Why Buy Term Life Insurance for Children?

Should you buy life insurance for your children?

Many people don’t think so, but there are some sound financial reasons why you shouldn’t be so hasty to dismiss this notion out of hand.

Planning for the future is what life insurance is primarily about and even your children should be considered in preparing their way down the road.

Reasons To Buy Life Insurance for Children

Life is full of uncertainty.  It’s simply not possible to predict the future so here are some reasons why it might be in your best interest to buy life insurance for your kids.

1. Future Insurability

Today’s children are not as healthy as they were because lifestyles have changed.  Many children today live a sedentary life which does not bode well for their future health.  Child obesity is rampant in today’s society because of eating habits, lack of exercise and spending too much time with the tech toys and other devices.

What this means down the road is the potential for a whole range of health problems such as diabetes, heart disease, high cholesterol levels and high blood pressure.  Your children will grow up, start their own family and will need to buy life insurance just like you have right now.

If your children haven’t changed their lifestyle they could develop severe health problems by the time they are starting their lives.  The cost of life insurance could be prohibitive and costly for them when they do apply.

You could buy a $100,000 – 30 year term policy for the kids right now and will provide them with coverage so that they will have insurance policy well into their forties or even their fifties.  This will give them some coverage for their own families down the road.

2. College Aged Kids

What about student loans?  The cost of college and university is expensive and many kids have to run up a huge pile of debt until they graduate and start work.  The average annual cost of tuition runs anywhere from around $13,000 to $36,000 per year depending on the college they attend.  For a four year program that comes to an average cost of between $52,000 to $144,000 in debt that has been racked up.

But what were to happen if they were to die young?  It’s not something that any parent likes to think about, but sadly, tragedies such as accidents and disease do happen.  These debts still have to be paid.  A term policy would be the ideal solution so everybody has that peace of mind.

Save for The Kids Tuition

The other side of the coin is to consider buying something like a universal life insurance policy and start a savings plan while they are still young.  A permanent life insurance policy like a universal policy has a cash value accumulation feature which can be taken out as a loan down the road.

You start the policy when they are young and then you have the advantage of a non taxable savings feature which builds over time from both the premium and the interest earned.  Depending on the amount of life insurance you buy, this could easily build up to $50,000, a $100,000 or even more.

The children can use this cash value and either take the money out as a loan or even surrender the policy completely to pay off college debts or even use the money to buy a home or start a business.  It’s a great way to give them an early and welcomed financial boost in their young lives.

3. Affordability

Another good reason to buy life insurance for the children right now when they are still quite young is that the policies are very affordable.  You don’t necessarily need to buy a huge policy on your children as the policy can be as small as $5,000 or $10,000 which would only cost you about $5 – $10 per month if that’s all you can afford in your budget.

4. Preparing for Any Eventuality

Nobody wants to think about the worst case scenario and this is something that no parent wants to ponder or even imagine, but even young children die in accidents and terminal illnesses.

If your child were to become terminally ill, it’s simple but terrible fact that the medical bills could be astronomical.  Every parent would do whatever they could to get the best possible medical treatment for their child regardless of the cost.

Even with a medical plan, and getting hit with the double calamity of losing your child in the end, you could also end up being financially devastated from the medical bills which still have to paid.

And lastly, there will be the funeral expenses to consider.  As horrific as this worst case scenario sounds, it is something which is possible, and is something which we should think about preparing for now rather than when it is too late.

 Where Can I Find an Affordable Life Insurance Policy for My Children?

You always want to talk to an independent agent like myself.  We can access and research dozens of companies so you are assured we will find the best policy at the most affordable rates.  Whatever your concerns, we can give you valuable advice and help you to find a policy that suits you.

Whatever your needs or questions then please call me direct at 877 – 966 – 9383.

Why Consider “10 Year Term” Life Insurance?

The most affordable type of life insurance is 10 year term.

This insurance is perfect for a young family, who needs some protection, but can’t afford to pay much.  It’s also great for short term needs.

It’s amazing how much life insurance someone in their 30’s or 40’s can purchase for less than $20 bucks per month if they’re in good health, and applying for 10 year term.

10 Year Term Explanation

Most term policies actually guarantee coverage up to age 95 or longer.  However, the premiums are only guaranteed to stay level for the first ten years.  That means your premiums will stay fixed during the initial 10 years, and in most policies, will rise annually thereafter.

There are various term lengths, such as 20 or 30 year term, which means the premium stays fixed for a longer duration, and remember, the lower the term duration, the lower the premiums.  For more information on alternatives to the ten year term, see our post on Types of Life Insurance.

10 Year Term Life Insurance Quotes

Age $500,000 $1,000,000
30 Year Old Male *$14 $21
40 Year Old Male $17 $28
50 Year Old Male $43 $78
60 Year Old Male $117 $217
70 Year Old Male $339 $625

*Note: All prices are MONTHLY as of 2/17/12, based on healthy, preferred plus, non smoker, and are subject to change.

Using Term for Buy/Sell Agreement or Key Man Insurance

Many business partnership arrangements require term life insurance on each partner, in the event that if he or she dies, the remaining partner/s will have liquid cash from the life insurance benefit to buy out the decedent’s family and or heirs of his or her share in the company.

10 year term life insurance is a popular choice for buy/sell contracts, since it’s the most affordable, and most businesses figure they either won’t be working together that long, or will probably restructure the ownership agreement by the end of 10 years anyway.

Estate Planning using Term Life Insurance

With the current “Band-aid” on estate taxes and the exclusion amount, some people aren’t sure what their long term estate tax implications could be.  A 10 year term policy with a conversion to permanent insurance may be a good solution for high net worth individuals whose estate value is approaching the current taxable threshold, but now quite there.

For example, a married couple with an 8 million dollar estate, with a properly structured AB Trust or bypass trust, may not owe any estate taxes if they were to both die in 2012.  However, if the current estate tax exemption (currently 5 million per individual) were to drop to, say, 3 Million per individual, then this couple would have an estate tax problem.

Since we don’t know what the future holds for estate tax legislation, some affluent families are purchasing 10 year term as a “wait and see” type strategy.  If the exclusion amount gets permanently set at 5 million per individual, or if estate taxes are done away with completely, then these wealthy individuals may decide to drop their coverage.

On the other hand, if the exclusion amount is permanently decreased, at least the policyholder will already have a policy in place (the 10 year policy), and could decide to convert it to a permanent policy such as guaranteed universal life or whole life.

You may also want to see this article for more information on using life insurance to avoid estate taxes and life insurance trusts.

Companies Who Sell 10 Year Term

Just about every company offers a guaranteed level 10 year term policy.  In my opinion, the 3 companies who are most consistently among the list of “low price leaders” for term insurance are Banner Life Insurance, ING-Reliastar Life Insurance, and Genworth Life Insurance.

Keep in mind, however, that some companies commonly show up in the top 3 in price quotes, but aren’t quite as lenient in underwriting, so it’s harder to actually qualify for their best ratings.  Two companies that come to mind here are Savings Bank Life (SBLI) and Ohio National.  On the contrary, you have a company life Prudential, who is usually not in the top 10, but maybe top 15 or 20, but are very fair on underwriting .

Apply for Term Life Insurance

To get started, simply call us at 877-996-9383 or get an instant quote using the form on the right.

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Why 20 Year Term is the Most Commonly Purchased Type of Life Insurance

20 Year Term Life InsuranceI sell more 20 year term in my office than any other policy, hands down!  (In some months, up to 50% more frequently than other terms.)

What exactly makes this particular policy ideal for so many people?

I believe it is the perfect blend of pricing and fits the duration of most people’s needs perfectly.

We’ll get into that a bit more in a minute, but for now let’s take a bird’s eye view of this thing to see if we can better understand it.

How does 20 Year Term Work?

Any time I write on a specific type of life insurance policy, such as 20 year term life insurance, I think it’s helpful to take a step back and explain a bit about the types of insurance, so no matter where you are in your life insurance search, you can follow along easily.

There are two basic types of life insurance, term and permanent.  Term most often is purchased for life insurance protection for a specific duration, such as 10, 20, or 30 years.

At the end of this duration (or term), most term policies have options to pay a higher premium and continue on with the policy for additional years, but this is not very common.  Most people only keep their term policies for the initial term period.

Permanent policies, including whole life and universal life, provide coverage your entire life and may build cash value.

20 Year Term Life Insurance Quotes

Below I’ve included sample 20 year term quotes for males between the ages of 35 to 65.  The rates are for a “preferred plus non tobacco” risk class, meaning a man in excellent health.  For other ages or amounts, please use our form on the right.

Age                            $500,000           $1,000,000
Male Age 35               $22.70                   $38.72
Male Age 45               $53.51                    $100.92
Male Age 55               $127.28                 $249.72
Male Age 65               $406.12                 $804.32     **All premiums Monthly

*Premiums based on 9/5/11 and are subject to change.  May not be available in all 50 states…..(continued on page 2)

25 Year Term Life Insurance – Quotes and Description

25 year term life insurance is a type of policy that offers guaranteed level premiums for a 25 year term duration.

After the initial term has expired, the premiums will increase mightily, so if you need coverage longer, you might consider a 30 year term or guaranteed universal life contract as an alternative.

Interesting Fact… Who Sells 25 Year Term Life Insurance???

Very few.  I represent dozens of life insurance companies, and many of the large carriers do NOT offer a 25 year term option, such as Genworth, Prudential, and Met Life.  All of the above offer 20 or 30 year policies, but not 25.

The companies who do offer a 25 year term policy are:

  1. Savings Bank Life – the product name is “25 Year Term Guaranteed 25″
  2. American General – Product name is “Select-A-Term 25″
  3. ReliaStar/ING – Product name is “TermSmart 25″
  4. Transamerica – “TransTerm UL 25″.  Note: this is a term/universal life hybrid, which means at the end of the 25 year initial term, the policy automatically “converts” (you might say) to the underlying universal life policy structure on which it is built.
  5. Protective Life – Product’s name is “Secure T 25 Year No Lapse UL”, and the same note applies here as to the TransTerm UL 25 above.

… and there may be a few more, but I don’t represent them.

Cost of a 25 Year Term Policy

As for cost, it will probably cost a bit more than 20 year term life insurance and a bit less than 30 year term.  You can quickly get a quote using our form on the right.  We have dozens of companies to compare, so you can be sure you’ll find the most competitive rate.

Be Careful! — Fewer Options means Less Competition

One word of advice.  If you have any type of health history or any other risk factors such as hazardous occupation, travels, or hobbies, a history of drug or alcohol abuse, or mental health disorder such as PTSD, bipolar disorder, anxiety/depression, be very careful about being narrow minded about “having to have” a 25 year term life insurance policy.

Remember that since only a handful of companies offer it, you may be shooting yourself in the foot by only having these companies to apply to.  It’s very possible that a different company (such as Prudential, Genworth, or Met Life) would offer you a lower rate class than the companies offering 25 year term.

That could mean that for the same price or lower, you could purchase a 30 year term policy instead.  Keep your options open and be sure to speak with a knowledgeable agent about your needs, as well as your health history.

We at Huntley Wealth Insurance are also happy to help with how to buy 25 year term insurance if you call us at 877-996-9383.

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Tips for Purchasing 30 Year Term Life Insurance

30 Year Term Life Insurance Covers Home Mortgage

30 Year Term Life Insurance Covers Home Mortgage

Thank you for visiting Huntley Wealth Insurance’s website, where we specialize in offering low cost term life insurance quotes.  In this article, we’ll discuss who can purchase 30 year term, offer sample quotes for coverage, and explain the difference between a long term policy versus whole life insurance.

Who Should Buy 30 Year Term Life Insurance?

30 year guaranteed term is ideal for people who need life insurance protection for a long time, but not necessarily their entire life.  One such example would be purchasing a 30 year insurance policy to cover a 30 year fixed mortgage.

Keep in mind that the oldest you can be to qualify is 65 years old.  Once you turn 66 and older, you can still apply for 10 and 20 year term policies, but there are no life insurance carriers offering 30 year level term after age 65.

Healthy or Receiving Treatment for Medical Condition

Perhaps you are very healthy male.  We love helping healthy men, because in many regards, it is easier to find you affordable coverage than for a man with health issues.

However, we also put an emphasis on obtaining affordable 30 year term coverage for men with medical impairments. So if you have been diagnosed with anxiety or high cholesterol, or any other disease, we are fully equipped to help you find affordable coverage as well!  Call us at 877-996-9383 for quotes or use the form on the right.

Sample 30 Year Term Quotes for Men

Please use our instant quote form to the right to determine the best prices for 30 year term life insurance from over 100 highly rated term life insurance companies.
Term Insurance Protection Being Treated for Health Issues

A few life insurance providers will be more lenient on particular medical issues than other providers.  Let’s take a health risk that plagues many men, such as heart disease.  Every insurance company is going to treat a history of heart problems differently.  Some will be more forgiving than others.

It makes sense, then, that the proper avenue to obtain cost effective 30 year coverage with health impairments is to apply with the carrier who will be the most understanding about your particular health impairments.  We recommend speaking to an independent broker who knows which carriers are best for which health impairments.

What is Universal Life Insurance and How Does it Work?

What is Universal Life Insurance?

Universal life insurance is a type of permanent coverage originally created in the 80’s to be a lower cost, more flexible alternative to whole life insurance.

As opposed to whole life, in universal life, premium payments are variable.  You can pay when you want, as long as there is sufficient cash value to pay for policy fees and cost of insurance.

How Does it Work?

If the policy performs well and policy costs stay low, it’s very possible that over the lifetime of a universal life contract, that substantially less premium may be paid into the contract than in the case of whole life.

Remember with whole life, they have to guarantee the coverage will stay in force for life, so that guarantee comes “at a premium”, if you’ll pardon the expression.

Not all universal life contracts have this sort of guarantee.  Your policy’s ability to stay in force will be based on several variables including the cost of insurance and interest rates, which are both variable, and the premiums you pay.

Since these are unknowns at the time of policy issue, you can run illustrations, or projections, showing how long the policy is estimated to stay in good standing.  But that’s only a preliminary estimate.

Universal Life Insurance Quotes

The quotes below assume excellent health, for a male, non tobacco user.  They are guaranteed universal life contracts to age 121, and build little to no cash value.  For a policy with cash value build up, you’ll need to call us for an illustration.

Age $100,000 $250,000
Male Age 30 $336 $841  PER YEAR
Male Age 40 $559 $1,291
Male Age 50 $809 $2,015
Male Age 60 $1,430 $3,530
Male Age 70 $2,600 $6,382
Male Age 80 $5,162 $12,689

 

Quotes are as of 2/28/2012 and are subject to change.

Universal Life Annual Statements

Your annual statement should give you two important dates.  One is the date your policy is estimated to lapse if you continue paying the scheduled premiums.  The other is the date it is projected to lapse if you stop paying premiums.

If you plan to make a change to your annual premium or withdraw or borrow from your cash, you should always request a new illustration.  You will want to request a new illustration at least once every year or two anyway, to compare it to your original illustration to see how it’s performing.

Universal Life Pros and Cons

The pros are premium flexibility and the possibility of paying less into the contract than in the alternative, a whole life policy.

Flexibility – Say you buy a UL and pay $500 per year into the policy for a few years and then get laid off from your job.  If you can only afford $200 that year, or nothing at all, your policy may still stay in force if it has enough cash value to support the costs.  Then the following year, you might pay double the premium to get the cash value back up to where it should be.

You might also have some unique interest crediting strategies, as is the case with indexed universal life, which allows your gains to track a major equity index, such as the S&P 500.  Some very attractive gains can be made in these policies.

Tax Advantages – You may also be able to borrow from your cash value account, accessing the cash tax free.  Some people stuff their UL full of cash, since the funds grow tax deferred.

Some disadvantages of UL would be expenses and surrender penalties, and the headache of maintaining them.

In most contracts, there are penalties to withdraw funds during the first 15 years.  Just yesterday, a client of mine came into the office to review his Aviva UL annual statement.  At 33 years old with only a $140,000 death benefit, he was charged $406 in expense charges, $46 for base cost of insurance, and a premium expense charge of $100.  So they charged him to pay a premium!

Again, most UL policies don’t have guaranteed riders, so they require constant vigilance and maintenance to be sure sufficient cash values are maintained to keep the policy in good standing.

Guaranteed Universal Life

As previously stated, some UL policies have no lapse riders that provide guaranteed coverage for a certain period of time, such as to age 100 or to age 120.  In these policies, you don’t usually get much cash build up, but at least you have a guaranteed death benefit for life and guaranteed premiums for life as long as you pay your premium on time.

The problem, of course, would arise when someone can’t pay their premium on time.  Once the “no lapse” benefit is breached, you would have the opportunity to backpay the premiums you missed, usually with additional premiums required to put the no lapse guarantee back in good standing.  But if you can’t do that, your policy will revert to the way a UL normally works.  The problem it will probably be in danger of lapsing, because again, cash value is usually sparse in these guaranteed policies.

Term UL Hybrid Policies

Some companies offer a universal life policy short “no lapse guarantee” duration riders, such as for 10, 15, or 20 years.  During this time, the premiums and face value are guaranteed to stay level, even if there is little or even no cash value.  So it acts like a term policy, but is actually built on a universal life platform.  After the initial term, the policy automatically converts back to acting life a universal life policy.

For more information about the types of life insurance including, term and whole life, see our “Types of Life Insurance” tab above.

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Indexed Universal Life

Before reading this article about indexed universal life, you’ll want to read and understand the basics of my previous article titled Universal Life Insurance Premiums, which offers an explanation of how universal life works and some sample quotes.

When you read about indexed universal life, what you’re dealing with is a particular method that the interest is credited to your cash value, which may offer a greater opportunity for interest earnings. When you’re dealing with universal life, the higher your cash value grows the better, since that ultimately means you can pay less premiums down the line, or pull more cash out of the policy, whichever you want.

What is Indexed Universal Life?
Many universal life contracts now offer an interest crediting strategy that’s tied to a major equity index, like the S&P 500. For example, rather than earning a non-guaranteed 4% per year, which is set by the insurance carrier, you might elect to try your odds in an indexed strategy, where you could earn as much as 8% or 10% in a given year, depending on the performance of the stock market.

One Year Point to Point Strategy with Cap
The most common indexed strategy is a one year point to point with a cap or participation rate. Say you pay $500 into your policy this year, and only $200 is needed for policy costs, and you’ve elected the one year point to point indexed strategy with a 8% cap, tied to the S&P 500.

In this case, your company would mark the current index value of the S&P. Say it’s at 1300 today. Then a year from now, one year after the $300 was allocated to the indexed strategy, the S&P’s level is marked again. Say it went up to 1360. That’s a gain of 4.6%. Your $300 would be credited with 4.6%.

But what if the S&P went up to 1500, a gain of 15.3%. Here your cap of 8% would come into play, and your $300 would be credited with 8%.

What if the Index goes down?

In most cases, the money allocated to a strategy tracking an index that stays flat or decreases during a segment, will make 0 gains for the year (or however long the segment is).  In some cases, a minimum guaranteed interest rate, such as 1%-2%, is available for index strategies over a 5 or 6 year segment.  This is the way Aviva Life Insurance’s 1 and 2 year point to point strategies work, which currently offer a 2% guaranteed minimum during the 5 or 6 year segment, respectively.  (As of the time of this writing, 3/1/12)