for me?
Regardless of what anyone may tell you, there is no one policy that is “best”. Determining which policy is best for you depends largely on what you are needing the coverage for and what your financial goals are. For the majority of the people out there, a basic term life insurance policy works the best for what they need. For others, permanent policies like universal or whole life works better. To fully understand which solution is best for you, you have to understand what your current and future needs are going to be.
What are life insurance policy loans?
When someone has a permanent life insurance policy, they will have a cash value account attached to their policy. With these types of policies the owner of the policy is able to take loans against the life insurance policy’s cash value to access the funds. In the event the insured dies and the loans haven’t been paid backed, the outstanding amount is deducted from the total death benefit upon payout.
What is the difference between an annuity versus a life insurance policy?
A life insurance policy protects you if you die too soon; an annuity protects you if you live too long. Annuities are offered by life insurance companies as a way to protect against running out of income during retirement and require either a large lump sum up front or a period of regular contributions similar to a 403(b), a retirement account for government employees and nonprofit organizations. Once the annuity itself becomes annuitized, disbursements from the annuity begin and can last a few months or through the life of the owner’s surviving spouse depending on the agreed upon terms at the start of the annuity.