Final Expense Life Insurance Provides Financial Backup

It is an emotional time when a loved one passes away, but it is especially hard when you have to take care of all the funeral expenses and the bills that are left behind.

Being unprepared for this kind of situation can be quite stressful and on top of your emotions, can be very devastating, especially if you don’t have additional financial support.

Even if there are financial resources available, it is not wise to use all your finances on funeral expenses when you can have a final expense life insurance policy to take care of this for you.

Time To Take Action
If you have a loved one that is a senior citizen or retired, you will want to start taking action in securing funds to use in the event that your loved one dies. Funeral expenses are on the increase and so being prepared helps to give you some kind of financial cushion when it comes time to dealing with what comes after the death.

Of course, this is an issue that families avoid and then when they are faced with it everyone scrambles to pool money together to bury their loved one and then the fight begins as to who will pay off the outstanding debts, which includes credit cards, hospital bills, doctor bills and more.

Usually people who are aging may not want to discuss these issues either and may hide their financial obligations from their children as well as their spouse.

If you want to avoid surprises and any financial burden that your loved one may leave behind, then it is best to consider a final expense life insurance policy for reassurance.

Final Expense Life – Permanent Plan Long Term Benefits
If you or your loved ones are enjoying fair health and don’t have major health issues, a simplified issue policy provides immediate benefits that require no waiting period.

A guaranteed issue policy on the other hand helps those who have some type of failing health issues and with a two to three year waiting period, family members would be able to collect full death benefits in the event that the person dies after the waiting period.

When you consider a final expense life insurance policy, you have the benefits of a permanent plan with fixed monthly rates that will never change. Unlike term insurance, these policies never expire. They allow you or your family member to be covered under the plan for the remainder of your life.

When To Consider The Plan
If you are fifty years old or older or you have a family member of which you are responsible for, it is time to consider a plan to execute if you or your loved one dies. It is even more feasible if there are failing issues with health that have not been able to be resolved.

It may be a gloomy topic to talk about, but it needs to be addressed before the unexpected happens. When an ongoing illness takes you or your loved to the hospital, then it is time to think about the idea of putting all your assets in place and making arrangements in case of an unexpected death that could occur.

A final expense life insurance policy is one of the most important things to consider when you have to face these issues.

Ways To Save On Life Insurance Policies

Many customers looking to purchase a life insurance policy, want a plan that gives adequate coverage without overpaying. Policies premiums are based on historical data that actuaries determine by solving complex algorithms. The base premium numbers are determined by risk categories which includes the applicants current health, medical history, habits, age, hobbies, credit score, driving record, etc. Policy premiums will still vary with applicants that are placed in the same group. Some common ways to save on life insurance are as follows:

  • Don’t smoke – When insurance companies determine their risks for life insurance applicants, the first class they determine is if the applicant smoked. Obviously there has been quite a few cases where people have smoked a pack a day and lived past age 100. That sample size is so small that it doesn’t effect the entire population that actuaries deal with. Underwriters will want to know if you smoke or have smoked at some point in your life. This one habit alone, can increase or decrease the applicants premium by a large number.
  • Purchase a plan that fits your coverage needs – Some customers purchase cheap policies, but then end up regretting it down the road. Sure, many policies are convertible, but may incur fees or additional charges if the plan is converted. Purchase the correct life insurance policy the first time around. This is done by talking to a good insurance agent and asking the right questions. The agent will determine what is needed for your financial situation and help you understand what type of life insurance policy fits you best. There are many different products ranging from term to permanent insurance. Common coverage for life policies are recommended to 5-10 times your annual income.
  • Save in the long run by purchasing early – More often than not, people wait till later in life to purchase life insurance. If you have the funding and ability to pay a life insurance premium, purchase it when your younger. Locking in rates at an early age will save you money in the life of your policy.
  • Pay premiums annually and automatic bill pay – After applying and getting accepted for a life insurance policy, there are options on paying for your coverage. Payment options vary slightly with each insurance company, but most insurance companies will offer a discount if installments are paid annually. This saves the insurance company money by investing the money as the receive it, rather than waiting for smaller payments to come in monthly. Insurance companies make a healthy profit on interest rates and will pass the savings on to the consumer if it’s paid entirely up front. More insurance companies now are offering automated bill payment, which may offer around a 1% discount.
  • Look into coverage “bands” – Every insurance company offers different prices for different amounts of coverage. “Bands” of insurance are policies priced according to coverage. Sometimes, an insurance company may offer a lower rate for a certain amount of coverage. Depending upon the amount of coverage you need, it may be cheaper or worthwhile getting more coverage.
  • Shop around – Inquiring with multiple insurance companies will always give you different prices. Each insurance company offer different policies, coverage amounts, discounts, etc. As with any major purchase in your life, it is wise to search for the best life insurance product. Always get multiple quotes and make sure you fully understand the policy that you need.
  • Stay healthy – Many applicants who end up paying higher premiums for life insurance are either smokers, chew tobacco, are overweight, have high blood pressure, etc. Maintaining a healthy lifestyle will lower premium rates. Never lie on an application and state that you don’t smoke, when it isn’t the truth. It is illegal to lie on a life insurance application, as if you make the misrepresentation, the contract will be voided. Fix your current state of health before applying or if you already have a policy, quit the bad habits, get healthy and have the insurance company reevaluate you when your health improves.

Although, life insurance policies can be confusing at times to the average consumer, there are many steps you can take to save money before and after buying a life insurance policy. Staying healthy and making good decisions in everyday activities will give you a good rate on your premiums. When making a major purchase in your life, make sure you understand the product that you are agreeing to terms with. An insurance agent will be able to fully describe the details of what a policy entails. Knowledge of major financial decisions in life can save you a lot of money throughout your life time.

Life Insurance Policy Reviews

The best insurance policy is the one that protects you and your family at the time you need it most. By having your policies reviewed, you are ensuring that you have proper and adequate coverage for your specific needs.

Cash value life insurance policies are valuable assets, just as are your equities, bonds, and other investment assets. The policy values are dependent on how the policy performs. Sometimes the performance is not as great as it was originally illustrated to be 5, 10, 15, or maybe even 20 years earlier. Because of this, the death benefit and cash value may not be adequate for what you are trying to accomplish.

About 20 years ago, many universal life insurance policies were being credited interest rates of around 10%. Today, these same policies may only be receiving an interest rate of around 4 – 5%. Because of the recent economy and the severe decrease in interest rates, many life insurance policies do not have enough cash value within the policy. This can result in the policy terminating much earlier than expected. We have seen policies that were originally illustrated to last until age 100 that are now expected to terminate at age 80 or earlier. Older policies were issued with the 1980 CSO mortality table. Even though they may have been issued with the best underwriting class obtainable at that time, there are currently additional, more competitively priced classes available. Today all insurance carriers are using the 2001 mortality table, which is a direct result of people living longer. These changes alone make it imperative to have your policies reviewed. A simple review has allowed us to discover alternatives for reducing the required premium, raising the death benefit, and extending the length of time the coverage will stay effective.

When policies are being examined, there are many other potential problem areas to focus on. During these reviews, it is important to assess who the current owner and beneficiaries of the policy are. In some cases, we have discovered that the wrong trust was named as the owner. This can result in a tremendous tax consequence depending on the size of the estate. The life insurance proceeds may be subject to estate tax if the policy was owned by the revocable trust instead of the irrevocable trust. This is a very simple mistake that may have originally been overlooked by your insurance agent, attorney, and even yourself.

In the case of incorrect beneficiaries, it is important to review these designations any time your life circumstances change. We have reviewed policies that named the ex-spouse as the primary beneficiary when it should have been changed to their current spouse or children. In addition, minor children should typically not be named as beneficiaries of life insurance policies. In the event the life insurance proceeds are paid to a minor child, the court will have to name an adult to act as the custodian until the child is old enough to control the funds. This may not be the same person you would have otherwise chosen if you were given the option. Instead, a trust should be established and named as the beneficiary. The trust should designate a guardian to watch after your children and a custodian whom you trust to watch over the funds within the trust. In many cases, it may be wise to name separate people as guardian and custodian. This avoids conflicts of interests and helps for each to make rational decisions.

In any event, life insurance policies should periodically be reviewed. If everything is still adequately fulfilling your original goals and expectations, then you will at least have peace of mind. This review process costs nothing, but has the potential to save you thousands.