What’s The Difference Between Whole, Universal, and Term Life Insurance?

Have you been talking to your friends about getting insured and you don’t know the difference between whole, universal, and term life insurance?

Have you been wondering which among these insurance packages is the right for your specific needs?

If you answered YES to at least one of these two questions, you’re definitely someone who’s come to a decision that you need to have a life insurance policy.

You may have arrived at that decision the first time after you had a child or maybe a life event happened that made you consider getting insured.

Whatever the reason, it’s time that you look at the options available for you so you can decide which is the best fit for you.

Let’s dive in and see their differences.

Term Life Insurance

Term life insurance is the easiest form of life insurance to comprehend. It is also the least expensive among the three.

When you’re planning to get a term life insurance policy, keep in mind that you’re only signing up for insurance that will cover you for a particular term or period of time. In other words, it’s only in play for a set number of years.

Over the duration of the term, you’ll pay an exact amount of money to the insurance company every year. It could be paid quarterly or monthly depending on your arrangement. The money is called the premium.

So, if you happen to die during the term, the beneficiaries listed on your policy will receive the benefits.

Let’s say, you have a 15-year term life insurance policy that provides a $250,000 benefit to your spouse or your children in the event of your death anytime during that 15-year period. In order for you to maintain that insurance, you have to regularly pay a certain amount.

The biggest disadvantage of having term insurance policies is that if you are alive when the term ends, you get nothing from it. Term policies only cover the number of years allocated in your agreement at the start. Once that term is over, the policy and payments end and you are now without life insurance.

Whole Life Insurance

Whole life insurance is a lifetime insurance package that offers a benefit to the ones listed on your policy once you die. It also offers a certain minimum benefit that can grow over time because it features an investment component.

As the years go by, your policy starts to grow its value in cash. You can actually borrow against this cash later on, if you wish.

There’s also an option for you to choose to begin receiving dividends from the investment portion as time goes on. The dividends are usually small but you can also get huge dividends if you got a large insurance package.

Some people eventually begin taking the cash value of the insurance and using it to pay the annual premium. It becomes a policy that lasts for the rest of their lives without them paying a single dime.

So what’s the catch? The monthly or yearly premiums are much higher compared to what you’d pay for term insurance with the same benefits.

Universal Life Insurance

Universal life insurance also lasts for a lifetime, but the difference is that it has a capacity for you to adjust the benefits later on.

It’s actually similar to whole life insurance but the good thing about this form of insurance is that you can make the benefits lower or higher as time goes on, depending on your ever-changing needs.

This comes with a cost, though. Depending on the current interest rates, the amount of premiums you pay will also adjust with universal life insurance.

Rates are usually much closer to the higher whole life rates than the term rates. As a matter of fact, rates for universal life insurance are sometimes even higher than rates for whole life insurance.

The investment portions of whole and universal life insurance can offer great benefits but you’ll end up paying a lot for it. Your premiums are going to be much higher compared to what you’d be paying for a term policy.

Things A Life Insurance Agent May Not Tell You

Are you sure that your life insurance agent is telling you everything you need to know before you have to make a coverage choice?

A life insurance agent will only explain the positives of the policy benefits and costs to you. This is because they’re in the business of selling policies and it is their goal to convince you to buy their prescribed insurance coverage.

You can protect yourself by doing your own research so you’ll be able to understand how the basics of life insurance works. It’s also necessary that you ask questions about all the things that aren’t clear to you.

Your needs are not the same as other people’s needs so it’s important that you ask relevant questions based on what your needs are.

Here are some of the things that your life insurance agent may not tell you:

Not A Necessity

A lot of people can definitely enjoy the benefits of protection that a life insurance policy provides, however, each person’s situation is different. Not everyone needs life insurance, it seems like that’s just not right, but it’s actually true.

If you die, life insurance coverage is there to serve as your income replacement so that your dependents will be provided for. That is the main purpose of a life insurance policy.

If you’re the breadwinner of the family and you have a spouse or children heavily relying on your income, purchasing a life insurance policy is definitely a wise decision.

But if you are someone who doesn’t have any dependents, getting a life insurance policy could be a total waste of money, unless you have a favorite charity and plan to add them as your beneficiary.

There are also some people who have enough financial capability to make sure that their dependents are well cared for should they die unexpectedly. You may not need life insurance if your savings and investments are enough to cover your primary expenses.

Agents Are Salespeople

Insurance agents can be super nice and sincere when they tell you that your life insurance coverage isn’t enough. But, keep in mind that life insurance agents are generally paid on a commission basis. It’s your responsibility to make the right choice for you, your family, and your needs.

It is an advantage for the agent if you buy a more expensive policy because they’ll earn more money from the sale. There are times when agents will urge you to replace your existing policies so they can generate more sales. Again it’s your responsibility to make sure you choose what’s right for your situation.

You shouldn’t be afraid to ask your agent about their commission on the different insurance products they sell. Also make sure that your agent can justify the cost if he or she asks you to upgrade to a more expensive policy.

Less Can Be More

It may seem like a great idea to purchase more than one life insurance policy even if you don’t need them. But your bank account will suffer from the unneeded strain of taking on that extra coverage.

It’s been pointed out that it’s a good idea to have just enough coverage for you to finish paying off your mortgage. After that, you should select the right coverage amount based on the necessity of your dependents.

If your children are grown and you’re widowed, you will less likely need life insurance. If you’re a breadwinner with a spouse and you also have three children, you’ll definitely need it for them.

Purchasing life insurance coverage should always depend on what your goals and needs are. Always remember to ask questions of your insurance agent and be sure you make the correct choice for your needs.

3 Things Life Insurance Agents Don't Tell You

6 Reasons You Get Denied For Health Insurance

Are you planning to apply for health insurance in the near future?

One thing to keep in mind when looking for a new or additional health insurance policy is that Americans can’t be denied for health insurance because of pre-existing conditions according to the Affordable Care Act.

But there are still a number of reasons you could get denied for health insurance coverage. These are the exceptions to the rule.

Read on to educate yourself and learn more about why someone might get denied for health insurance so you can avoid these when you apply..

1. Annual Income

If you are applying for health insurance plans administered by the government like Medicare or Medicaid, you can be rejected if your income is above the maximum level.

You can still qualify for a government health plan depending on a few factors.

For example, a family with five children can be allowed to earn more and still apply for medical insurance. But a family that earns more with just one child may be denied.

Make sure to check this information regularly as the base numbers can change annually.

2. Hazardous Occupation

If your career is considered hazardous, you are more likely to be denied health insurance coverage.

The number of jobs considered to be high-risk by insurance companies are few so the likelihood this practice would affect you is low.

People who work in occupations that are considered to be dangerous may be denied coverage when they attempt to purchase health insurance on their own.

3. Unpaid Premiums

There are some applicants who are denied because they failed to pay the premiums of their previous insurance plans.

Failing to pay your premiums could keep you from getting health insurance coverage due to the risk the company would be taking that you would pay them when you didn’t pay previously.

Getting approved for health insurance when you owe premiums on another policy would be unlikely.

Most insurance companies will do their due diligence with a background check to see if there are any collection accounts under your name and they will pay particularly close attention if they find one from another insurance company. You may be disqualified based on this criteria alone.

4. Falsified Tax Returns

Another reason you might be denied health insurance coverage is if you have intentionally given false information on your tax returns.

This may apply if you are applying for Medicare, Medicaid, or other plans from the health insurance marketplace.

If you’re caught falsifying information, you will be banned from applying for a government healthcare plan for the rest of your life.

5. Spouse Coverage

Some people may be denied government health insurance due to the fact that their spouse has a plan that can cover them.

You can apply and get coverage through the healthcare marketplace, it just won’t be subsidized by the government. This type of health insurance subsidy is for people who don’t have another way to get health insurance.

If you have a spouse who has insurance and you can be placed on that plan, then you actually don’t qualify for any government subsidy for health insurance.

6. Health Risks

People who drink or smoke or engage in other activities that are considered a health risk aren’t covered under the aforementioned pre-existing condition exceptions.

These types of activities are choices that affect your health, not things beyond your control that existed prior to you applying for insurance.

These are just some of the reasons you can be denied health insurance coverage. Keep these things in mind when you begin looking for a policy to make your chances of getting the right policy more likely.

Credit Score

Do Homeowners Insurance Quotes Affect Your Credit Score?

Are you wondering if requesting homeowners insurance quotes will hurt your credit score?

The quick answer is NO. It may actually be the other way around.

No one wants to get an insurance plan that will require them to spend a fortune for not enough coverage. So you may have heard the rumor, more like a myth, that if you get an insurance quote, your credit will suffer.

This rumor is responsible for people not shopping around and ending up paying for a policy that is likely not right for them.

The good news is – you can get as many homeowners insurance quotes as you please and your credit score will be safe and sound.

Fact Check: Credit Scores and Homeowners Insurance Quotes

While it is a fact that insurance companies will take a look at your credit score when you ask for a quote, they’re only doing a “soft pull” which is a type of credit inquiry that will not affect your credit score.

These so-called soft pull inquiries will be seen on your personal credit reports, but that’s as far as it goes. These inquiries aren’t available for lenders to see, it’s just for your eyes.

The best thing about it is that it has no effect, whatsoever, on your credit score.

Why Homeowners Insurance Providers Check Credit

Insurers will always want to take a peek at your credit score so that they will have an idea of how much risk they may be taking when providing you with insurance.

This move is backed by studies indicating that people with lower credit scores are more likely to file a lot of claims or have insurance claims that are more expensive.

People with higher credit scores are less likely to file insurance claims which is a good thing for insurance providers.

If your credit score is low, you’ll often be charged higher premiums. That won’t be the case if your credit score is high.
Always aim for higher credit scores for you to enjoy lower insurance premiums and many other benefits that come with it.

Start making sound decisions for your personal finances and you’ll definitely get your credit score back on track.

Just remember that there are also other things, aside from your credit score, that will affect your homeowner’s insurance quotes. Your geography, property value, and claim history can also have an effect on your monthly payments.

Understanding Credit-Based Insurance Scores

It is common among insurance companies to use a credit-based insurance scoring system to successfully predict the risks of your future insurance claims.

Credit-based insurance scores are different from your credit score. It is a three-digit number that reflects the calculations done by using the information found on your credit report.

These are things like the number of outstanding debts you currently have and the amounts owed.

Still, just like with a regular credit report, when a homeowner’s insurance provider requests your credit-based insurance score, there’s no effect on your credit score.

When you’re requesting homeowner’s insurance quotes, you must also carefully consider the coverage you’ll need from the policy you’re researching. Get in touch with a number of insurance providers in your area and remember not to sacrifice your coverage just to get a low priced policy.

How Does Age Affect Auto Insurance Rates?

Age is one of the major factors that insurance companies check when you are requesting a quote for your car insurance.

An auto insurance company looks at a driver’s age to generally measure driving experience and accident risk.

Insurers know that if a driver has more years behind the wheel, they have more driving experience and it is less likely that the driver will get into an accident and submit reimbursement claims.

This means that the insurance company will incur fewer costs to have the driver insured and in return they offer a lower priced policy.

Average Auto Insurance Rate According To Age

In general, the youngest drivers pay the most for insurance while middle-aged drivers pay the least.

Car insurance costs decrease and reach the lowest rate for people in their 50s and may increase when they are in their 60s and above.

As a rule of thumb, insurance premiums are the highest for teen and young adult drivers aged 16 to 24. Average costs range from around $7,000 per year at age 16 to around $3,000 per year at age 21.

At age 25, average insurance rates rapidly decrease to around $2,000 per year and continue to decline until age 55 having the best rates.

At age 55, insurance costs are around $1,500 per year – reaching the lowest cost – then slightly increase to around $1,700 at age 65 and around $2,000 at age 85.

Is your age high-risk?

According to the Insurance Institute for Highway Safety, young drivers aged 16 – 19 are three times more likely to get involved in a car accident. This is why young drivers pay more. The insurance company thinks that they are more prone to incidents and accidents so they charge higher rates for this age group.

On the other hand, mature drivers in their mid-30s to late 50s acquired better driving skills and road mastery leading to lower accident rates.

Moreover, once a driver reaches the age of 60, premium rates slowly go up because aging comes into play. Drivers above 60 years old generally have poorer eyesight and slower driving reflexes than they once had and that has an impact on their driving ability.

So the higher the risk for you to get involved in an accident according to your age, the more expensive the insurance rates will be.

How Do You Save Money on Car Insurance?

There are a number of effective ways for young, middle-aged, and older drivers alike to save more money on auto insurance.

Shopping around is the best strategy to save money on insurance costs. There are insurance companies that give better prices for young drivers compared to others.

Some companies are found to be the most affordable insurer for young drivers. All you have to do is ask around and get quotes from at least three companies until you find the best deal.

You can also compare prices online as most large insurers allow you to start a quote on their website.

Another way to save money is by checking with insurance companies to see if there are any available promotions or discounts.

Teenagers may get up to 10% off by maintaining good grades or taking certified driver’s education classes. Teens and young adults also benefit by being on their parent’s policy. Adding a teen or young adult to a current parental policy generally raises the policy rates less than if the teen or young adult were on a policy alone.

Seniors may also get discounts by taking defensive driving classes.

There are also companies offering “55 and Retired” promos where drivers aged 55 and above who are retired instantly qualify for a 10% discount.

The bottom line is auto insurance rates can be expensive for some age groups, however it’s something we all need. You just need to have money-saving strategies to get the lowest quotes and best deals.

5 Myths & Misconceptions About Life Insurance

Unlike science, math or geography, life insurance is not something that you can easily learn in school. It’s not like learning how to balance a check, baking lasagna, or doing car repairs.

Even if it is tricky to figure out all the rules and technicalities behind it, life insurance is something that most people should be familiar with.

One of the things that you should familiarize yourself with are the myths and misconceptions surrounding life insurance policies.

Not only do these these things make getting life insurance scary, they also prevent individuals and families from purchasing the life insurance that they need out of fear and confusion. Let’s take a look at a few of the myths and misconceptions you might have.

1. It Costs A Lot Of Money

Would you believe that 80% of Americans overestimate the costs when deciding whether to purchase a life insurance policy?

Many people think that a $250,000 term policy for a 30-year-old individual will cost around $400 to $1000 a year.

You might be surprised to find out that figure is actually pretty far off the mark. The actual price for this type of policy will most likely only cost you around $160 to $200 per year or $13 a month.

2. Single Non Parents Don’t Need Life Insurance

If you are single with no dependents, you still need to consider purchasing a life insurance policy.

Single individuals need a policy that is enough to cover their medical and funeral bills as well as any personal debt upon passing away.

If you do not have life insurance, you could end up leaving a lot of debt for your family members to deal with after your death

3. You Are Too Young To Get A Life Insurance Policy

Getting a life insurance policy makes the most sense while you are younger since the premiums are less expensive and you have fewer assets to pass on to your dependents.

The longer you wait to get a life insurance policy, the more expensive it will be. Plus, as you age you are more likely to develop a medical condition which can make the price of the policy go up.

4. It Is Recommended To Buy Term And Invest The Difference

This may be true for some people. Even though, term insurance is appropriate for many consumers, a permanent policy is a better deal if you need a life insurance for your entire life.

5. You Can Only Buy Life Insurance If You Are Healthy

Life insurance is more affordable if you are young and healthy this much is true. However, that does not mean that you can only get it if you are a young, healthy adult.

In fact, you can qualify for some policies even without undergoing a medical exam. You just need to shop around and get the best policy for you. You wouldn’t buy the first car you saw, in the same manner but with bigger stakes, you shouldn’t purchase the first policy you look at. Take some time and find the best policy to cover all of your needs and your family’s needs once you’re gone.

There are a lot of myths and misconceptions concerning life insurance policies. If you want to have peace of mind, never leave your life insurance policy out of your budget, so your bills may be covered after you’re gone.