WHAT is Term life insurance?
Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time for example Term- 10, Term-20, Term 30, Term 40 are insurance policies with level or same premiums for 10 years, 20 years, 30 years and 40 years respectively. After that period expires coverage at the previous rate of premiums is no longer available and you must either forgo coverage or potentially obtain further coverage with increased premium payments. If the insured dies during the term, the death benefit will be paid to the beneficiary.
Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.
In simple words term life insurance policy pays a monetary benefit to the named beneficiary if the death of the insured happens during the term of the policy. Term life insurance is the most inexpensive way to insure or cover yourself and protect your family or loved ones against financial hardships in the event of untimely passing away.
Benefits of Term Life Insurance?
There are few benefits and the top most is low cost – In comparison to other form of insurance such as Whole life or Universal life, Term life insurance policy is the most inexpensive way to insure yourself.
Second benefit – ability to buy higher amount of insurance, since the coverage is not that expensive, it is really suitable to young families – who have responsibilities on their shoulders towards spouse, kids, house and other dependants, untimely death and can really shake things up in life, there are many examples and families end up in sorry and helpless state, just imagine if something happens to the main bread earner of the family what will family have to go through. So having this form of inexpensive insurance really makes sense and once dependants on you and more independent of you, you can always reduce the coverage to suit to your new needs.
Third Benefit – to cover short term business loans, If you have business loan for short time frame few years and just need a coverage to cover the loan amount in the event of death, term life insurance policy is best.
WHAT is Whole life insurance?
A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.
In simple words whole life insurance policy pays a monetary benefit to the named beneficiary when the death of the insured happens, later or sooner, we all have to go one day and when ever that time comes, it would pay a lump sum benefit to family. Mostly whole life policy is advised to plan for final expenses, planning for taxes or estate planning, leaving legacy for the family or making a donation to a charity. So basically when ever we are planning to make sure funds must be available one day when ever the time comes whole life policy is the way to go with. It does come with different options such as life pay meaning premiums need to be paid for life, limited pay options such as 10 pay, 20 pay or pay 65; respectively it means that policy would be paid up in 10, 20 or at age 65. After which no premiums need to be paid but the coverage would stay in force and would pay benefit at the time of death.
Benefits of Whole life insurance?
1. It is a permanent insurance and guarantees pay out to beneficiary one day, when ever the insured happens to pass away. It removes the speculation that term policy has what if you out live that term of insurance, all your money invested into plan goes wasted, where as with whole life you have peace of mind that one day this contract will be honored.
2. Funeral planning or final expense planning is a good fit for whole life policy as we know that one day for sure money would be needed and this whole life plan would payout the coverage amount to the beneficiary that too 100% Tax Free.
3. Estate Planning – when estate is transferred from one generation to next; there are tax consequences, depending up to how much is needed, that can be worked out with accountant, whole life insurance policy could be bought so as your estate gets transferred fully to your heir without parting a major share to taxes.
4. Children or Grand children – that is another major reason why parents or grand parents buy policies to leave money behind to help their children go to university or help them buy first car, or first home down payment or marriage.
What is No Medical Life Insurance?
No medical Life Insurance as name signifies Life insurance without medical examination ie no blood work, no needle tests or urine sample or no medical results from doctor. If you have any of these health conditions, we can insure you:
1. Cancer
2. Heart attack
3. Stroke
4. High Blood Pressure
5. Cholesterol
6. Diabetes – Insulin
7. Hepatitis B
8. Hepatitis C
9. Cirrhosis
10. Kidney disease
11. Bypass surgery
12. Dementia
13. Depression
14. COPD
15. Respiratory condition
16. Declined by other Life Insurance
17. MS (Multiple Sclerosis)
18. Angina
19. Hemophilia
20. Thrombocytopenia or serious Anemia
You can buy Term Life insurance or Whole Life Insurance without seeing any nurse or doctor.
Who are good candidate for this option?
If you have health conditions and have tried with medical underwritten insurance plan, where insurance company has declined you, then this could be good option as its better to have some coverage than nothing.
No Medical Life Insurance has its own advantages and disadvantages?
Advantages:
• Easy to get, just need to answer few health questions and you get the Life Insurance coverage.
• Hard to insure individuals, who are declined by other insurance companies.
• Older or Elder individual with health conditions or just need small policy for final expenses.
• Some are just scared to have needle for blood work or don’t like to get seen by nurse or doctor for blood work or needles, this is good option for them.
• If you want immediate coverage and can’t wait for regular underwritten plan where they take 3-6 weeks before issue of policy.
Disadvantages:
• Premiums are higher as these insurance plan risk is treated as higher risk by life insurance companies because of limited information about individuals health in comparison to fully underwritten application as insurance company is able to properly access the risk in a medical under written insurance application, also in some case if someone is really healthy and has healthy life style could even get preferred rates in fully underwritten insurance plan.
• Underwriting is done at the time of claim; At the time of processing of claim if the insurance company find out that some of the information on application was not correct or complete, Claims could be declined; hence providing complete and accurate information in these application is very important.
• Two years waiting period; most of these plans have restriction that in case of death claim in first two years other than accidental death there is only refund of premiums and actual coverage (coverage for any reason of death) only starts after two years. Its because insurance company wants to ensure, you were healthy enough to buy life insurance and death claim is not expected to happen very soon.
• No medical Term Life insurance policy may not have option of renewal at the end of term, hence reading the policy once you get the contract is utmost important to understand the terms and policy wordings so as there are no surprises later on or at the time of renewal or claim.
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