Overview & Policy Types
Finding The Right Policy
In actuality, pricing and regulations of Life Insurance and Investment Products are strictly controlled and regulated by each individual state, hence there is no difference in price from one broker to another when comparing “apples to apples”.
The real value is in determining which product is best for you and “illuminating the fine print” to make sure that it truly suits your needs! In addition to this, making sure that you are given the benefit of the very best underwriting professionals enables you to take advantage of the best pricing offered by each insurance company.
Equitas believes Life Insurance is a cornerstone of any Financial Planning. There is an extensive array of coverage types on the market today, not surprisingly the challenge for anyone is to get a combination of not only effective coverage but attractive pricing.
However more importantly the right product to achieve your goals.
Needs + Future Goals / Budget = "The Right Product"
These challenges are a constant across different ages, income levels, and professions.
The first wave of Baby Boomers has already crossed the threshold of retirement. We also live in an era where Three Generational Households are becoming increasingly common.
Meeting the needs of these separate, yet often intertwining market segments calls for creative solutions and robust market knowledge. Equitas Advisors is here to help.
A policy with a set term period (10, 20, 30 years). Once the policy is expired there is no Death Benefit (some policies allow for a conversion to permanent insurance) and there is no Cash Value. Term is the cheapest form of coverage and gives you a lot of "bang for your buck". This is a Risk Protection Product.
Return of Premium Term (ROP) has the same attributes as a term policy. Though higher in cost, this policy returns all of the premiums paid to the insured at the end of the term period. This is also a Risk Protection Product however premiums returned can be used for retirement income Annuity or rolled over into a permanent policy which could satisfy Wealth Preservation needs as well.
There are some milestones in life that will play a factor in what types of Life Insurance Policy you should be looking at...
For example: "Just Got Married", "Just Bought a House",
"Just Had a Baby", "Just Getting Ready ti Retire", etc, etc...
Different stages in your life will come with different needs and objectives..
There are so many different kinds of Life insurance policies on the market today it can be hard to know what type of policy to choose or even how to choose!
This first video explains the different types of Life Insurance, how they are structured, and how they work.
The second video explains some of the Hybrid policies that have become very popular since their inception a few years ago.
The third video (below) explains Risk Class and how insurance companies determine Risk Class.
About Term Life Insurance
Provides your family with predictable and affordable financial protection for a specified period of time, for example 10, 20, or 30 years.
Term life insurance is the original form of life insurance and can be contrasted to permanent life insurance such as Whole Life, Universal Life which may guarantee coverage at fixed premiums for the lifetime of the covered individual.
Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities, for the insured. Such responsibilities may include, but are not limited to, consumer debt,dependent care, college education for dependents, funeral costs, and mortgages. Term is the biggest bang for your buck, however only for a specific period of time. It is for this reason that term is so relatively inexpensive.
About Return Of Premium Term ROP
Return of Premium Term (ROP) has the same attributes as a term policy.
Though higher in cost, this policy returns all of the premiums paid to the insured at the end of the term period without tax consequences.
This is also a Risk Protection Product however premiums returned can be used for retirement income Annuity or rolled over into a permanent policy which could satisfy Wealth Preservation needs as well.
ROP is a great way to still get relatively inexpensive risk protection with a great payoff at the end in the form of a lump sum that could be tens of thousands of dollars returned to you.
About No Lapse Guaranteed Universal Life
No Lapse Guaranteed Universal Life (GUL’s) is a type of permanent life insurance protection that provides a guarantee on the death benefit proceeds. With this form of coverage, your death benefit will not terminate.
Because a regular UL policy needs to have a sufficient amount of cash in order to remain in force, the No Lapse Guarantee UL can allow a plan that would otherwise lapse to stay intact. GUL’s offer a guaranteed insurance plan – not a cash accumulation vehicle…
Remove the cash that has built up in the policy and the No Lapse Guarantee falls apart. A good broker should explain this to you carefully. There is a new breed of GUL’s that offer several hybrid strategies which include riders or additions to the policy such as a Return of Premium option, Long Term Care Expense, and Chronic Illness Provisions. These products can be a great fit for many, but need to be looked at carefully and explained in detail.
About Whole Life Insurance
Whole life insurance is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds an accumulated cash value the insured individual can borrow against or withdraw. This is the most basic type of cash-value life insurance. Whole life insurance provides policyholders with the ability to accumulate wealth as regular premium payments cover insurance costs. These payments also contribute to equity growth in a savings account. Dividends, or interest, can build up in this account, tax-deferred. As indicated by its name, whole life insurance protects an individual for his entire life. This is the most basic type of whole life insurance, also known as straight life, traditional or permanent whole life insurance.
What Risk Class am I
What is a Health Class for Life Insurance? Life insurance health ratings are levels used by life insurance companies to determine what rate will be used to calculate your premium.
The ratings generally fall into four classes:
Preferred Plus, Preferred, Standard Plus, and Standard.
There ratings, which go past standard and take into account more severe impairments and a higher risk to the insurance company.
However, most people fall into the above four major Risk Classes.
How Much Life Insurance Do I Need?
The answer to that query depends on several variables, four of which are debt, income, mortgage and education (D.I.M.E.).
Above all, your goal should be to ensure the economic safety of your family and loved ones. Other Policies may offer a savings aspect, Long Term Care Income, Retirement Strategies, and Cash accumulation Vehicles tied to market Indices. However, it is our belief that Life Insurance should always begin with the protection needs of you and your family. The other variables can be great, but they should not come at the expense of that fundamental protection that is the basis of Life Insurance.