Skip to contentOnline Texas Life Insurance Marketplace, the Texas Life Insurance Broker, announced today that the company has reached Page one with their page on the Facebook Platform for Texas Life Insurance .
Individuals interested in how to buy life insurance in Texas and no medical exam life insurance in Texas, can choose to click ‘Like’ on the Facebook Platform page to be able to follow the company’s news, or mention the company in one of their posts.
Those that connect with the online insurance marketplace on the Facebook platform, can read different articles and blogs about life insurance, can answer different polls, stating their opinions about various topics in the life insurance area, and can connect with others, and discuss questions about life insurance.
“We are overjoyed that every day more and more people are finding us on this social media site,” said Scott Thiltgen, owner of Texas Term Broker.
Facebook gives everyone the power to share with the people they care about, making the world more open and transparent. Facebook users communicate and share information through the social graph, the network of connections and relationships between people. Facebook gives companies and the developer community access to the social graph through Facebook Platform. Using a rich set of tools and online services, developers can build applications that are deeply integrated into the Facebook website. Millions of Facebook users return to the site each day, providing unparalleled distribution potential for applications and the opportunity to build a business that is highly relevant to people’s lives.
In 2007, Facebook launched Facebook Platform to empower developers and entrepreneurs around the world make the Web more social for users. Millions of Facebook users return to the site each day, providing unparalleled distribution potential for applications and the opportunity to build a business that is highly relevant to people’s lives.
Texas Term Broker is an online provider of life and health Insurance quotes. It is unique in that this website does not simply stick to one kind of insurance carrier, but brings the clients the best deals from many different online insurance carriers. This way, clients have offers from multiple carriers all in one place, this website. On this site, the client will have access to quotes for Texas Life and Health insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc.
Life insurance coverage is the fact that most versatile of investment of minimal-risk product which works best for clients in nearly any wealth category and existence stage. In the past, it’s been an essential component in lots of a properly-performed estate plan, also it remains probably the most relevant, secure possibilities. However, with last year’s restored estate tax exemption, agents must still adjust their scope and sales hype if this involves offering this time around-honored solution.
The way the forex market change within the short- and lengthy-term? Which financial planning problems is it more beneficial suitable for solve? John Titus, advanced marketing attorney at Saybrus Partners, a Hartford, Conn.-based wealth management firm, weighs in at in regarding how to get the most from the merchandise this year and beyond.
Why is life insurance coverage a highly effective wealth transfer vehicle?
For just one, after dying, its benefits are immediate. Second, and much more important, its smart an advantage that’s generally tax-liberated to the beneficiary and may usually be produced estate tax-free if required. Thus, the policy’s internal rate of return on its rates is fairly attractive. And, in present day economic atmosphere, another reason life insurance coverage is really good at this context is the fact that its benefits aren’t always correlated to the market conditions. When dying benefits are compensated, for instance, the present status from the stock exchange isn’t a factor.
How have recent estate tax rules influenced or transformed the requirement for life insurance coverage inside a well-rounded estate plan?
The current temporary rise in the estate tax exemption implies that less individuals will be influenced by tax rules. Much less sometime ago, a husband and wife with combined assets of $5 million could have been facing a $1.5 million federal estate tax liability. For deaths this year and 2012, that same couple doesn’t have federal estate tax liability. Obviously, the question pending over all this is the way forward for the estate tax exemption, that is slated revisit $a million in 2013. Count me among individuals who think it’ll stay at current levels for that expected future.
When the exemption remains at $5 as well as $3.5 million, estate proprietors will turn to life insurance coverage like a strategy to cope with other, non-estate tax-related financial targets and challenges. These challenges include business succession planning, using needless IRAs and deferred annuity and taking advantage of life insurance coverage like a supplemental retirement earnings vehicle, amongst others.
Would you expect the forex market to alter within the next 5 years? If that’s the case, how?
I actually do think you will see significant market uncertainty as well as unpredictability for that expected future. Nonetheless, I believe that federal estate and gift tax exemptions will stay at relatively high levels.
Because the federal budget reduces, federal grants or loans towards the states will even likely shrink, putting more financial pressure on condition budgets. Consequently, I believe that condition inheritance taxes will most likely remain in place as well as return in states which have removed them. Many states are needed to balance their budgets, and condition inheritance taxes will most likely be a welcoming supply of revenue later on. Because of this, estate proprietors will need to keep close track of this problem. I believe it is more probably that tax rates will rise soon which life insurance coverage like a supplemental retirement earnings vehicle could play an progressively natural part for the reason that regard.
Is life insurance coverage equally suited to clients with all of amounts of wealth?
The fast response is yes. When the federal estate tax exemption amount stays in the $5 million level or near to it, then certainly less estate proprietors will need to bother about federal estate taxes. I see pointless why our prime-internet-worth estate owner won’t still turn to life insurance coverage to supply the liquidity required to pay future estate taxes, even when the total amount needed is less.
For individuals who’ll not need to bother about federal estate taxes, you will find other non-estate-tax-related financial issues that life insurance coverage could be a solution. Again, using life insurance coverage like a supplemental retirement earnings vehicle might be quite attractive within an atmosphere of rising tax rates.
What’s the No. 1 question you listen to clients about integrating life insurance coverage to their estate plan? How can you answer it?
Most likely probably the most comon question nowadays is, “So why do I want life insurance coverage basically don’t have any estate tax problem?” I answer this in a few various ways. First, the financial agent and also the client must have attorney at law about the way forward for federal and condition estate taxes. The customer might not have an problem today, but might have one later on.
When the client and agent agree that there’s no federal estate tax problem, then your agent should discuss other financial planning problems that would use life insurance coverage included in a general strategy.
Buying life insurance coverage is among the most significant financial choices customers make. Yet they frequently know hardly any concerning the options that come with their plans, so that they neglect to make the most of them.
Listed here are 10 of the very generally overlooked options that come with life insurance coverage plans and why they are vital that you you like a insurance holder.
Waiver of premium. This feature pays the premium of the policy should you become seriously ill or disabled.
Faster dying benefit. This feature enables you to definitely receive payday loans from the dying advantage of your policy if you are identified having a terminal illness. Lots of people with this particular benefit make use of the money to assist purchase treatment along with other expenses whether they have only a short while to reside.
Guaranteed purchase option. With this particular feature, you can buy coverage at designated future dates or existence occasions without showing you are in good condition.
Lengthy-term care riders. Some existence items include this method, which enables you to employ the advantages of your policy to cover lengthy-term care in return for a lower existence benefit.
Spouse or child term riders. Existence guidelines with this particular feature permit you to purchase term life insurance coverage for the spouse or dependent child, as much as age 26. This method could be a less expensive method to purchase coverage if you cannot afford separate guidelines.
Cash value plans. This kind of policy pays out upon your dying as well as builds up value throughout your daily life. You should use the money value like a tax-protected investment, like a fund from which you’ll borrow and employ to pay for a policy rates later.
Mortgage protection. This feature, typically available on term existence guidelines, pays your mortgage should you die.
Cash distributions and financial loans. Many universal and whole existence guidelines permit you to withdraw or take a loan, while using cash worth of a policy as collateral. Rates of interest are usually relatively low. You may also make use of the cash worth of your existence policy to pay for your rates if you want or wish to stop having to pay rates for some time. You are obligated to pay the borrowed funds or perhaps your receivers will get a lower dying benefit.
Survivor support services. Some existence guidelines offer services that offer objective financial and legal help receivers.
Worker assistance programs. This feature makes assets open to you for issues that can impact your individual and professional existence. Assets are often free and help address issues for example drug abuse, stress, marital problems, legal concerns and major existence occasions.
“Customers need to know their life insurance coverage guidelines so that they don’t overlook important features that may be important to their livelihoods,” states Shaun Koll, assistant v . p . of product for Colonial Existence & Accident Insurance Provider. “Make certain you’ve got a copy of the policy, you know in which you ensure that it stays which another person in the household also knows in which you ensure that it stays. You could request a duplicate of the policy out of your insurance provider if you want it. Additionally, evaluate your insurance policy every so often to make certain it’s right for your stage in existence.”
Texas Life insurance
Being protective goes hands-in-hands with motherhood. From hands sanitizer gel to bike headgear to high-tech child car seats, moms and fathers will visit the finishes of the world to have their children safe, seem and happy. But eventually, the scrapes and bruises no more require a healing hug, working out wheels appear the bike and also the day comes when they are driving to college - not only senior high school, but college. You may be surprised, but you will find actions you are able to take since will safeguard them then - as well as beyond.
It isn’t uncommon for brand new parents to think about adding life insurance coverage coverage towards the other guidelines they carry, like vehicle and medical health insurance. It’s really a difficult factor to consider, but it is an additional protection which will make sure that kids and also the making it through spouse is going to be taken proper care of in case that certain parent dies. However, you will find other ways a life insurance coverage policy can really make a difference for the child.
May possibly not be something which immediately involves mind, but getting a life insurance coverage insurance policy for your kids might have lasting benefits for his or her financial future. However, doing this when they’re still youthful couldn’t only equal to financial savings within the long-term, but better protection of the assets because they themselves reach a time where they’ll think about a family that belongs to them.
In practical terms, giving your kids the gift of the life insurance coverage policy safeguards them from medical underwriting and costs. You will be creating the policy early enough which costs is going to be lower, especially in the initial stage, also it can help with keeping them workable further in the future, with respect to the plan.
Through the years, a life insurance coverage policy may become a significant part of the children’s financial protection. And when they are in the right age to achieve the discussion about how exactly to become financially responsible, it’s really a useful example, among other training like creating a good credit score and wise investing habits.
Some insurance coverage allows your son or daughter to create changes his or her existence progresses, providing them with the opportunity to increase coverage because they undergo life’s milestone occasions, like marriage, getting a home loan to purchase a home and getting children that belongs to them. Rates will increase with added coverage, however the added costs connected with medical underwriting is going to be removed.
Searching for the kids is definitely an instinct which will never fade. Because they grow, you’ll help guide them on the right track in existence, but sooner or later, they will be off by themselves. Providing them with lengthy-term protection when they are youthful will make sure that you are assisting to be careful on their behalf, lengthy after they have left the nest.
Nowadays when a life insurance agent comes to sell you a policy, the spiel is remarkably different. He no longer quotes the highs of the stock market or sells you the dream of quick money through equity investing. He instead assures the safety of your capital and guarantees your return. This change mirrors the changing trend in the life insurance sector, where traditional plans are making a comeback and leaving the once popular unit-linked insurance plans (Ulips) behind.
Jayachandran/Mint
Owing to last year’s reforms and volatility in the stock markets, insurers have once again turned their focus on traditional plans. Unlike a Ulip where investments are market-linked and costs are transparent, traditional plans work on the principle of give and get— you pay x every year and you will get 15x+y in 15 years is how most traditional plans are structured. But over a period of 15 years, this 15x+y usually translates into a paltry return. Even the bonuses that most traditional plans offer are seldom able to improve the returns. So before you succumb to a traditional plan, here are four key questions you need to ask.
What you give and get?
This is an important parameter to consider.
Comparison: First, it enables comparison. Says Rituraj Bhattacharya, head (market management?), Bajaj Allianz Life Insurance Co. Ltd: “The way to compare traditional plans is to look at the guaranteed sum which is typically the sum assured. For this sum how much premium do you have to pay over a given term is how one can compare products.â€
Costs: The give-and-get equation gives you a sense of the costs. Let’s understand through an example. Take a traditional endowment plan for a 30-year-old for a term of 20 years with a sum assured of Rs. 10 lakh on an annual premium of Rs. 46,931. The guaranteed payout under this plan is the sum assured and the non-guaranteed component is the bonuses which are at the discretion of the company. Compare this with a term plan which will charge an annual premium of around Rs. 2,000 for the sum assured mentioned above over the same term. In other words, you pay Rs. 44,931 extra to guarantee that sum assured on maturity.
Rate of return: The give-and-get equation of a traditional plan helps you understand the returns from the policy, too. Use a financial calculator that gives you the internal rate of return from the net or swing the numbers past your financial planner and you will understand the delusion guaranteed return is. In the above example, the return on your investment is just 0.66%.
What are the additional benefits?
But you also get bonuses, the agent will argue. Typically, in a traditional insurance plan there are three kinds of bonuses: cash, reversionary and terminal. The premiums that you pay get invested in a life fund which is kind of a perpetual fund that an insurance company has. Says Bhattacharya: “The insurer meets all his liabilities of paying claims or maturity through this fund. So depending upon the interest rate scenario and surpluses that this life fund has, a company may declare a bonus.â€
Cash bonus: Once the company declares a bonus it becomes guaranteed. If you choose to have it as cash, it is called cash bonus.
Reversionary bonus: The guaranteed bonus can also get added to your sum assured. This is called the reversionary bonus.
But you must be careful with reversionary bonuses since they can significantly impact your returns. There are two kinds of reversionary bonuses: simple and compound. As the name suggests, a simple reversionary bonus is a percentage of the basic sum assured that once declared becomes a guaranteed payout, but a compound reversionary bonus is a percentage of the overall sum assured. Here’s an example: a 6% simple reversionary bonus on a sum assured of Rs. 100 will bump up the sum assured to Rs. 106 in the first year and Rs. 112 in year two. However, a compound reversionary bonus will bump up the sum assured to Rs. 106 in year one and Rs. 112.36 in year two. But Kapil Mehta, managing director, SecureNow Insurance Broker Pvt. Ltd, has a word of caution: “The rate at which a simple reversionary bonus is paid out creates an optical illusion because the rates are more than the rate of a compound reversionary bonus. However, in the long term and with the power of compounding, a compound reversionary bonus tends to give you better returns.â€
Terminal bonus: This is again totally at the discretion of the company and is paid at the end. Says V. Viswanand, director and head (products and persistency management), Max New York Life Insurance Co. Ltd: “One also needs to look at liquidity in a policy. A cash bonus is a good idea in that sense because it gives you the freedom to have the money at your disposal anytime you want.â€
Bonus rates: You should also have an idea about the bonus rates that the company has been declaring. Most companies will have some historical data of their bonus rates, which can access through the insurer’s website or the agent.
Says Bhattacharya: “Typically, a company does not have a lot of volatility in bonus rates. Since the bonus rates depend on the surpluses in life fund, interest rate is only one factor that determines that surplus. Hence, most companies will maintain a stable bonus rate structure.â€
Adds Kapil Mehta, CEO, SecureNow, an insurance broking firm: “Bonus rates get declared as a percentage of the sum assured and so it becomes very difficult to get a sense of returns. However, on an average, the returns from the bonus are not more than 4%.â€
What happens if you surrender policy?
That’s usually far and the last thing in your mind when you are buying the policy. But it’s a relevant question nevertheless. Typically, traditional plans are front-loaded—a large chunk of the costs are deducted in the initial years—and so in the first three years, most traditional policies don’t have a surrender value. If you choose to surrender your policy within this period, you get nothing back.
After three years, the policy usually assumes a surrender value. Most insurers will offer two options: a minimum guaranteed surrender value—which is a regulatory requirement—and a non-guaranteed surrender value. The guaranteed surrender value is a fixed percentage of your premiums—around 30-35% of all the premiums paid minus the first year’s premium.
The non-guaranteed surrender value is arrived at more scientifically and indicates the value of your investments. The non-guaranteed surrender value depends upon the sum assured, bonus, policy term and the number of premiums paid. Since the non-guaranteed surrender value is a better reflection of your investments, it is usually higher than the minimum guaranteed surrender value. Usually in the industry, it is the minimum guaranteed surrender value that is paid out, but some insurers offer the higher of the two surrender payouts. Choose the latter option.
What happens if you stop paying premiums?
How a skipped premium will impact your benefit is also important to understand. Typically, if you skip paying a premium in the first three years of the policy, it will lapse and you will get no benefits. Some insurers may choose to pay you a discretionary sum.
However, if you skip paying a premium after three years, your policy will continue to exist but with reduced benefits. After three years, your policy assumes a cash or surrender value. Depending on this value, the insurer may settle for a reduced sum assured or may offer an extended term cover of the same sum assured for a number of years. Your policy will no longer enjoy any variable benefits.
You also need to understand the revival norms of the policy. Says Viswanand: “Some insurers allow a period of five years to renew ones policy, while others may offer only two-three years. Typically, reinstatement norms are same for all the policies of an insurer.â€
If you manage to get an answer for each of these questions, you would understand your benefits and policy clearly.
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Life insurance is one of those financial products that can give people the heebie-jeebies. It can sound confusing and complicated, and it involves thinking about a very scary proposition: death.
But life insurance really isn’t as frightening or complex as it seems. It’s actually a fantastically useful and flexible estate-planning tool that can provide income-tax-free security for your loved ones. It can also provide liquidity to pay estate taxes, especially if your estate largely consists of assets such as real estate or a closely held business that you may be reluctant to sell to raise cash. (If the policy is owned by an irrevocable trust, the insurance payout can avoid estate taxes too.)
Here’s a rundown of some of the basics of life insurance:
1 ‘How do I buy insurance?’
You can go directly to an insurance company or use a broker, either in person or online, that compares products from multiple insurance companies and can help you find the best quote.
You also can check if your employer, union or trade association offers a group life-insurance policy. Group life-insurance policies may not offer as much flexibility as some individual policies, but they typically don’t require a medical exam — a boon for those in poorer health seeking to be insured.
When you’re shopping for policies, stick to companies with high financial strength ratings from firms such as A. M. Best, since the last thing you want when spending money for peace of mind is to have to worry about your insurer going bust.
Most individual life-insurance policies require you to get a medical evaluation so that the insurer can assess your health and longevity risks. That’s typically arranged by your insurance broker or the insurer, at no cost to you. In most cases, a medical technician will come to your home or office to get some vital stats and blood and urine samples.
2 ‘Do I need insurance?’
You generally can skip life insurance if you’re single with no dependent kids and don’t expect to have a taxable or debt-ridden estate. Also think twice about forking over for life insurance if your premature death wouldn’t affect the ability of your surviving partner to pay for daily living expenses.
But do consider life insurance if you have dependent children, are a business owner or if your spouse doesn’t work or you have a big income disparity. In these cases, if you die prematurely, a life-insurance policy can help the survivor pay for your family’s day-to-day cost of living, including mortgage payments or help your business remain viable after your death.
There are many variables to factor in when considering how much life insurance to buy. It depends on your current and projected income and assets, your family’s annual living expenses, the length of the policy you are considering and whether you have any specific future economic needs — such as a child’s college tuition, a special-needs child who needs lifelong support, or expected estate taxes to pay off. Your insurance broker or salesperson can help you come up with a coverage amount that’s suitable for your situation.
3 ‘Term or permanent?’
Life insurance, in its most basic form, can be divided into two categories: term and permanent, also called cash-value. Term life, the simplest and cheapest form of life insurance, is when you buy an insurance policy that lasts for a set period, typically 10, 20 or 30 years.
A term policy, which usually costs just a few hundred dollars a year if you’re in good health, is appropriate for people who only want life insurance for a limited number of years — such as until your children are grown or until you reach retirement age.
Permanent or cash-value life insurance, by contrast, lasts for the remainder of your lifetime. These policies are often used for specific estate-planning purposes, such as funding future estate taxes or for ensuring the continuity of a family business.
4 ‘Why the cost difference?’
Permanent insurance is more costly than term life insurance because it lasts longer and because it provides more than just a death benefit: It also has an investment component in which money accumulates tax-free within the policy.
In other words, a portion of your premium is placed in a separate investment account; this money grows tax-free while the policy is in force. (How it’s invested depends on the policy.) As more money builds up inside the policy, you might eventually use this stash of cash to help you pay the policy’s premiums.
Many insurers tout the tax-free investment benefits of cash-value policies. Not only does the money grow inside the policy tax-free, but your beneficiaries don’t have to pay income taxes when they receive the policy’s payout. A cash-value policy might make sense if you have already contributed the maximum amount to other tax-deferred investment accounts, such as 401(k)s and individual retirement accounts.
On the other hand, the higher premiums, commissions, and sometimes limited investment choices might not make a cash-value account worth it.
Some people choose to buy a special kind of permanent policy called a “second-to-die” or “survivorship” policy.
These policies pay out when the second person in a couple — you or your spouse — dies, and the money generally goes to your children or other heirs. They typically cost less than traditional permanent insurance because they are based on the life expectancies of two people, rather than one.
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For several years now, September has been designated as Life Insurance Awareness Month. When we change our clocks back in the fall, we also check the batteries in our smoke detectors to protect our families. What a perfect reminder to review our life insurance needs annually to help ensure our loved ones are protected.
There are many life changes that can take place in a year - marriage, children, job changes, etc. Each of these changes can make a big difference in the life insurance coverage needed for your family.
“I know I need it, but I don’t want to think about it now.” “I’ll deal with it later, it’s not a priority.” These are two of the most common responses when the topic of life insurance comes up. Despite being saddled with a reputation as a boring financial product, life insurance still remains a product that many financial professionals agree should be the foundation on which people should build their financial goals.
Why so? First, think about your loved ones. The primary benefit of life insurance is to provide for them, helping them meet daily expenses and continue the activities of daily life without any further major disruption. Familes can use life insurance proceeds to pay bills - like credit card and mortgage bills - and daily necessities such as groceries, gas, etc. Without adequate life insurance coverage, many families could be placed under great financial distress to meet the ongoing financial obligations of their new lives.
Life insurance can also protect one’s spouse against sharp reductions in future pension and Social Security payments by replacing assets cut short by premature death. For example, it is not unusual for a surviving spouse to receive less than half of his or her spouse’s projected pension because death has interrupted anticipated contributions flowing into the plan.
And it’s not just at home where life insurance can help. Life insurance can help business owners and others with significant assets to pass those assets to their loved ones in a tax-efficient manner. It also serves as a tremendous tool enabling people to support nonprofit organizations through charitable gifts.
Life insurance might not be a popular topic, but the security it offers brings a level of comfort that most people can’t do without. In addition, most people will find that life insurance coverage is a key component as they plan for their long-term financial goals. None of us can control whether we will have tomorrow, but protecting the people in our lives is something we can take control of today.
Life insurance is one of those products hyped by marketers who tout low prices. Of course, cost is a huge factor in any financial decision. But are you really getting the lowest cost and the best deal for your life insurance needs?
Comparing the cost of anything needs to be done on an apples-to-apples basis. For life insurance, that means the comparison is only valid when you look at two contracts with the identical provisions and benefits.
Starting with term insurance, there are several points of differentiation. First may be the company ratings. One may expect to pay a little more for a company with higher ratings. If you are OK with lower ratings to save a few bucks, go for it.
For annual renewable term products, you want to see how long the policy will be in force and how high the premium gets in the later years. Few policies last for life - and if they did, you probably would not be willing to pay the premium when you are age 90. Other points of comparison for annual renewable term contracts would be their convertibility into permanent products at a later date. Some allow it and others do not.  Some restrict what you can convert to, and others allow conversion to any of the policies offered by the company at the time. And lastly, some companies have very good permanent products that you’d be proud to own, and others are not quite as good.
For term contracts, such as 10-, 20- or 30-year products, the same points of comparison exist - along with a few new ones. You want to evaluate what happens to the contract at the end of the guaranteed premium period. Some will simply end the contract with no more coverage, while others may offer extensions. The premiums, however, on those extensions are frequently extremely high, effectively forcing you to surrender the policy unless you knew that you were on death’s doorstep.
Permanent products such as whole life or universal life have a completely different way to compare costs in addition to the provision-by-provision comparisons. These products may be recommended for estate planning or for a client who wants to build up cash inside the contract for safety or future use.
I like to look at the internal rate of return on the internal cash surrender value and the internal rate of return on death benefits. Most permanent insurance illustrations will actually show you, year-by-year, the forecasted rates of return on your premium dollars.
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You’ve figured out how much life insurance you need, how many years you need it, how much you can spend and what type of policy best fits your situation.
But your homework isn’t finished yet. Now an array of life insurance policy add-ons, called riders, must be considered.
“Riders can give policyholders additional benefits and increase peace of mind that if something goes wrong, there’s a Plan B,” says Shelley Fiore, an agent for Detroit Financial Group, a general agency of the Massachusetts Mutual Life Insurance Co.
When you buy life insurance, available riders vary by insurance company and policy, as do the rules for how they work. Costs also vary and depend on many factors, including your age, health and type of policy. We can’t list every option available, but here are some of the most useful riders.
In case you become totally disabled
1. Waiver of premium rider
With this rider, you don’t have to pay the premium if you become totally disabled and can’t work.
Fiore says she always suggests that clients consider it so “they don’t have to choose whether to put food on the table or pay the insurance premium.”
Keep in mind the waiver expires, often at age 60 or 65.
2. Disability income rider
You collect a regular income from the insurance company if you become totally disabled and can’t work. The policy specifies the amount of the income and whether it’s paid for a certain amount of time or for the length of the disability.
Some disability income riders pay out only if you became disabled from an accident, while others pay on accident or sickness, says Al Lurty, senior vice president of ING’s U.S. insurance operations.
In case you need more insurance but your health has declined
3. Guaranteed insurability rider
This rider lets you purchase additional life insurance coverage at a later date without undergoing a medical exam or providing any evidence about your insurability.
Because you never know how your health could change, Fiore says it make sense to consider the rider (if you’re eligible) and think you might want to buy more life insurance later. The option allows you to buy additional insurance at certain intervals, such as every three years, or at certain ages, Fiore says. When the option comes up to buy more coverage, the insurance company considers your age for setting the premium, but not your health.
“I’ve seen people with severe heart conditions or cancer get additional coverage who otherwise would have been declined,” Fiore says.
In case you want to convert term life to permanent insurance
4. Term conversion rider
Term life provides coverage for a certain period of time, such as 10, 15, or 20 years. Permanent life insurance, such as whole life or universal life, provides coverage for your entire life, so your beneficiary receives a benefit no matter when you die.
This rider lets you convert term life insurance into permanent life insurance without undergoing a medical exam. Fiore says it’s especially attractive to young people starting careers and families who need life insurance but don’t have enough money yet to secure all the coverage with permanent life insurance, which has higher premiums than term life.
There will be a deadline for when you must convert, if you want to change the term policy to permanent life insurance without providing health information. Understand the convertibility features of term life before you buy.
In case you become seriously ill
5. Accelerated death benefit rider
This has become standard in the insurance industry, Lurty says, and is usually included automatically for free or offered at nominal cost. The rider lets you collect a portion of the policy’s death benefit if you become terminally ill with a short life expectancy, such as one year. The policy spells out how much of the death benefit is available before death. Usually it’s capped at $250,000 to $500,000, Lurty says.
You can use the proceeds for anything, such as paying medical bills or living expenses. Even though the insurer offers the rider free, the company may charge a fee if it is exercised.
6. Critical illness rider
The insurer pays a lump sum if you’re diagnosed with one of the critical illnesses specified in the insurance policy, such as cancer, heart attack, stroke, kidney failure and others. Instead of reimbursing you for medical expenses, the way health insurance does, the rider provides money to use for any purpose during the course of treatment.
In case the unthinkable happens
7. Child protection rider
No one wants to consider the possibility of losing a child, so all emotion must be set aside when considering a child protection rider. Although the death of a child typically would not result in income loss, as would the death of a spouse, the tragedy still would have some financial consequences, which could be an additional hardship for a bereaved family. This term life insurance rider provides coverage for final expenses in case the unthinkable happens. The coverage generally can be purchased in units - for example, $1,000 — Lurty says, at a nominal price. Basic information about the child’s health is required for underwriting.
In case you die from an accident
8. Accidental death benefit rider
If you die from an accident, this rider provides an additional benefit on top of the policy’s regular death benefit. The option is often referred to as double indemnity when the additional payout equals the original death benefit. Sometimes the rider also includes additional payment for dismemberment. You would collect money if you lost a limb or your sight. Life insurers will consider your occupation and hobbies when determining premiums, Lurty says. High-risk activities, like race-car driving, would boost the rates.
In case you outlive your term life policy
9. Return of premium rider
“If you live to the end of the term, in exchange for paying the premium, in most circumstances you get all your money back,” Lurty says. He notes that some companies use a separate rider where others, like ING, write the return of premium benefit into a base policy.
You pay a higher premium for the opportunity to get your money back. The big question to consider: How does paying the extra cost for the return of premium rider compare to investing that money and buying a basic term policy instead?
To find the answer, subtract the annual premium for a basic term policy from the annual cost of a return of premium policy. The difference is how much you would have to invest each year during the insurance term. Then calculate what annual rate of return you’d need on that money to beat the amount you’d get back from a return-of-premium policy. Remember, money from the return of premiums is tax-free, but your own investment returns are taxed. In some cases (depending on age, sex, tax bracket and other factors), you’d need to get more than a 7% rate of return on your investment to beat the return of premium policy, Lurty says.
There is no one-size-fits-all answer to whether any of these riders are right for you. You’ll need to weigh policy options to find the best package for your needs.
“My best advice is to talk to a knowledgeable life insurance agent to help make an informed decision,” Lurty says.
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Eloise Nelson is digging through and examining some of her important papers.She now realizes it’s what she should have done years ago when she first took out a $75,000 life policy.Nelson would have discovered her monthly premiums were scheduled to jump drastically, from $64 to $220, after 20 years.”Well when I got it, I really didn’t understand how it would be or anything,†she said.So seven months ago, it came as a shock when her insurer Primerica started drafting those big $220 payments from her bank account.”I don’t have that kind of money to give nobody,” she said.Realizing she couldn’t afford it, she canceled her policy. Primerica then refunded her last payment but not the full $1,300 they’d taken in higher premiums.Nelson complained to the company, but to no avail. “I got a lot of fast talking and no satisfaction,” she said.Action 9 got in touch with Primerica. It said it sent a letter to Nelson one year ago reminding her of the scheduled premium increase, but did not hear from her.Nelson has only herself to blame for not paying attention to all of her important mail.After Action 9’s contact, Primerica refunded all of her money, $1,320, as a goodwill gesture.She tells others not to repeat her mistake. “Make sure you understand everything before you sign anything.”