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How to Take Out a Loan Against a Life Insurance Policy

A perpetual life insurance policy’s cash value is readily available for borrowing. The money can be used for any purpose and repaid anytime you choose, and a life insurance policy loan has comparatively low-interest rates. There are no loan restrictions or prerequisites (other than the amount of cash value). The drawback? You run the risk of losing your policy (and its cash value) if you don’t pay the loan’s interest, plus you’ll probably owe a lot of money in taxes. It’s simple to get cash by borrowing against your life insurance policy, provided you can make your payments on time.

Can you borrow against your life insurance policy?

How much can you borrow?

How do you take out a life insurance policy loan?

Pros vs. cons of taking out a life insurance loan

Does your life insurance coverage allow for borrowing?

The amount of money you would get if you surrendered your life insurance policy is its cash value. A portion of the premium you pay for a life insurance policy with a cash value, such as whole or universal life insurance, goes toward the cash value each time you make payment. The policy’s terms specify the interest rate, which is how the cash value increases over time. You can borrow cash from the insurer if your permanent life insurance policy builds cash value by using the cash value as security. This choice is usually only accessible until the cash worth of your life insurance policy has grown to a certain level, which might take five to ten years of premium payments. Due to the absence of a cash value component, term life insurance plans are less expensive than permanent ones. They cannot be used as collateral for loans, and if you decide to surrender a term life insurance policy, you will not be compensated.

How Much Can You Borrow from a Life Insurance Policy?

How much you can borrow from a life insurance policy varies by insurer. Still, the maximum policy loan amount is typically at least 90% of the cash value, with no minimum amount.

When you take out a policy loan, you’re not removing money from the cash value of your account. Instead, you’re taking a loan from the insurer and using the cash value as collateral. This is a significant benefit, as the cash value remains within the life insurance policy and continues to accumulate interest.

You don’t need to pay back the loan in a set period, as many other forms of loan are required. However, if you don’t pay the insurer the annual interest, which can be fixed or variable, what will add the interest payment to the value of your outstanding loan?

Length of the loan

You’ll get hit with compounding interest if your loan stretches over many years. And if the total outstanding loan exceeds your policy’s cash value, the policy will lapse. If this happens, you will lose coverage and hit a high tax bill if the outstanding loan exceeds the amount you’ve paid in premiums.

There is a risk in borrowing nearly the total amount of the policy’s cash value, so if you take out a policy loan, continually carefully monitor its size compared to your cash value. In addition, we would recommend making interest payments whenever possible.

How do you take out a life insurance policy loan?

The process of taking out a life insurance loan is straightforward. You fill out a form from the insurer and often get the money deposited in your account within a few days. You may need to confirm your identity, sign a confirmation document or provide a notarized confirmation before receiving your loan if:

You provided new account information to the insurer in the last month

The policy changed ownership recently

The loan exceeds a specific size, such as $50,000

Pros and cons of taking out a life insurance loan

Life insurance collateral loans are a simple way to get money on short notice with few restrictions. You must be very careful about managing the account’s cash value and paying off interest as required.

However, besides the risk of the policy lapsing, there are a few downsides to borrowing against your whole or universal life insurance.

There are no qualifiers for a policy loan.

You can borrow against your life insurance policy without having to meet the requirements for conventional loans. The loan does not reflect on your credit report because there was no credit check. You also don’t need to present any income documentation. You will need to provide identification and evidence of your loan request at most.

If you need money immediately, as for an urgent medical need, life insurance collateral loans might be a perfect alternative because there are no requirements or checks. They can also be used as a bridge loan while you wait for a loan from another source to be authorized. It usually works in your favor to repay an insurance loan as soon as possible. The loan’s interest accrues annually, and the policy will expire if the balance is too high. If this occurs, you would have paid premiums totaling thousands of dollars with nothing to show (no coverage). You can also owe taxes if the loan balance is more extensive than your paid premiums.

Another justification for repaying the policy loan is that the outstanding sum will be subtracted from the death benefit that will be distributed to your dependents after your passing.

Pay it back anytime

You do not have to repay a debt against your life insurance policy. Additionally, if the total amount owed (initial loan + accrued interest) does not exceed the policy’s cash value, you are exempt from paying the yearly interest. Therefore, if you’re unsure how long you’ll need the money, borrowing from your life insurance policy is a great choice. It usually works in your favor to repay an insurance loan as soon as possible. The loan’s interest accrues annually, and the policy will expire if the balance is too high. If this occurs, you would have paid premiums totaling thousands of dollars with nothing to show (no coverage). You can also owe taxes if the loan balance is more significant than your paid premiums. Another justification for repaying the policy loan is that the outstanding sum will be subtracted from the death benefit that will be distributed to your dependents after your passing.

#lifehealthadvisors #areteautomation #lifeinsurance #ethoslife #fyp

Credits by: Marianne

Date: August 16, 2022

Source: https://medium.com/@MarianneLifeBlogs/how-to-take-out-a-loan-against-a-life-insurance-policy-dbbe47a256f8

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What Is a Claimant in Life Insurance?

Definition of Life Insurance Claimants

A claimant or beneficiary of your life insurance is the person who will receive a specific sum of money in the event of your passing. When you purchase a life insurance policy, choosing an heir is an important step because it is the only way legally to designate who will receive the money if you pass away during the policy’s term.

If you are a beneficiary, you should understand how the policy pays out, your options, and anything that might make things more difficult. To find out more about naming or being a beneficiary of life insurance, continue reading.

What Is a Beneficiary in Life Insurance?

You can designate an heir, who may be a person or an organization, when you buy a life insurance policy. Also possible is having more than one. They receive a predetermined sum of money or a series of payments if they pass away during the policy’s term.

You can distribute the funds however you like as the policy owner:

One person can be designated to receive everything.

You can designate two or more people to split the total sum however you choose.

Your estate may have a name.

You can designate a trust to receive the proceeds from the policy if you have one or desire one.

When they pass away, some people prefer to leave money for a charity; you can mention any recognized organization you like.

If necessary, you can give names to your minor children. It helps to be aware that most states call for an adult guardian to oversee minor assets if you intend to do this. The process of choosing a guardian can be expensive and time-consuming.

It’s crucial to contact the insurance provider and present a death certificate if you are the beneficiary of a life insurance policy and your loved one has passed away in order to begin the payout procedure.

Making a trust or custodial account is one way to hasten this procedure. Your children’s money is placed in a trust, where a trustee will look after it until they are of legal age or the age you specified for them to inherit it. If you don’t specify anyone, the “de facto” beneficiary is your estate.

How Should Insurance Beneficiaries Be Known?

Make sure you give accurate information when naming people to receive insurance money. You’ll need to know things like their birthday, social security number, and contact information. Additionally, make sure everything is correct before submitting it by checking it twice. If there are mistakes, the wrong people might get the money, or your heirs might have to deal with legal issues.

Let’s take the example where you list “spouse” as your beneficiary. Two years later, you get divorced and remarry without altering your insurance policy. After your passing, both your current and former spouses might make an attempt to collect the money.

You’ve created a legal problem that could delay payout because the definition of “spouse” is ambiguous. One was your legal spouse at the time of your death, and the other was your legal spouse at the time the insurance policy was written. Along with all the legal fees, stress, and heartache that always follow fights over money, a fight over money is likely to take place.

Contingent and Primary Beneficiaries

It is frequently advisable to add one or more supplemental beneficiaries to a policy. If the primary beneficiary (or beneficiaries) passes away or cannot be located, a contingent beneficiary is a person who gets some or all of the money.

Note: If you list multiple people, specify how much money (in a percentage form) each one should receive.

For example, suppose you buy a policy with a $1 million benefit. You designate the beneficiary as your spouse. Your partner will receive the entire sum should you pass away while the policy is still in effect. However, you might pass away before your main beneficiary.

Your three adult children are added as contingent beneficiaries because you want to ensure that the money is passed on to your children. You include each of them in the policy and distribute the funds equally. In this manner, your children will each receive a third of the money after your passing, even if your spouse dies before you do.

Per Capita and Per Stirpes

The decision of whether to choose per capita or per stirpes when naming beneficiaries is another factor to consider. If no other contingent beneficiaries are listed on the policy and one or more of your beneficiaries pass away, these specify how the money should be distributed.

Per capita (“per head”) is frequently used as the abbreviation. This implies that you don’t have to describe every potential event in great detail. Instead, an equal portion is distributed to each of your living beneficiaries.

For instance, if you have three adult children and one of them passes away before you do, the other two will instead receive half of the face value each. If you choose per stirpes and one of your beneficiaries passes away before you do, the beneficiary’s children, if any, will receive their share.

A per stirpes arrangement would give your two grandchildren the one-third that your three adult children were going to receive, for instance, if one of your three adult children passed away before you and was survived by two children. One-sixth of the funds would be given to each grandchild.

Life insurance is a wise choice for estate planning. In light of that, it might not be the best course of action for you and your situation. Consider speaking with an estate planning lawyer, who can assist you in putting together a strategy to ensure that your loved ones have what they need after your passing and that your assets go to the people you want them to.

There may be a box to check on some beneficiary designation forms so you can choose per stirpes. If there isn’t a box, ask your agent if you can enter per stirpes.

Who Has the Authority to Alter the Life Insurance Beneficiary?

When submitting a life insurance application, name at least one beneficiary. It doesn’t follow that you can’t alter it later. If you are the owner, you always have the option to remove or add people. You might decide to appoint someone else because of changes in your life, for instance.

In the event of a marriage or divorce, you might want to appoint someone else. A good reason to review your policy is the birth of a child. Alternatively, you might have another justification for the change. However, if you designated a beneficiary as “irrevocable,” you will need to obtain their approval before making any changes (they must sign the policy change form).

Additionally, in some circumstances, your insurance provider or state may place limitations on who you can name. For instance, married couples who reside in states with community property laws might need the consent of their spouse before naming anyone else.

Note: Contact your insurer and ask for a “beneficiary change form” if you want to add or change an heir.

Do beneficiaries of life insurance policies have to pay taxes? A life insurance death benefit received as a lump sum is typically not regarded as taxable income. There are, however, some circumstances in which you might owe taxes.

For instance, any interest paid above the face value of the money if it is received as monthly payments or an annuity is taxable income. Additionally, if the funds are transferred to your estate rather than a specific individual, estate taxes might apply. The good news is that there won’t be any estate taxes assessed unless your estate is worth more than $11.7 million.

Summary

If the insured passes away during the policy term, a beneficiary of life insurance receives the death benefit.

Multiple beneficiaries, including primary and contingent beneficiaries, may be named, along with a person or trust.

Your beneficiaries must have accurate identification information so that they can be located and legal disputes are kept to a minimum.

The majority of life insurance proceeds are tax-free, but in some cases, a portion of them might be.

Before you proceed, be sure you are aware of your state’s life insurance laws and how to handle naming minors.

#lifehealthadvisors #insurance #ethos #healthiswealth #protectyourfamily

Credits by: chroniclesofnellieann

Date: Sep 2, 2022

Source: https://medium.com/@nellieannworkspace/what-is-a-claimant-in-life-insurance-4cff08950079

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How does life insurance work? What is it?

Most individuals will explain life insurance to you as a purchasing policy that provides money to your family during your death. If you ask them to describe the main aspects of the guidelines, the many options, or how they operate, they will likely try to divert the subject.

However, those factors are crucial if you’re looking into life insurance. Your inquiries will be addressed in this post, specifically:

What constitutes a life insurance policy’s essential components? A life insurance policy is a contract between a person and an insurance provider (or legal entity). Every life insurance policy is unique, and every state has a different set of rules that govern insurance contracts.

The insurer: Only a select group of organizations are permitted to offer life insurance, and state insurance regulators oversee these organizations. The person or organization that owns (or “holds” the policy is referred to as the policyholder. Examples include a family trust or a company. The policy has two options for coverage: either the holder or a third party. The individual whose life is insured is known as the insured. The sum that the insurer will pay out upon the insured’s death is known as the death benefit.

The recipients of the death benefit are known as beneficiaries. It can be distributed proportionally among many different persons and entities (for example, three children could each receive 30% and 10% could go to a charity), or it can all go to a single person (for example, the surviving spouse). The duration of time the insurer agrees to provide a death benefit is known as the policy length. This can be for a set period of time, like 10 or 20 years, or it can be permanent, meaning that as long as premiums are paid, the policy will be in effect for the insured’s whole lifetime. The monthly or yearly payments required to maintain the insurance in force are referred to as the premium. monetary value: Whole life insurance and permanent life insurance both feature a cash value component that accrues over time2 and can be withdrawn or used as collateral for loans. Term life insurance has no cash value.

What are the different kinds of life insurance policies, and how do they work?

There are two basic types of life insurance: Term and permanent life insurance. A term life insurance policy provides coverage for a specific period of time, typically between 10 and 30 years. It is sometimes called “pure life insurance” because, unlike the permanent policy or whole life insurance, there’s no cash value component to the policy — once the term is over, there’s nothing left.

Permanent life insurance provides coverage that lasts your entire life. Unlike term, it’s not a “pure life insurance” product because it includes a cash value component that helps make coverage last while the insured is alive and premiums are paid and while providing other financial benefits. A portion of your premium dollars grows tax-deferred over time — but the entire death benefit is immediately payable from the first day you have the policy. The cash value, on the other hand, may take some years to build up to a significant amount.

There are two main types of permanent insurance: whole and universal life. Whole life insurance is simpler — the premium remains the same for life, the death benefit is guaranteed, and the cash value grows at a guaranteed rate. Universal life insurance can be less expensive, but the premiums, death benefits, and cash value growth rate can vary, making the policy more complex.

What advantages do people receive from life insurance at various times? Most adults should consider getting life insurance because it may be a potent weapon for safeguarding their financial confidence and, more importantly, the economic trust of those who depend on them. However, you should consider what kind of financial protection you require at this time in your life before purchasing a policy.

Questions and answers about life insurance What is the price of life insurance? Depending on the type of insurance (i.e., term or permanent) and all the factors that can affect your life expectancy, including age, weight, health, gender, lifestyle, occupation, and risk factors like smoking, the cost of a policy — for a particular level of death benefit — can vary significantly.

How may my needs be met by a life insurance policy? Riders, which are optional features almost all life insurance policies contain, can offer valuable extra benefits that specifically adapt the approach to your needs. For instance, Guardian offers riders that can assist save family assets by covering end-of-life expenses while the insured person is still alive.

#lifehealthadvisors #ethos #protectyourfamily #selflove

Credits by: Rechelle Automationbeyond

Date: Sep 2,2022

Source: https://medium.com/@rechelle.automationbeyond30/how-does-life-insurance-work-what-is-it-b712c36eb292

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Compare prices from multiple life insurance providers instantly without providing your phone number.

Everyone dreads seeing the dreaded “phone number” section while online filling out information to acquire immediate life insurance quotes.

Why do so many people find that objectionable?

Because you are aware that your phone will ring endlessly until you answer and that you will be added to a call list. Once you respond, the salesperson on the other end won’t stop until he has persuaded you to buy something you didn’t need at a price higher than what you originally desired.

That isn’t how things ought to be. You are, after all, seeking rapid life insurance rates. You don’t want to wait for a commission-based salesperson to call you back at a time that is inconvenient.

In the end, “quick quote” websites that want your phone number do so because it will benefit their business, not because it will make your life simpler or your shopping experience more pleasant.

You won’t have to worry about that inconvenience if you hunt for your quotes in the appropriate location.

We eliminated all the anti-consumer tactics we saw on other websites when we created our fast quote engine, including the requirement for your phone number. Instead, we concentrated on gathering the necessary data we require to offer quotes that are more accurate than those you will find elsewhere online.

If you don’t wish to keep your quotes to refer to them later, we don’t even demand an email address from you — fewer speed bumps and no later regrets.

Of course, we’re pleased to assist you there if you wish to be contacted. We have in-house experts available to chat with you if you give us a call. However, doing so is voluntary, and you’ll never be asked for your phone number. Furthermore, our agents don’t receive commissions significantly sets them apart from other agencies.

Do you know how you feel when a used car salesperson talks to you? This can also occur when you try to get life insurance since many will attempt to upsell you on whole life insurance. Whole life insurance is useless and more expensive when compared to term life insurance. On the other hand, commission-based agents receive a more extensive check.

It seems to sense that customers are hesitant to share their phone numbers.

Calling an insurance agent on the phone shouldn’t make you nervous. Be aware if you are required to give your number to receive immediate life insurance quotations. However, suppose you’re doing your research correctly. In that case, you can wait to call until you’re prepared to apply and keep your contact information to yourself until then.

#areteautomation #lifehealthadvisors#healthtips #stayhealthy #knowledge

Credit by: Paolo Moyet

Date: August 17, 2022

Source: https://medium.com/@jrpmoyet/compare-prices-from-multiple-life-insurance-providers-instantly-without-providing-your-phone-number-a9e3a7f3b2bc

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Top 5 Reasons to get Life Insurance in your 30s

In your 30s, a lot can happen. You might be planning a wedding, beginning a family, or searching for your first house to purchase. But have you given life insurance any thought?

In your 30s, life starts to get quite real. You might settle down, get married, start a family, own a home, and bring home the golden retriever you’ve always wanted. That is a lot. Because of this, now is a wonderful time to begin making plans for the future of your family.

Even though it could be difficult, you might need to think about what would happen to your family if something happened to you. The decisions you make today may have a profound impact on the people you care about the most.

In your 30s, consider buying life insurance for the following five reasons:

You Need to Pay Your Monthly Bills

Your life is a series of monthly bills.

Your salary is probably heavily invested in these costs, which may include your rent or mortgage, auto payments, utilities, credit card bills, and student loans. Despite all odds, you’ve been able to save some money for that Blink-182 reunion tour, but your finances are still tight. Another reason a life insurance policy can be a good idea is this one.

How will your family assist in paying off your mortgage or outstanding loans after you pass away? Your loved ones’ ability to pay the bills you leave behind may be aided by a life insurance policy.

You Have a Family to Support

To create their own families, many are delaying parenthood till they are older. It’s possible that your grandparents and parents were married and had children when they were in their 20s. But more people today are delaying marriage until their 30s or later. Why not, then? It’s simpler than ever to play the field and wait for that ideal match thanks to dating apps like Bumble, Hinge, and the rest.

In fact, women in their early 30s are giving birth to more children than those in their 20s for the first time ever.

Does that circumstance ring a bell for you? If so, you might want to consider what will happen to your family when you pass away. Purchasing life insurance in your 30s could provide your family with financial security in the future.

You are Financing your Kids’ Education

No matter if you’re talking about a four-year college, associate degree, or vocational school these days, getting a credential is very pricey. And it won’t get any simpler with soaring tuition costs. Even enrolling your children in a public, in-state school can be expensive: the average yearly cost after accounting for tuition, room and board, fees, and other costs is more than $20,000.

Most people’s personal funds just won’t be enough to pay for their education. Although they are an option, student loans could leave borrowers with long-term debt.

If you are unable to provide for your children on your own, the payoff from a life insurance policy may help.

Insurance may be more affordable when you’re young

Age is one of several variables that insurance companies take into account when determining premiums, but it is one of the most crucial. With all the health tracking apps, recreational sports leagues, and 5ks with pals, young people frequently have fewer health issues, and insurers are aware of this. That might work in your favor.

Purchasing life insurance when you’re still young may enable you to locate a plan that both suits your financial needs and your urgent demands. For those in their 30s, a term life insurance policy is frequently the best option. Compared to a whole life policy, coverage quantities are frequently higher, and costs are created to be reasonable. It’s frequently the best kind of life insurance coverage for a 30-year-old.

Your Loans were Co-signed by Your Parents

Without a perfect credit history, getting a loan to establish a business or purchase a new home is difficult. You might have asked your parents to co-sign your mortgage or other loan, like many other 30-somethings. In the event that something were to happen to you, they would still be responsible for making those payments.

Life insurance can let you pay them back for their assistance when you most need it. Your home, business, or investment might be protected and your debts could be paid without depleting your parents’ financial resources by using the payoff from an insurance policy.

#ethos #lifehealthadvisors #areteautomation #ethoscoverage #lifeinsurance

Credits by: Angelic Mae

Date: Aug 31, 2022

Source: https://medium.com/@amjumadla/top-5-reasons-to-get-life-insurance-in-your-30s-4320baa18c86

[joanslifeideasblog]

Automated Webinar Follow-Up Email: Increase Sales from Interest!

Complete Webinar Follow-Up System with Automated Webinar Email Campaign

How to Make Sales from Interest

Did you know that webinars are one of the best ways to turn leads into customers? Studies show that webinars produce more leads annually than other content marketing strategies and techniques. Because of this, you had an automated webinar email, and a comprehensive webinar follow-up system is crucial. Numerous articles have been composed regarding email templates for your webinar follow-up. In this post, we’ll talk about how essential it is to have a follow-up strategy in place and offer advice on how to build one that can help you turn more leads into sales. Both are necessary for a successful campaign.

Why it’s important to follow up after a webinar

The significance of setting up a thorough webinar follow-up system, including an automatic webinar follow-up email to clients, to boost sales

Webinars are a potent tool for generating leads and turning them into paying clients. Because of this, having a complete system in place — including an automated webinar email campaign — is crucial. Following up with them can stay top-of-mind and improve your chances of turning webinar leads into sales. Make sure the next steps are in place to make the sales if you are going through the hassle of holding webinars.

Why use an automated email sequence for webinars?

How to design a successful automatic webinar follow-up system

If you’re planning a webinar or have already hosted one, you know that follow-up is crucial for converting potential clients into paying ones. The best method to ensure that everything is taken care of and that you are giving your potential consumers the most excellent service possible is with an automated email campaign.

For your webinar follow-up, use these steps to develop an efficient automated email campaign:

o Choosing the material you want to include in your webinar follow-up emails is the first step. It will change based on the topics presented in the webinar and the objectives you have for your email campaign. But every webinar follow-up email needs to contain a few essential bits of information:

o The URL for the webinar recording: There are two reasons why this is crucial. First, it gives curious viewers who couldn’t attend the live event a chance to catch up on what they missed. Second, you have the opportunity to demonstrate your knowledge further and win over potential clients.

o A schedule of upcoming webinars: Include a plan of your following webinars in your follow-up email campaign. It keeps your company at the front of their minds and makes it simple for interested viewers to sign up for upcoming events.

o A call to action: What do you want the people who receive your email to do when they read it? Include a direct and concise call to action to make it simple for them to take action. For instance, you could provide a link to a landing page where they may learn more about your product or service.

It’s time to start creating the entire text for your email campaign once you’ve decided what information to include.

How to maximize lead conversion with an automated webinar follow-up email:

1. Be succinct and to the point: Like any other email, your webinar follow-up email should be concise and to the point. A protracted, wordy message is boring to read. Be sure to be precise and concise in your communication and to get right to the end. Make sure to send out a thank-you email following the webinar.

2. Make emails more distinctive: Personalize your webinar follow-up emails to establish connections with potential clients. Incorporate the recipient’s name throughout the email body and in the subject line.

3. Include visual elements: Emails with images or videos are more likely to be opened and read by recipients. Consider including a screenshot or thumbnail image in your follow-up email if you have a webinar recording.

Use a compelling call to action in your email: What do you want your readers to do after reading it? Please include a link leading them to a landing page with additional information about your good or service. Please do not make them look for ways to transact with you!

5. Ensure that the follow-up script for your webinar is well-planned and mapped out for success. Don’t just send emails to everyone. To ensure success, properly plan and write your webinar email sequence.

You can ensure that your webinar follow-up emails are as successful as possible and assist you in turning more leads into sales by adhering to these easy guidelines.

The advantages of using a computerized email campaign system

You now have more free time after utilizing Automize to automate your webinar email marketing!

Any business can benefit greatly from an automated webinar follow-up email to clients and your webinar follow-up campaign automation. Having such a system in place has the following advantages, to name a few:

· It keeps you organized: You can make sure that everyone who joins your webinar receives a follow-up email by automating webinar follow-up emails. It is a terrific technique to monitor people interested in your goods or services. And the correct software can enable you to discover this information with a single click.

· You gain time savings: You may eliminate the need for manual sending by automating your webinar follow-up emails. It might save you time, especially if your webinar attendance list is lengthy.

· It enables you to customize the emails: They don’t have to be impersonal just because they are automated. The subject line and rest of the email can still contain the recipient’s name. You can establish a rapport with potential clients by doing this. There are numerous platforms available that can achieve this. Give us a call if you need assistance selecting.

· It helps you close more sales: You can help you close more deals by using an automated webinar follow-up email campaign. You can raise the likelihood that a webinar participant will buy your product or service by following up with them and giving them more details about it.

Common errors with comprehensive webinar follow-up systems and automatic webinar email

Customers frequently make a few blunders when creating their automated post-webinar follow-up email and complete webinar follow-up system. Here are some of the most typical errors:

· Forgetting to include a call-to-action: A call-to-action is one of the most crucial elements in your webinar follow-up email marketing. Recipients might not understand what you want them to do next without a call to action. Therefore, ensure your email has a clear and concise call to action.

· Not personalizing the emails: Not personalizing the webinar follow-up emails is another error people make. It can be a lost chance to establish relationships with future clients. The subject line and body of the email should both contain the recipient’s name. Everyone wants to feel significant and heard when you speak. Not in a “Dear Sir” email, please!

· Select a compelling email subject line. Do some research on the topic of your subject line. The subject line of the email sent after a webinar frequently determines whether the recipient opens it or not. Find out what motivates people to open that email if you want to raise your open rate.

· Not sending follow-up emails: One of the most frequent errors is failing to send follow-up emails after a webinar. You’re losing out on a crucial chance to turn webinar attendees into customers if you don’t follow up with them. Make doing business with you simple. You want to sell these webinars! Could you not make them go looking for you? By avoiding these common mistakes, you can set up an automated webinar follow-up email campaign and complete a webinar follow-up system that will be more effective and help you close more sales.

Using the advice in this article, you can set up a fully automated webinar follow-up system for your company, and an effective and efficient automated webinar sales funnel email campaign. Your webinar’s return on investment will significantly rise. More leads will result in more sales thanks to it. And more sales — that’s why you’re in business. What are you still holding out? Start right away!

#areteautomation #crm #automatedplatform

[joanslifeideasblog]

Life Insurance For Cancer Patients And Survivors

The ability to obtain standard life insurance will often be hampered if you have recently received a cancer diagnosis or treatment. A cancer diagnosis is not necessarily a surefire roadblock to buying life insurance.

After receiving a cancer diagnosis, is life insurance still an option?

Even though it could be pricey and restricted, you can still get some forms of life insurance if you presently have cancer.

Having a diagnosis of cancer usually makes it impossible to obtain insurance.

Basal cell carcinoma is a condition for which most insurers do not impose restrictions, according to Travis Price, an independent senior market insurance agent in Manton, Michigan (skin cancer).

However, given the nature of small cell lung cancer, there is a good chance that no life insurance would ever be placed with you.

What Kinds of Life Insurance Are Available to Cancer Patients?

Following a cancer diagnosis, you will probably be able to qualify for a guaranteed issue, group life, and final expenditure life insurance policy, which provides coverage for last expenses and burial fees. However, with a cancer diagnosis, you could not be eligible for the two most popular forms of life insurance — term and whole.

These forms of life insurance often don’t allow for application rejection, and the applications don’t typically even include any health-related questions.

The possibility of limited coverage quantities is one compromise. The fact that guaranteed issue and final expense life insurance sometimes have graded death benefits means that your beneficiaries won’t receive the total payout if you die away within two or three years of purchasing the policy. (The timetable will be specified and depend on the policy.) The nature of your disease will also impact what coverage you may qualify for.

How Long Does It Take to Regain Life Insurance Eligibility After Cancer?

Although each insurance provider is unique, you usually need to have been cancer-free for at least five years to be eligible for freshly issued term life insurance, whole life insurance, or other forms of coverage.

Depending on the type of cancer, its invasiveness, and the likelihood that it may return, there may be a waiting time for life insurance after cancer.

Waiting periods for life insurance following cancer. Certain insurers have higher underwriting requirements for specific diseases that need remission for at least a decade.

Life insurance waiting periods after different cancer types

Here are sample waiting periods for various types of cancer from Trusted Choice, a network of independent insurance agents:

Bladder cancer: 2 years

Bone cancer: 5 years

Breast cancer: 2 years

Cervical cancer: 1 year

Colon cancer: 2 years

Kidney cancer: 3 years

Leukemia: 10 years

Lung cancer: 3 years

Lymphoma: 2 years

Metastatic cancer: 5 years

Ovarian cancer: 3 years

Prostate: 1 year

Rectal cancer: 2 years

Skin melanoma: 1 year

What Kind of Life Insurance Is Best After Cancer?

Traditional life insurance may be possible if you have had cancer for at least five years. Here are a few potential choices.

Long-term care insurance If you’re eligible, term life insurance is often the least expensive method to get protection. You’ll probably have to undergo a life insurance medical examination, so be ready to discuss your prior cancer diagnosis and treatment when questioned.

You may lock in prices for term life insurance for a predetermined amount of time, such as 10 or 20 years.

Permanent life insurance Whole life insurance and universal life insurance are two options for permanent life insurance. If you pay the premiums, these plans can offer life insurance as long as you live.

streamlined life insurance issues While simple issue life insurance does not need a medical exam, you might be required to complete a brief health questionnaire.

A simplified issue might be an excellent decision if you are cancer-free but not in perfect health.

Life insurance with a guaranteed issue You cannot be refused guaranteed life insurance because of a medical exam, health standards, or medical history requirements. That may seem enticing, but the cost of the coverage you receive will be high, and the policy’s death benefits will be low.

Life insurance for burial Burial insurance, intended for life insurance purchasers over 50, is designed to cover expenditures associated with the end of life, such as funeral fees and unpaid medical bills. Obtaining this coverage doesn’t need a medical checkup.

How Does Cancer Affect the Price of Life Insurance?

For all plans, including those for cancer patients and survivors, most life insurance firms employ a categorization method to calculate the prices for life insurance. Following cancer, some suggestions to improve your chances of finding life insurance.

Work with a knowledgeable independent life insurance agent first and foremost. Independent brokers deal with various insurance providers and will be aware of those more receptive to covering cancer patients. Find an independent agent that specializes in impaired risk underwriting in particular.

With these techniques, you might be able to get affordable life insurance no matter when you become eligible for it after cancer.

By eating well and exercising, you may improve your general health. Avoid using tobacco. Quotes for life insurance are often substantially more expensive for smokers.

Choose a profession with less risk. Police officers, firefighters, pilots, and construction workers are among the occupations that might see increased costs.

Avoid dangerous pastimes, including scuba diving, skydiving, and mountain climbing. Your quotations will take them into account and increase the Price. Maintain a spotless driving and criminal history. DUIs, prior arrests, and other criminal convictions may impact your rate or ban you from coverage.

#lifehealthadvisors #ethos #lifeinsurance #lifeinsurancematters #mycoverage

Credits by: Marianne

Date: August 29, 2022

[joanslifeideasblog]

Life Insurance For Cancer Patients And Survivors

The ability to obtain standard life insurance will often be hampered if you have recently received a cancer diagnosis or treatment. A cancer diagnosis is not necessarily a surefire roadblock to buying life insurance.

After receiving a cancer diagnosis, is life insurance still an option?

Even though it could be pricey and restricted, you can still get some forms of life insurance if you presently have cancer.

Having a diagnosis of cancer usually makes it impossible to obtain insurance.

Basal cell carcinoma is a condition for which most insurers do not impose restrictions, according to Travis Price, an independent senior market insurance agent in Manton, Michigan (skin cancer).

However, given the nature of small cell lung cancer, there is a good chance that no life insurance would ever be placed with you.

What Kinds of Life Insurance Are Available to Cancer Patients?

Following a cancer diagnosis, you will probably be able to qualify for a guaranteed issue, group life, and final expenditure life insurance policy, which provides coverage for last expenses and burial fees. However, with a cancer diagnosis, you could not be eligible for the two most popular forms of life insurance — term and whole.

These forms of life insurance often don’t allow for application rejection, and the applications don’t typically even include any health-related questions.

The possibility of limited coverage quantities is one compromise. The fact that guaranteed issue and final expense life insurance sometimes have graded death benefits means that your beneficiaries won’t receive the total payout if you die away within two or three years of purchasing the policy. (The timetable will be specified and depend on the policy.) The nature of your disease will also impact what coverage you may qualify for.

How Long Does It Take to Regain Life Insurance Eligibility After Cancer?

Although each insurance provider is unique, you usually need to have been cancer-free for at least five years to be eligible for freshly issued term life insurance, whole life insurance, or other forms of coverage.

Depending on the type of cancer, its invasiveness, and the likelihood that it may return, there may be a waiting time for life insurance after cancer.

Waiting periods for life insurance following cancer. Certain insurers have higher underwriting requirements for specific diseases that need remission for at least a decade.

Life insurance waiting periods after different cancer types

Here are sample waiting periods for various types of cancer from Trusted Choice, a network of independent insurance agents:

Bladder cancer: 2 years

Bone cancer: 5 years

Breast cancer: 2 years

Cervical cancer: 1 year

Colon cancer: 2 years

Kidney cancer: 3 years

Leukemia: 10 years

Lung cancer: 3 years

Lymphoma: 2 years

Metastatic cancer: 5 years

Ovarian cancer: 3 years

Prostate: 1 year

Rectal cancer: 2 years

Skin melanoma: 1 year

What Kind of Life Insurance Is Best After Cancer?

Traditional life insurance may be possible if you have had cancer for at least five years. Here are a few potential choices.

Long-term care insurance If you’re eligible, term life insurance is often the least expensive method to get protection. You’ll probably have to undergo a life insurance medical examination, so be ready to discuss your prior cancer diagnosis and treatment when questioned.

You may lock in prices for term life insurance for a predetermined amount of time, such as 10 or 20 years.

Permanent life insurance Whole life insurance and universal life insurance are two options for permanent life insurance. If you pay the premiums, these plans can offer life insurance as long as you live.

streamlined life insurance issues While simple issue life insurance does not need a medical exam, you might be required to complete a brief health questionnaire.

A simplified issue might be an excellent decision if you are cancer-free but not in perfect health.

Life insurance with a guaranteed issue You cannot be refused guaranteed life insurance because of a medical exam, health standards, or medical history requirements. That may seem enticing, but the cost of the coverage you receive will be high, and the policy’s death benefits will be low.

Life insurance for burial Burial insurance, intended for life insurance purchasers over 50, is designed to cover expenditures associated with the end of life, such as funeral fees and unpaid medical bills. Obtaining this coverage doesn’t need a medical checkup.

How Does Cancer Affect the Price of Life Insurance?

For all plans, including those for cancer patients and survivors, most life insurance firms employ a categorization method to calculate the prices for life insurance. Following cancer, some suggestions to improve your chances of finding life insurance.

Work with a knowledgeable independent life insurance agent first and foremost. Independent brokers deal with various insurance providers and will be aware of those more receptive to covering cancer patients. Find an independent agent that specializes in impaired risk underwriting in particular.

With these techniques, you might be able to get affordable life insurance no matter when you become eligible for it after cancer.

By eating well and exercising, you may improve your general health. Avoid using tobacco. Quotes for life insurance are often substantially more expensive for smokers.

Choose a profession with less risk. Police officers, firefighters, pilots, and construction workers are among the occupations that might see increased costs.

Avoid dangerous pastimes, including scuba diving, skydiving, and mountain climbing. Your quotations will take them into account and increase the Price. Maintain a spotless driving and criminal history. DUIs, prior arrests, and other criminal convictions may impact your rate or ban you from coverage.

#lifehealthadvisors #ethos #lifeinsurance #lifeinsurancematters #mycoverage

Credits by: Marianne

Date: August 29, 2022

[joanslifeideasblog]

Customer Relationship Management Software’s Objective

A CRM Software’s Definition

An application used to manage and store customer data is known as CRM software. This data may include personal information, preferences, buying patterns, interactions with the business and other customers, and other things.

What Advantages Do CRM Software Offer?

Businesses use CRM software to cultivate and preserve relationships with their current clientele. CRM software enables businesses to better understand the needs of their customers, respond to those needs by improving services and products, attract new clients, and more.

What Purpose Does Customer Relations Management Software Serve?

Now let’s talk about some of the main objectives of CRM software. Including the following:

Find New Clients

CRM software is widely used by businesses to attract new clients. A business that sells goods and services online, for instance, can use its CRM software to entice new clients by emailing them and providing them with special discounts, coupons, and other offers.

Identify and Keep Your Customers

CRM software can assist businesses in learning more about their clients’ requirements so that they can enhance their products, services, and other aspects. In other words, by offering customers goods and services that are on par with or better than their expectations, CRM software can aid a business in keeping its current clientele.

Encourage Customer Loyalty

Many businesses use CRM software to reward existing customers for their loyalty by sending them emails with rewards, discounts, etc. These programs are also being used to collect customer feedback so that changes can be made in response to it.

How Does a CRM Software Operate?

Through the following three steps, customer relationship management software assists businesses in developing customer relationships:

Step 1: Gather Data on Customers. The first step of this process entails gathering data on clients using a variety of techniques. This data may include specifics like the client’s name, contact information (such as a phone number, email address, and mailing address), gender, age group, purchasing patterns, and preferences, among other things. It may also contain information about previous interactions between the business and the client (such as the most recent time the client purchased goods or services from the business).

Step 2: Store Information in a Database. In order to make the information easily retrievable at any time, the collected data is stored in a database in the second step. A company should be able to easily access this information from its database at any time during this six-month period, for instance, if it wants to send marketing materials to new customers once a month for the first six months after acquiring them.

Step 3: Produce Reports from Database Data. The third step entails obtaining pertinent data from the database for additional analysis and decision-making. For instance, if a business wants to analyze customer behavior to attract new ones (see step 1) or customer feedback to improve its business processes (see step 3), it should create reports based on the data stored in its database so that it can use such reports for analysis.

#areteautomation #marketingautomation #leadconnector #emailmarketing #contentmarketing

Credits by: chroniclesofnellieann

Date: Jul 28, 2022

Source: https://medium.com/@nellieannworkspace/customer-relationship-management-softwares-objective-12aacfb146a4

[joanslifeideasblog]

Should You Borrow From Your Life Insurance Policy?

Traditional life insurance was designed to provide beneficiary death benefits in the event of the insured person’s death. However, there are now some life insurance products available that include a savings or investment component.1

Some insurance agents tout the benefits of life insurance with investment components. Those benefits include being able to borrow money from the cash value of the policy after you’ve paid premiums. Two types of life insurance policies that provide cash value are whole life insurance and universal life insurance. Check your life insurance policy to see whether it includes a loan provision.

Being able to use your policy if you need an emergency loan sounds great. But be aware of the pros and cons of policy loans to ensure that you don’t put your coverage and paid premiums at risk.

Can You Borrow Money From Term Life Policies?

Most of the time, you can take cash from your life insurance policy after you have built up the cash value. You will have to contact your financial advisor or insurance agent to determine your policy’s cash value. Discuss what the impact will be on your policy, as well as any tax implications.

Inexpensive life insurance policies, such as term life insurance, don’t build any cash value. For that reason, they don’t allow you to borrow money from them. Term life insurance is so affordable because it is purely a life insurance policy.

Term life has no value other than the actual death benefit paid upon the death of the insured. And that’s only if the insured dies within the fixed term.

If you have the option of borrowing from your life insurance policy, you probably own a policy that offers cash value.

Should You Borrow From Your Policy?

Before you move forward on a policy loan, talk with your financial planner to understand the long-term and short-term consequences and risks. There are many hidden costs you may not be aware of, so you want to be sure this is truly the best option for you.

Ask your agent or advisor to run an “in-force illustration,” which will show you how taking a loan would impact your policy. Weigh the pros and cons, and also explore other options. Keep these topics in mind:

Find out how the loan and interest would impact your policy. Ensure that the death benefit portion is not at risk.

Learn whether you will have to pay an “opportunity cost.”

Make sure you can afford to pay the loan interest and other fees. Interest costs could be compounded, meaning you could be paying interest on your interest.

If you aren’t able to pay back the interest on your loan, think twice.

If you rely on the policy’s dividends to pay the loan interest, take a close look at the details with your planner. If you borrow from the policy’s cash value, it reduces the amount of available collateral for the loan. It also reduces dividends and generates less money to cover interest payments. This can be costly, and it could even cause you to lose your policy.

How Borrowing From a Life Insurance Policy Works

One big difference between policy loans and traditional loans is that you don’t have to pay back the loan to your insurance policy. When you borrow based on your life insurance policy’s cash value, you are borrowing money from the life insurance company.

When you need cash for a big expense, such as college tuition, a loan from your life insurance policy can be a saving grace. It can offer you advantages over credit card debt or personal loans from a bank. A loan from your insurance company is also much simpler to get than a bank loan, because it uses the cash value of your policy as collateral.

On the flip side, this option doesn’t come without risks. If you do not pay back the loan, the insurance company will take it from the cash value of your policy or deduct it when the death benefit is paid out.

One of the main problems with this is that if the loan is not paid back, and you don’t pay the interest either, then the interest will compound and be added to your loan balance. This amount may end up exceeding the policy’s cash value over time.

Borrowing from your life insurance policy requires cautious planning and monitoring of your loan balance and cash value. Otherwise, you might risk losing your policy. This planning is where an in-force illustration will come in handy.

Do You Have to Pay Back the Loan?

Unlike bank loans or mortgages, you do not have to pay back the loan you take when borrowing from a permanent life insurance policy. But when you borrow the money based on your cash value, the amount you borrow may reduce the death benefit from your policy’s life insurance portion.

If you do not pay the loan back, and the interest combined with the amount borrowed starts to exceed the cash value, you could put your life insurance policy at risk. This policy risk can arise more quickly than you think.

Why Borrow From a Life Insurance Policy vs. the Bank?

Policy loans don’t make sense in all situations, but there are some advantages when compared to loans from traditional lenders.

Some people buy cash-value life insurance in order to build assets. That way, later in life, they can borrow from their policy or use the investments when they need to. Others choose to borrow from their policy to avoid the hassle of a bank loan.

In most cases, taking a loan from your life insurance policy allows more flexibility in repayment. Rather than making monthly payments to a bank on a fixed term, you can pay back as little or as much as you want, and at any time interval.

If you can repay your loan in a reasonable amount of time and keep up with the interest payments, this could be a good option. Your life insurance agent can help you figure out a plan.

Before you borrow from a cash-value policy, make sure you have a discussion with your financial planner.

An Example of Borrowing From a Life Insurance Policy

Jane had been paying into her whole life insurance policy since she was 22 years old. When she turned 40, she decided she wanted to buy herself the sailboat of her dreams. She didn’t want to take out a loan, so she planned to use some of her savings. She also planned to borrow the remaining $20,000 she needed from the cash value of her life insurance policy.

When Jane called to get the loan and discuss it with her financial advisor, she found out that she could borrow the money without a problem. But she also learned that the amount might reduce the amount of her death benefit. This reduction would mean that, if she were to die, her family would only get the death benefit minus the amount of the loan she hadn’t yet paid.

Jane’s advisor also explained that, even though she didn’t have to pay back the loan, she could end up paying interest and compounded interest. When they worked out the details, Jane decided that the loan for the sailboat wasn’t the best use of her accumulated cash value.

Instead, Jane chose to take money from her life insurance policy to start her own business. Because she had already done market research and had some demand for her services, she felt confident that she could pay back her loan within two years.

The Bottom Line

Borrowing from your life insurance policy could be a problem if you borrow the funds because you’ve fallen on hard times. In some states, the cash value in your life policy is protected from creditors. Still, any loan taken from your life insurance policy is considered cash, and this money would no longer be protected from debt collectors if it’s in your bank account.

Don’t take out a loan without having the big picture. The most important thing to know is that it’s not the same as pulling money from your savings account. It’s a complex transaction, and you need to make sure you understand all aspects of it.

#ethos #lifehealthadvisors #getinsured #lifegoal

Credits by:MILA ARAUJO

Date: October 25, 2021

Source: https://www.thebalance.com/borrowing-from-a-life-insurance-policy-4056784

[joanslifeideasblog]

Why the Wealthy Should Consider Buying Life Insurance

One result of accumulating wealth may be a desire to keep it in the family by passing along assets to future generations. Life insurance is a popular way for the wealthy to maximize their after-tax estate and have more money to pass on to heirs.

A life insurance policy can be used as an investment tool or simply provide added financial reassurance. While life insurance isn’t something that wealthy people alone can benefit from, there are several unique reasons that someone with a higher net worth may consider purchasing it.

KEY TAKEAWAYS

Life insurance can be a useful financial tool for business owners or individuals with high net worth.

It can also be used as well as for people who may not have accumulated as many assets.

You may purchase several permanent life insurance policies but you will need to meet underwriting and medical requirements.

Life insurance policies are not counted as part of an estate and are not taxed by the federal government.

A life insurance policy can be sold for its cash value, or you can borrow against its accumulated cash value during your lifetime.

Tax Laws Favor Life Insurance

One reason why the wealthier may consider purchasing life insurance has to do with taxation. Tax law grants tax benefits to life insurance premiums and proceeds, affording asset protection in the process. The proceeds of life insurance are also tax-free to the beneficiary.1 This could be appealing to an individual with a higher net worth or to anyone who seeks to minimize estate taxes.

Policy owners with estates of $12.06 million or less can leave this amount to their beneficiaries without having to pay estate taxes, as these are the limits in 2022, as per the Internal Revenue Service (IRS).2 The proceeds of a large life insurance policy can be used by the policyholder’s heirs to pay a tax bill for individuals whose estates surpass the estate tax exemption threshold.

Insurance premiums also won’t be subject to estate taxes. For example, if someone spends $500,000 for a $2 million life insurance policy, that initial premium payment comes out of the estate and won’t be taxed. To look at the insurance premium another way, the after-tax value of the $500,000 is $300,000; thus, for $200,000 ($500,000 premium amount − $300,000 estate tax), the family receives a $2 million guaranteed life insurance payout. That’s a guaranteed return on the premium payment.

Life Insurance Can Protect Business Owners

If an entrepreneur co-owns a business, then life insurance can fund a buy and sell agreement in the event of an owner’s sudden death. A family business can also benefit from a key person insurance policy. This is insurance on the main person in a small business — usually the owner, founder, or key employees.

A keyman policy protects the firm from going under in the event that key personnel passes away before a replacement is in place. The business itself serves as the beneficiary and is able to use the proceeds for things like hiring and training replacement employees, paying off outstanding business debts, or keeping up with day-to-day operating expenses.

Life Insurance as an Asset

Life insurance is more than a death benefit. Depending upon the type of insurance, it may have a cash value or intrinsic value. Cash value accumulation is a feature of certain types of permanent life insurance, which offers lifetime coverage. Thus, when the insurance is no longer needed, it can be sold as a life settlement.

When properly structured, whole life insurance can offer steady tax-free dividends. This means that your policy can provide an additional stream of income if necessary. The cash value in the policy also builds up and can be borrowed to pay for college expenses or other costs during your lifetime.

Finally, with whole life insurance, your death benefit is guaranteed regardless of your future health. This is important for providing long-term security for the policy owner’s family and heirs. Each of these benefits may appeal to individuals with a high net worth or to anyone seeking to use life insurance as an investment tool.

If you pass away without outstanding loans from a life insurance policy, then the loan amount is deducted from the death benefit that’s paid to your beneficiaries.

Life Insurance Strategies

There are a variety of insurance scenarios to choose from. The right one may depend on things like your current income needs, your tax situation, and other assets that you’re using to fund your financial goals. Here are three example scenarios of how life insurance can be used as part of a broader wealth management plan.

Retirement Plan Funds Life Insurance Strategy

Retirement plan funds — both individual retirement accounts (IRAs) and 401(k)s — can be taxed twice for wealthier individuals: First as income, then with an estate tax.

Assume James has $900,000 in his IRA. To avoid losing a large percentage of his IRA to Uncle Sam upon his death, James buys a second-to-die insurance policy with his $900,000. Upon James’ death, his wife receives the $3 million tax-free benefit.

Transfer Current Life Insurance With Cash Surrender Value Policy to Increase Death Benefit

Kevin had a 10-year-old second-to-die insurance policy worth $850,000, with a death benefit of $1.53 million. His advisor recommended that he do a tax-free insurance policy exchange. The new policy had an increased death benefit of $3.48 million, and there were no out-of-pocket charges.

The Two-Step Annuity Tactic

Sarah buys an immediate joint-life annuity for $1 million, which pays $43,843 annually as long as Sarah and her husband are alive. Next, Sarah uses the annual $43,843 payout to fund a $5.68 million second-to-die policy. In essence, Sarah converted $600,000, the after-tax value of the initial $1 million, into $5.68 million. Finally, both the annuity and death benefits are guaranteed.

Consider using an online life insurance calculator to determine how much life insurance you need.

Is Life Insurance Only for the Wealthy?

While wealthier people may be motivated by potential tax savings or the opportunity to use life insurance as an investment, it’s something that practically everyone can benefit from having. For example, you may need to have life insurance, regardless of net worth, if you:

Are married or have one or more children

Are the primary source of income for your household

Have a special-needs dependent

Owe co-signed debts, including student loans, a car loan, or a mortgage

Want to leave behind money to pay funeral or burial expenses

Those are all reasons to consider purchasing life insurance if you’re interested in creating a measure of financial security for anyone whom you’ll leave behind. The good news is that life insurance may be cheaper and easier to purchase than you might think.

For example, there are a number of companies that offer term life insurance online with affordable premiums, based on age and overall health. While permanent life insurance covers you for life, it can be more expensive. Additionally, permanent life insurance may not be necessary if you’re not interested in accumulating cash value.

Is Life Insurance a Good Way to Build Wealth?

For some high-net-worth individuals, life insurance can provide an opportunity to keep money in the family and shield it from taxes. In addition, a life insurance policy with an investment component and cash value is a good way to create tax-free savings, if you regularly max out your retirement accounts.

Can You Make Money off a Life Insurance Policy?

If you purchase a permanent life insurance policy with a cash-value component, you can borrow from your policy. You can also sell or surrender your policy or borrow from your policy to get cash. However, an insurance policy in and of itself doesn’t earn the policyholder much money, although their beneficiaries will monetarily benefit from it.

What Kind of Life Insurance Builds Wealth?

Life insurance can build wealth in many ways, the primary one being the death benefit, which is passed along to your beneficiaries. This wealth transfer strategy is a way to immediately provide a cushion of wealth (depending on the death benefit amount) to surviving family members. A permanent policy, like whole or universal life, comes with a death benefit and cash component that may earn interest.

The Bottom Line

Life insurance can offer numerous benefits, regardless of net worth or wealth accumulation. When weighing life insurance options, consider what your primary reasons are for purchasing coverage, how much coverage you expect to need, and whether you prefer term life insurance or permanent life. Researching the best life insurance companies and getting quotes for coverage online can help you choose the right policy to meet your needs and financial situation.

#ethos #lifehealthadvisors #protectlife #financialplanning

Credits by: BARBARA A. FRIEDBERG

Date: June 01, 2022

Source: https://www.investopedia.com/articles/financial-advisors/111215/why-wealthy-should-buy-lots-life-insurance.asp

[joanslifeideasblog]

How Much Life Insurance Should You Carry?

Death, just like taxes, is inevitable, though most people may not be keen to dwell on it. But ensuring that you have the right financial resources in place, including life insurance, is important if you have loved ones who depend on your income. Life insurance can help cover funeral and burial expenses, pay off lingering debts, and make managing day-to-day living expenses less burdensome for those you leave behind.

If you don’t have life insurance, or you do but are unsure about whether your policy is sufficient, here’s how to evaluate your coverage needs.

KEY TAKEAWAYS

Your financial and family situation will determine whether you need life insurance, and if so, how much coverage you should have.

The younger and healthier you are, generally, the less you’ll pay for premiums, but older people can still get life insurance.

It may be wise to carry as much life insurance as you need to pay off your debts plus any interest, particularly if you have a mortgage or cosigned student loans with someone else.

Your policy’s payout should be large enough to replace your income, plus a little to hedge against the impacts of inflation on purchasing power.

There are several rules of thumb used to compute the ideal amount of coverage.

What Is Life Insurance?

Life insurance is an agreement in which an insurance company agrees to pay a specified amount after the death of an insured party, as long as the premiums are paid and up to date. This amount is called a death benefit. Policies give insured people the assurance that their loved ones will have peace of mind and financial protection after their death.

Life insurance falls into two different categories: whole and term. Whole life policies are a type of permanent life insurance, meaning you’re covered for life as long as your premiums are paid. Some whole-life policies offer an investment component that allows you to build cash value, taking the premiums you pay and investing them into the market.

Term life insurance, on the other hand, covers you for a set term. For instance, you may purchase a 20- or 30-year policy, depending on your age and how long you need coverage. Some policies allow you to renew your coverage after a certain expiration date, while others require a medical exam to do so. Between term life and whole life insurance, term life tends to offer cheaper premiums.1

Note

A medical exam is a standard underwriting requirement for most life insurance policies, although you may be able to purchase no-exam life insurance at a higher premium cost.

Who Needs Life Insurance?

Life insurance can be a helpful financial tool to have, but buying a policy doesn’t make sense for everyone. If you’re single and have no dependents with enough money to cover your debts as well as the expenses related to death — your funeral, estate, attorney fees, and other expenses — then you may not need life insurance. The same applies if you have dependents as well as enough assets to provide for them after your death.

But if you’re the primary provider for your dependents or have a significant amount of debt that outweighs your assets, then insurance can help ensure your loved ones are well taken care of if something happens to you. Having a life insurance policy could also make sense if you own a business or owe cosigned debts, such as private student loans, for which someone else could be held responsible if you pass away.

Keep in mind that life insurance by itself doesn’t cover every situation. For example, a standard life insurance policy won’t pay any disability benefits if you become disabled, nor will it cover long-term nursing care costs. But you can purchase disability riders or long-term care insurance riders for an additional premium cost that can cover those types of scenarios.

If you’re married, then both you and your spouse may need life insurance coverage, even if only one of you is primarily responsible for your household income.

Age and Life Insurance

One of the biggest myths that life insurance agents perpetuate is that you’ve missed the boat if you fail to sign up for a policy when you’re young. The industry leads us to believe that life insurance policies are harder to get the older you become. Insurance companies make money by betting on how long people will live.

It’s true that insurance is cheaper when you are young. But that doesn’t mean qualifying for a policy is easier. The simple fact is that insurance companies want higher premiums to cover the odds on older people, but it is very rare that an insurance company will refuse to cover someone who is willing to pay the premiums for their risk category. That said, get insurance if and when you need it. Do not get insurance because you are scared of not qualifying later in life.

Should You Use Life Insurance as an Investment?

It’s possible to consider life insurance to be an investment if you have a policy that builds cash value. Cash value policies are generally touted as another way to save or invest money for retirement. These policies help you build up a pool of capital that gains interest. This interest accrues because the insurance company is investing that money for its own benefit, much like banks. In turn, they pay you a percentage for the use of your money.

But it’s important to consider the rate of return that you might earn. If you take the money from the forced savings program and invest it in an index fund, for example, you may realize better returns. For people who lack the discipline to invest regularly, a cash value insurance policy may be beneficial. A disciplined investor, on the other hand, could generate higher returns by putting the money they would pay toward premiums in the market.2

If you’re considering using a life insurance policy as an investment, check the rate of return and risk profile of the underlying investments to ensure that they align with your financial goals.

What Is the Minimum Amount of Life Insurance You Need?

A large part of choosing a life insurance policy is determining how much money your dependents will need. Choosing the face value — the amount that your policy pays if you die — depends on a few different factors. As such, the minimum amount of coverage you need may be very different from what someone else requires. Financial experts often recommend purchasing 10 to 15 times your annual income in coverage, although your personal number may be higher or lower. Here are some of the most important considerations for choosing a minimum amount of life insurance.

Debt

Life insurance can be used to pay off outstanding debts, including student loans, car loans, mortgages, credit cards, and personal loans. If you have any of these debts, then your policy should include enough coverage to pay them off in full. So if you have a $200,000 mortgage and a $4,000 car loan, for instance, you need at least $204,000 in your policy to cover your debts. But don’t forget the interest. You should take out a little more to settle any extra interest or charges as well.

Income Replacement

One of the biggest factors for life insurance is to replace income. If you are the sole provider for your dependents and bring in $40,000 a year, for example, you will need a policy payout that is large enough to replace your income, plus a little extra to guard against inflation.

To err on the safe side, assume that the lump sum payout of your policy is invested at 8%. You will need a $500,000 policy just to replace your income. This is not a set rule, but adding your yearly income back into the policy ($500,000 + $40,000 = $540,000 in this case) is a fairly good guard against inflation. Once you determine the required face value of your insurance policy, you can start shopping around. There are many online insurance estimators that can help you determine how much insurance you will need.

Insuring Others

Obviously, there are other people in your life who are important to you, and you may wonder if you should insure them. As a rule, you should only insure people whose death would mean a financial loss to you. The death of a child, while emotionally devastating, does not constitute a financial loss because children cost money to raise. The death of an income-earning spouse, however, does create a situation with both emotional and financial losses.

In that case, follow the income replacement calculation with his or her income. This also goes for business partners with whom you have a financial relationship. For example, consider someone with whom you have a shared responsibility for mortgage payments on a co-owned property. You may want to consider a policy for that person, as that person’s death will have a big impact on your financial situation.

Note

If you’re purchasing life insurance to cover a business partnership arrangement, then you may want to consider a key-person insurance policy versus traditional coverage.

Methods of Calculating Life Insurance

Most insurance companies say a reasonable amount for life insurance is six to ten times the amount of annual salary. If you multiply by ten, if your salary is $50,000 per year, you’d opt for $500,000 in coverage. Some recommend adding an additional $100,000 in coverage per child above the 10x amount.

Another way to calculate the amount of life insurance needed is to multiply your annual salary by the number of years left until retirement. For example, if a 40-year-old currently makes $20,000 a year, they will need $500,000 (25 years × $20,000) in life insurance.

The standard-of-living method is based on the amount of money that survivors would need to maintain their standard of living if the insured party dies. You take that amount and multiply it by 20. The thought process here is that survivors can take a 5% withdrawal from the death benefit each year — the equivalent of the standard-of-living amount — while investing the death benefit principal and earning 5% or better. This type of calculation is sometimes known as human life value (HLV) approach.

Another methodology is called DIME (debt, income, mortgage, education). This is meant for a minimal amount of coverage that will cover family expenses in the event of an untimely death. With the DIME approach, your coverage should be enough to cover all of your outstanding debts (including your mortgage), pay for your kids’ education, and replace your income for as many years until your children reach 18 years old.

Alternatives to Life Insurance

If you’re getting life insurance purely to cover debts and have no dependents, there are alternatives. Lending institutions have seen the profits of insurance companies and are getting in on the act. Credit card companies and banks offer insurance deductibles on your outstanding balances. This often amounts to a few dollars a month and, in the event of your death, the policy will pay that particular debt in full. If you opt for this coverage from a lending institution, then make sure to subtract that debt from any calculations you make for life insurance; being doubly insured is a needless cost.

What Is a Rule of Thumb for How Much Life Insurance You Need?

There are several rules of thumb you can use for computing the amount of life insurance you’ll need. These often involve multiplying your current income by a number such as 10x or the number of years left until retirement. Other rules of thumb involve adding up all expenses and obligations you need for your family.

Is Life Insurance Needed After Age 60?

While life insurance is often intended to replace the economic loss of someone with a family to support in the event of their untimely death, it can be purchased by those whose children have grown up as well. This can be done for several purposes, including giving an inheritance, establishing a trust upon death, contributing to a charity, or if the older individual is a key employee or partner in a business.

Still, many insurance companies only offer term policies for those aged 18–65. But depending on the insurer and type of policy, you can even get coverage initiated as old as age 80. Note, however, that life insurance premiums increase the older you are when you purchase the policy.3

What Happens to My Life Insurance if I Lose My Job?

If you lose your job and have private life insurance that you purchased on your own, so long as you continue paying your premiums, you will have coverage. If the insurance was provided as a group plan through your employer, you will typically lose that coverage after one month after being terminated.

Can I Cash out My Life Insurance Policy?

If you own a permanent life insurance policy that accrues cash value (such as whole life or universal life), you can often borrow against or withdraw some or all of that value. The death benefit will typically also decline proportionally to the amount you take out of the policy. If you surrender the entire amount, you will lose all of your coverage.

The Bottom Line

If you need life insurance, it is important to know how much and what kind you need. Renewable term insurance is generally sufficient for most people, but you have to look at your own situation. If you choose to buy insurance through an agent, decide on what you’ll need beforehand to avoid getting stuck with inadequate coverage or expensive coverage that you don’t need.

As with investing, educating yourself is essential to making the right choice, so be sure to do your research to ensure that you acquire the best life insurance possible. Locate and compare life insurance quotes to determine which deal would best suit your unique needs.

#lifehealthadvisors #ethos #healthishappines #insuredyourlife

Credits by: ANDREW BEATTIE

Date: May 25, 2022

Source: https://www.investopedia.com/articles/pf/06/insureneeds.asp

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How To Maximize Life Insurance With The Ladder Strategy

Laddering life insurance is a way to tackle fluctuating life insurance needs while also saving money in the process.

When you ladder life insurance policies, you create a peak amount of coverage when you need it and pay less when your life insurance needs diminish.

What Is the Life Insurance Ladder Strategy?

The life insurance ladder strategy is to buy multiple term life insurance policies with differing expiration dates to match your expected financial needs as they change over time.

In a ladder, you have multiple policies that expire in different years as your life insurance payout needs reduce in later years. In some cases, this is better than buying one large policy that tries to match the timeframe of your longest debt. Laddering life insurance is a way to adapt life insurance coverage as your life changes.

In a life insurance ladder, you have a policy for each major financial obligation, with different coverage end points so that you’re not paying for coverage long after your need for it is gone. This also typically reduces the total amount you pay.

For instance, you may have these debts and financial needs that fluctuate during your life:

Childcare costs

Children’s current education costs

Children’s future education costs

Mortgage payments

Income for surviving spouse

Final expenses

If you have a mortgage, are paying for a private high school education, are saving for college and want to set up an income for your spouse if you were to die, you need more life insurance than if you simply wanted a payout to cover final expenses. When you have multiple life insurance needs, you may want to ladder policies now and have fewer life insurance policies in a decade or two.

How to Ladder Life Insurance

Laddering life insurance simply means buying multiple term policies with differing expiration dates. An example is buying:

A $250,000 10-year term life policy

A $250,000 20-year term life policy

A $250,000 30-year term life policy

If you were to buy all three policies around the same time, the above example means you would have $750,000 in term life coverage for the first 10 years, $500,000 in term life coverage for the middle 10 years and $250,000 in term life coverage for the final 10 years. You could also stagger the three policies, so you have a 10-year policy now, add a 20-year policy in a few years and then a 30-year policy further down the road.

Why would you want to ladder life insurance policies? You may want more coverage for the first 10 years since that’s when you have the biggest life insurance needs, including paying a mortgage and saving for your children’s future education needs.

If you plan to pay off your mortgage in a few years, you won’t need to factor in those costs for your long-term life insurance needs. The same goes for saving for a child’s education. If your child is a teenager, you might not need to worry about education costs in a decade. You instead might want just enough coverage to handle final expenses and to provide an income for your spouse after you’re gone.

How to Save Money with a Life Insurance Ladder

You may save on life insurance premiums by going with multiple term life insurance policies featuring varied lengths rather than buying one sizable 30-year term life insurance policy.

Here’s an example using the average of the five cheapest term life insurance quotes we found online for a 40-year-old nonsmoking male in average health.

Life insurance ladder vs. one large 30-year term life policy

As you can see in the table, laddering three different $250,0000 term life policies would cost less per month than buying one $750,000 30-year policy. You would sacrifice the larger death benefit by laddering policies in later years, but you’d save money throughout the durations of the term life policies.

Should I Be Laddering Life Insurance?

Everyone’s individual circumstances are unique. Life insurance ladders are a way to make sure you’re spending the least amount of money possible to insure yourself at different points in the future, and offer lots of options as the unknowns of our lives unfold.

If you want to save money and focus your coverage during your peak-earning years or to cover you when you have the most debts, laddering term life insurance policies can be a way to maximize your coverage when you need it without paying higher costs when you don’t need it as much.

But you may decide a larger policy during the whole period makes more sense for you.

How Much Life Insurance Should I Buy?

While there is no exact rule for how much life insurance you need, some simple recommendations use between five and 15 times your annual income for life insurance coverage. But rules that involve multiplying income tend to be too simplistic.

There’s the DIME Rule (Debt & Final Expenses, Income, Mortgage, Education). This rule says you should add up these expenses to calculate your life insurance needs:

Debt (include funeral expenses)

Income (multiply your annual income by the number of years you want to provide it, such as 10 or 20 years)

Mortgage (the balance)

Education (such as private school and college with housing and books)

Some of the factors to consider include:

Age: When you’re younger and have little savings built up, you may need more insurance.

Current and future earning power: If you’re on a path to a high-earning occupation, you may want more life insurance earlier rather than buying additional coverage later on. For example, if you’re in a surgical residency program earning $55,000 annually, you likely need a different amount of insurance than a social worker making $55,000 annually, because your future earning potential is much higher.

Debt: How much and what type of debt you have also plays a role. If you are married and have a $250,000 mortgage, you need life insurance. But if your only debt is $250,000 of federal student loans, which are discharged at your death, you don’t need life insurance to cover that loan.

Children or other dependents: When you have young children, you almost assuredly need life insurance so that their needs would continue to be met if your income was gone. But you likely need a lower amount of insurance when your children are in high school than when they were toddlers because you have fewer years of supporting them ahead.

Your budget: Some people end up buying less insurance than the amount they need because they simply don’t have the room in the budget to pay for more. So, if a recommended coverage amount is a $1 million term life policy, some people may opt for a $500,000 policy instead. While not ideal, it may be all they can afford, and having some life insurance in place is better than none at all.

Another budget factor is whether you are saving a lot or saving almost nothing. If you are saving 30% of your income, for example, this lowers your life insurance need in two ways: You’re building up savings that survivors can use, and your monthly commitments are only 70% of your income, so you can assume survivors won’t need coverage amounts equal to your full income to meet their daily expenses.

Your financial wishes: Do you feel strongly about your kids graduating from college with no student loans? Are you dead set on paying for your kids’ weddings? If your answer to questions like these is yes, then you need more life insurance than someone who wants life insurance to meet only basic needs for their kids.

#lifehealthadvisors #ethos #secureyourfuture #getsecured

Credits by: Les Masterson

Date: Aug 11, 2022

Source: https://www.forbes.com/advisor/life-insurance/ladder/

More from Joanarciga

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How To Maximize Life Insurance With The Ladder Strategy

Laddering life insurance is a way to tackle fluctuating life insurance needs while also saving money in the process.

When you ladder life insurance policies, you create a peak amount of coverage when you need it and pay less when your life insurance needs diminish.

What Is the Life Insurance Ladder Strategy?

The life insurance ladder strategy is to buy multiple term life insurance policies with differing expiration dates to match your expected financial needs as they change over time.

In a ladder, you have multiple policies that expire in different years as your life insurance payout needs reduce in later years. In some cases, this is better than buying one large policy that tries to match the timeframe of your longest debt. Laddering life insurance is a way to adapt life insurance coverage as your life changes.

In a life insurance ladder, you have a policy for each major financial obligation, with different coverage end points so that you’re not paying for coverage long after your need for it is gone. This also typically reduces the total amount you pay.

For instance, you may have these debts and financial needs that fluctuate during your life:

Childcare costs

Children’s current education costs

Children’s future education costs

Mortgage payments

Income for surviving spouse

Final expenses

If you have a mortgage, are paying for a private high school education, are saving for college and want to set up an income for your spouse if you were to die, you need more life insurance than if you simply wanted a payout to cover final expenses. When you have multiple life insurance needs, you may want to ladder policies now and have fewer life insurance policies in a decade or two.

How to Ladder Life Insurance

Laddering life insurance simply means buying multiple term policies with differing expiration dates. An example is buying:

A $250,000 10-year term life policy

A $250,000 20-year term life policy

A $250,000 30-year term life policy

If you were to buy all three policies around the same time, the above example means you would have $750,000 in term life coverage for the first 10 years, $500,000 in term life coverage for the middle 10 years and $250,000 in term life coverage for the final 10 years. You could also stagger the three policies, so you have a 10-year policy now, add a 20-year policy in a few years and then a 30-year policy further down the road.

Why would you want to ladder life insurance policies? You may want more coverage for the first 10 years since that’s when you have the biggest life insurance needs, including paying a mortgage and saving for your children’s future education needs.

If you plan to pay off your mortgage in a few years, you won’t need to factor in those costs for your long-term life insurance needs. The same goes for saving for a child’s education. If your child is a teenager, you might not need to worry about education costs in a decade. You instead might want just enough coverage to handle final expenses and to provide an income for your spouse after you’re gone.

How to Save Money with a Life Insurance Ladder

You may save on life insurance premiums by going with multiple term life insurance policies featuring varied lengths rather than buying one sizable 30-year term life insurance policy.

Here’s an example using the average of the five cheapest term life insurance quotes we found online for a 40-year-old nonsmoking male in average health.

Life insurance ladder vs. one large 30-year term life policy

As you can see in the table, laddering three different $250,0000 term life policies would cost less per month than buying one $750,000 30-year policy. You would sacrifice the larger death benefit by laddering policies in later years, but you’d save money throughout the durations of the term life policies.

Should I Be Laddering Life Insurance?

Everyone’s individual circumstances are unique. Life insurance ladders are a way to make sure you’re spending the least amount of money possible to insure yourself at different points in the future, and offer lots of options as the unknowns of our lives unfold.

If you want to save money and focus your coverage during your peak-earning years or to cover you when you have the most debts, laddering term life insurance policies can be a way to maximize your coverage when you need it without paying higher costs when you don’t need it as much.

But you may decide a larger policy during the whole period makes more sense for you.

How Much Life Insurance Should I Buy?

While there is no exact rule for how much life insurance you need, some simple recommendations use between five and 15 times your annual income for life insurance coverage. But rules that involve multiplying income tend to be too simplistic.

There’s the DIME Rule (Debt & Final Expenses, Income, Mortgage, Education). This rule says you should add up these expenses to calculate your life insurance needs:

Debt (include funeral expenses)

Income (multiply your annual income by the number of years you want to provide it, such as 10 or 20 years)

Mortgage (the balance)

Education (such as private school and college with housing and books)

Some of the factors to consider include:

Age: When you’re younger and have little savings built up, you may need more insurance.

Current and future earning power: If you’re on a path to a high-earning occupation, you may want more life insurance earlier rather than buying additional coverage later on. For example, if you’re in a surgical residency program earning $55,000 annually, you likely need a different amount of insurance than a social worker making $55,000 annually, because your future earning potential is much higher.

Debt: How much and what type of debt you have also plays a role. If you are married and have a $250,000 mortgage, you need life insurance. But if your only debt is $250,000 of federal student loans, which are discharged at your death, you don’t need life insurance to cover that loan.

Children or other dependents: When you have young children, you almost assuredly need life insurance so that their needs would continue to be met if your income was gone. But you likely need a lower amount of insurance when your children are in high school than when they were toddlers because you have fewer years of supporting them ahead.

Your budget: Some people end up buying less insurance than the amount they need because they simply don’t have the room in the budget to pay for more. So, if a recommended coverage amount is a $1 million term life policy, some people may opt for a $500,000 policy instead. While not ideal, it may be all they can afford, and having some life insurance in place is better than none at all.

Another budget factor is whether you are saving a lot or saving almost nothing. If you are saving 30% of your income, for example, this lowers your life insurance need in two ways: You’re building up savings that survivors can use, and your monthly commitments are only 70% of your income, so you can assume survivors won’t need coverage amounts equal to your full income to meet their daily expenses.

Your financial wishes: Do you feel strongly about your kids graduating from college with no student loans? Are you dead set on paying for your kids’ weddings? If your answer to questions like these is yes, then you need more life insurance than someone who wants life insurance to meet only basic needs for their kids.

#lifehealthadvisors #ethos #secureyourfuture #getsecured

Credits by: Les Masterson

Date: Aug 11, 2022

Source: https://www.forbes.com/advisor/life-insurance/ladder/

[joanslifeideasblog]

What Is Cash Surrender Value?

If your permanent life insurance policy has built up significant cash value, or if funds are tight, you might be considering canceling the policy to access the funds. But before you do, it’s important to understand what you’ll give up and if your cash value will be subject to “surrender penalties” and taxes.

If you need cash to get you through an emergency, or can’t afford premium payments, there are alternatives to canceling a policy that may provide the funds or breathing room you need, while keeping your coverage in place.

Definition and Examples of Cash Surrender Value

In order to better understand “cash surrender value,” you first need to know what “cash value” is and what surrender charges are.

Life insurance policies fall into two broad categories, term life and permanent life. Term life policies last for a limited number of years, such as 20, and only pay a death benefit if the insured dies within that time. But permanent life insurance is designed to last your entire life and builds a cash value within the policy in order to do so. This cash value can also function as a kind of savings vehicle.

The cash value is not the same as the amount of coverage you have, or the death benefit of the policy. It’s a cash account internal to the policy that’s designed to offset the increasing cost of that coverage as you age.

Permanent policies have a “surrender period” that may last for 10 years or more. During this time, the insurer will assess a penalty if you decide to surrender (cancel) the policy according to a surrender fee schedule listed in the policy.

The “cash surrender value” in a permanent life insurance policy is the cash value minus any applicable surrender charge.

How Is Cash Surrender Value Calculated?

The surrender value of your policy depends on how much cash value you have and what if any surrender penalty exists when you want to cancel it. How long the surrender period lasts and how surrender charges are calculated is listed in your policy; they’re based on your age, gender, rating class, and the amount of coverage you have.

The penalty may be based on a percentage, and typically decreases every year until the policy is “out of surrender,” and it reaches zero. During the first few years of the contract, surrender charges can be especially steep. For example, during the first policy year, your surrender value could be 0% of the cash value, if you have any cash value built up. But in the fifth year, it could be closer to 80% of the cash value amount. It depends on the specifics of your policy and is not necessarily a straightforward calculation.

If you want to cancel a policy during the surrender period, ask your insurer what the cash surrender value is to know how big of a hit you’ll take in surrender fees — it may be worth waiting until the policy is out or almost out of the surrender period, or accessing the cash value via a loan or direct withdrawal.

A policy’s cash surrender value isn’t fixed; it usually increases over time as the policy’s cash value grows and the surrender charges decrease.

Tax and Other Implications

When cashing out a life insurance policy, the IRS may consider a portion of the money as taxable income. To calculate the amount of taxable income, subtract the total amount you paid in premiums from the amount of money you received in the cash surrender. For instance, if you receive a cash surrender payment of $50,000 and paid $40,000 in premium payments, $10,000 would be subject to taxation.

Aside from potential taxation, it’s essential to understand that cashing out your policy cancels it. Once you surrender your policy, you can not change your mind, and there is no grace period during which you’ll have coverage. Beneficiaries will receive no death benefit from the policy, and it may be difficult or even impossible for you to get a new life insurance policy, depending on your age and health.

The premium on your existing policy is based on your age and health when you applied for it. If you wish to replace it with a comparable policy any time in the future, the cost will be much higher, or you might be uninsurable, especially if you’ve developed health issues.

How Does Cash Surrender Value Work?

People surrender their life insurance policies for numerous reasons. Often, they cancel because they no longer need the coverage.

If you’re the owner, surrendering your policy usually requires that you simply fill out a “surrender request” form and submit it to your insurer. Once you submit the form, you can expect to receive a check from the insurance company.

You can also request a partial surrender or cash withdrawal, or take out a loan against the cash value, instead of surrendering the entire policy. Talk to your insurer about how these might affect your policy.

Alternatives to Surrendering Your Policy

If you still need life insurance, it’s wise to continue coverage rather than cancel it. And there are ways you can access the cash value in your policy while keeping your coverage intact.

Use the cash value to pay premiums: If you’re having difficulty paying premiums, your policy might have a provision to deduct premiums from your cash value when payments aren’t made. Alternatively, you may be able to select a “reduced paid-up” option, which exchanges your policy’s cash value for a smaller death benefit, but requires no additional payments from you.

Make a withdrawal: You can withdraw from your life insurance policy’s cash value instead of cashing out the entire amount. If the amount you withdraw is less than the amount you’ve paid in premiums, you shouldn’t have to pay any income tax.

Take out a loan against the cash value: If your policy is in its surrender period, consider taking out a loan against its cash value. You must repay the loan, with interest, or risk reducing your death benefit. But you won’t be assessed surrender fees.

Exchange your policy: If you need long-term care insurance or would prefer to own an annuity, you can exchange your life insurance policy for either without having to pay taxes on any gains via a 1035 exchange.

Make use of an accelerated death benefit (ADB) provision: If your policy includes an ADB provision, you may be able to access a portion of the death benefit “early” if you have a chronic or terminal illness or require long-term care.

Sell your policy: If you’re over 65 or terminally ill, you might want to sell your policy in a life or a viatical settlement, and potentially receive more than the cash value. When you sell a policy, the settlement company becomes the owner and beneficiary, paying any subsequent premiums and receiving the benefit when you die.

If you sell your policy to a settlement company when you’re terminally ill, you shouldn’t have to pay tax on any gains.

Talk to your insurer before surrendering your policy or taking any significant action on it. An agent can provide the exact cash surrender value as well as information and illustrations that show how long your policy can survive if you stop paying premiums or make a withdrawal. They can also discuss the implications of taking out a loan or if your policy has an ADB provision that you can use.

Key Takeaways

The cash surrender value is the amount of money an insurer will pay you if you surrender a permanent life insurance policy that has a cash value.

Typically, the amount of cash surrender value increases as the policy’s cash value increases and the surrender period decreases.

Surrendering a policy cancels your coverage.

If the cash surrender value of your policy is higher than the amount you’ve paid in premiums, when you cancel the coverage, you’ll have to pay taxes on the earnings.

If you still need coverage, you have options for accessing the cash in your policy without canceling it.

#lifehealthadvisor #ethos #protectyourfamily

Credits by: MICHAEL EVANS

Date: January 13, 2022

Source: https://www.thebalance.com/cash-surrender-value-calculated-on-insurance-4157833

[joanslifeideasblog]

Life Insurance For Smokers

If you’re a smoker, you’re probably well aware of the fact that it can impact your health. Cigarette smoking is the leading cause of preventable disease, disability and death in the U.S., according to the Centers for Disease Control and Prevention. Smoking accounts for 480,000 deaths (or 1 in 5 deaths) per year.

And here’s another unpleasant side effect of smoking: significantly more expensive life insurance rates. Smokers can pay nearly four times more for a life insurance policy compared to someone who doesn’t smoke.

Can Smokers Get Life Insurance?

Yes, smokers can get life insurance. But you should expect to pay higher rates than a non-smoker. That’s because tobacco use is a proven health risk and impacts your life expectancy. Your life expectancy is a major cost factor when life insurance companies set their rates.

You could be denied a life insurance policy as a smoker if you also have certain medical conditions, such as smoking-related diseases. You could also be denied a policy if you lie on your application about tobacco use.

What Counts as “Smoking”?

So what counts as smoking? Cigarettes are an obvious candidate. But there are many other forms of “nicotine delivery systems” that can peg you as a “smoker,” “tobacco user” or “nicotine user” when you’re shopping for life insurance:

Vaping & e-cigarettes

Bidis (thin hand-rolled cigarettes)

Cigars

Pipes

Hookahs

Chewing tobacco

Snuff

Dissolvable tobacco

Nicotine replacement therapies (patches, lozenges, gum, inhalers, nose sprays)

Heated tobacco products

Marijuana users are sometimes also considered smokers, depending on whether the use is occasional or regular.

Regular cigar smokers will usually be considered smokers. But many life insurers will give you a non-smoking rate if you smoke cigars infrequently, such as one or less per month.

Whether or not you’re a “smoker” is decided by each life insurance company, and the parameters can vary significantly. For example:

Prudential is generally lenient when it comes to cigar smokers. They consider you a non-smoker if you haven’t had a cigarette in 12 months, but you can smoke a pipe, cigar, or chew tobacco. However, you may not get the best non-tobacco rates.

Legal & General America will consider you a smoker if you’ve used any of these in the last 12 months: Cigarettes, pipes, smokeless tobacco, chewing tobacco, electronic cigarettes, vaping and nicotine substitutes such as patches and gum.

Why Do Smokers Have Different Life Insurance Rates?

Life expectancy is the basis for life insurance rates. So factors that impact your potential “mortality,” or life insurance expectancy, are factored into life insurance quotes.

Cigarette smoking among adults is at an all-time low of 14%, according to the most recent report from the Surgeon General. But 16 million Americans have a smoking-related disease. And you don’t have to already have health consequences in order to get stuck with higher life insurance rates. Simply being a smoker will usually push you into higher rates when you shop for life insurance.

Non-Smoking vs. Smoking Life Insurance Rates

Brace yourself for high life insurance quotes if you’re a smoker. We found that smoking rates will easily be double or triple a non-smoking rate. The increase will vary by your age, gender and the coverage amount, but here are examples of average quote increases for a 20-year, $500,000 term life insurance policy.

Term life insurance rates non-smoking vs. smoking

How Do Life Insurance Companies Find Out That You’re a Smoker?

When you fill out a life insurance application, it’s crucial to be truthful with all your answers. Life insurance companies have many ways to verify everything you’ve stated on the application.

A primary verification method is with a life insurance medical exam, which typically includes taking blood and urine samples. These samples will reveal cotinine in your system, which is a byproduct of nicotine. Cotinine can also be detected in saliva and hair samples. But testing for cotinine isn’t foolproof. Smokers may be able to slip through if they haven’t smoked in a day or two.

About 43% of life insurance applicants didn’t disclose their tobacco habits, according to ExamOne, which performs medical exams for life insurance companies. That’s based on the number of people who had cotinine in their testing analysis but said they didn’t smoke. Younger applicants are the most likely to fail to disclose their tobacco use.

Life insurance companies have a keen interest in weeding out smokers who aren’t telling the truth. Life insurers lose an estimated $3.4 billion a year in premiums because of undisclosed tobacco use, according to Verisk, a data analytics provider.

Among the other ways a company could find out if you’re a smoker or use another type of nicotine:

Doctors’ records. Requesting your medical records is a routine part of many life insurance applications. Nicotine use will likely be noted in your records.

Pharmaceutical databases. Life insurers often get lists of your past and current prescriptions. Nicotine use might show up here, such as a prescription for a smoking-cessation drug.

Past life and health insurance applications. A company called MIB stores your past answers to individual life and health applications. If your past answers are different, it would be flagged here.

Social media. Insurance companies are increasingly using social media sites such as Facebook to look for evidence of factors that affect rates.

The sound of your voice. Verisk provides life insurance companies with analytics that predict whether you’re a smoker from the sound of your voice, combined with other data such as demographic and socioeconomic information. When you answer life insurance application questions over the phone–a common step called a tele-interview–you could be recorded. Verisk can analyze these recordings and flags people who are likely to be smokers.

How Long do You Have to Quit Smoking to be Considered a Non-Smoker for Life Insurance?

Generally if you haven’t smoked for 12 months or more, you’re considered a non-smoker. The non-smoking time length rules vary among insurance companies.

What If I Quit Smoking Later?

If you purchased life insurance at a smoking rate and have now quit for at least a year, you may be able to get a better price. You can ask your life insurance company how long you have to quit to be considered a non-smoker.

If you’ve passed that time threshold, you can ask for the rate to be reconsidered. That means you’ll take a new life insurance medical exam and your health will be re-evaluated. If you’ve also developed new medical conditions in the interim, those will factor into the new rate, too. So getting a re-rating isn’t necessarily a slam dunk after you’ve quit smoking

What if I Start Smoking After I Buy Life Insurance?

Once you buy a policy, a life insurance company can’t raise your rates. So if you start deep-sea diving or smoking afterwards, you’ll still enjoy the life insurance rates you already locked in. The same is true for health conditions you develop after buying a policy.

The risk for life insurers that you’ll start smoking later in life is pretty low. Nearly 90% of cigarette smokers first try cigarettes before age 18, according to the Centers for Disease Control.

Can I Avoid a Life Insurance Medical Exam as a Smoker?

Not all life insurance policies require a medical exam. Some policy types, such as guaranteed issue life insurance, require no exam and have no health questions. Rates are based on your age, gender and coverage amount.

Because the life insurer has no health information from you, these types of policies are among the most expensive you can buy. They also tend to offer only low amounts of coverage, such as $5,000 to $25,000. You can still be better off buying a traditional life insurance policy and resigning yourself to taking the medical exam and paying smokers’ rates.

How to Find the Best Life Insurance Smoking Rates

The key to finding the best life rates — whether you use nicotine or not — is shopping around. An independent insurance agent can help you shop the market and get quotes from insurers that tend to be nicotine-friendly.

Here are some tips for smokers to find the best life insurance rates.

Compare quotes. The most effective way to find the lowest rates is to compare life insurance quotes among multiple insurers.

Bundle insurance policies. You can typically get a discount if you bundle your life insurance with other policies from the same company, such as car insurance and home insurance.

Ask to be re-rated. If you’re a smoker who already has a life insurance policy, ask to be re-rated if you quit for at least 12 months. This may require a new life insurance medical exam, and you could end up paying more if you developed any new medical conditions since your last medical exam.

You might be wondering if it’s a good idea to quit smoking and then apply for a life insurance policy. While this might get you better rates, it’s generally not a good idea to wait to buy life insurance.

For instance, you could develop a new health condition while you are in the midst of quitting smoking, which might result in higher rates. Or worse, you could pass away without a policy in place, leaving your dependents in a bind.

#lifehealthadvisors #ethos #lifegoals #beprotected

Credits by: Ashley Kilroy

Date: Aug 16, 2022

Source: https://www.forbes.com/advisor/life-insurance/smokers/

[joanslifeideasblog]

How and Why to Convert Term Life to Permanent Life Insurance

Term life insurance often is touted as an affordable way to provide a financial safety net for loved ones who count on you for support. It costs less than permanent life insurance because it provides coverage for a limited number of years rather than indefinitely. It’s also cheaper because term life insurance doesn’t have the cash value or internal policy charges that many permanent life insurance policies have.

If you choose the right term length, the coverage will be in force during the most crucial financial years for your family — for example, up until the point your mortgage is paid off or your kids have made it through college.

“If the goal is to protect you while you’re building a nest egg, term insurance is a great choice,” says Dennis LaVoy, a Certified Financial Planner, Chartered Life Underwriter and founder of Telos Financial in Michigan. “Term insurance is a good fit for a lot of situations and covers most people.”

But goals can change. You might later find that the term length of your life insurance policy isn’t long enough to meet your needs. You might even decide that what you really want is coverage that lasts a lifetime. Does that mean you have to go back to square one and get a new policy? Not necessarily.

Term life insurance policies typically offer the option to convert them into permanent life insurance policies. Making the switch is easy, but deciding whether it’s the right move isn’t that simple. Here’s what you need to know about how and why to convert term life to permanent life insurance.

How to Convert Term Life to Permanent Life

Converting a term life policy to a permanent policy is much simpler than applying for a new policy. First, check the language of your policy to see if conversion is an option (it is on most policies).

Next, check the term conversion period — the time frame during which you can convert. Some companies will allow policyholders to convert at any point during the term of their policy. But many will limit the conversion period, says Henry Hoang, founder of Bright Wealth Advisors and Bright Life Insurance in California. For example, the conversion period on a 20-year term policy might be limited to the first 10 years the policy is in force.

“If you know when that deadline is, you want to be sure you can make the conversion before the period expires,” he says.

Then contact your insurance agent or company to ask to convert your policy. You won’t have to take a life insurance medical exam or go through the underwriting process, says Dane Spealman, a State Farm insurance agent in Pikeville, Maryland. In fact, the underwriting class you were assigned when you bought your term policy (standard, preferred or super preferred) won’t change even if your health has changed.

You’ll simply fill out a questionnaire, and your new permanent policy will be issued within a few days, he says.

The Cost of Converting

There are no fees to convert a term policy to a permanent policy, Spealman says. However, the rate you pay for coverage — your premium — will increase. How much it increases depends on several factors.

Although your health won’t be a factor because you lock in your original underwriting class, your age when you convert will affect your rate. The older you are, the higher your premium will be.

The amount you convert also will impact your premium. You have the option to convert the full value of a term policy or just a portion of it. For example, if you have a policy with a $500,000 death benefit, you could convert just $250,000 of it to a permanent policy. You’ll pay less for a permanent policy with a smaller benefit — and the premium on the remaining term life policy will drop because the benefit has been reduced.

When you convert might also affect your rate. For example, Spealman says that State Farm gives term life policyholders a credit for the amount they’ve paid toward their policy that can be applied to the cost of a permanent policy if they convert within the first few years of getting a policy. So it’s worth checking with your insurer to see if you have this option because it could save you some money.

Finally, the type of permanent policy you choose to convert your term policy to will factor into your premium. (Note too that you may be offered only one policy type for a conversion, such as a universal life insurance policy.) For example, the premium for a whole life insurance policy will be higher than the premium for a universal life insurance policy, Hoang says.

Sample Insurance Premiums for a Term Life Policy Purchased at Age 30 and Converted at Age 40

Reasons to Convert a Term Life Policy

Just because your insurance agent or company mails you a letter telling you that you should take advantage of an opportunity to convert your policy doesn’t mean you should. After all, there was a reason you bought a term life policy rather than a permanent policy. However, there might be a reason now that a permanent policy will be a better fit.

You’ve had a change in health. Converting a term life insurance policy to a permanent policy allows you to extend your coverage without going through the underwriting process. This can be a valuable option if your health changes for the worse. If you wanted to get a new term life policy to extend your coverage, you would have to pay astronomical rates or could even be uninsurable, Hoang says. But if you convert, your current health won’t affect the premium on a permanent policy or your insurability.

Your budget has changed. You might have wanted to buy a permanent policy from the get-go but couldn’t afford the higher premium. If you’re making more money now, it can make sense to convert if the higher premium on a permanent policy fits within your budget, LaVoy says.

You want a cash value asset. One of the benefits of a permanent life insurance policy is that part of your premium goes toward the cost of insurance and part of it goes toward building cash value. Some people want cash value life insurance so they can access the cash during retirement (or for other reasons) tax-free. It shouldn’t be a substitute for saving for retirement in an account such as a 401(k), but it can be part of a financial plan.

You want to leave a legacy. If you want to be able to leave an inheritance for your children but don’t want to scrimp during retirement just to ensure there’s cash left to pass on, a term life conversion can help solve that problem.

“At retirement, someone might want a permanent policy to get peace of mind to spend more liberally and still leave money for the kids,” Hoang says. The permanent policy can be in force no matter when you die and will pay a death benefit to your beneficiaries.

You want to have funds to cover your final expenses. Even if you’re not worried about passing on money to your children, you might not want to saddle them with paying for your funeral. So converting enough of a term policy to a permanent policy to cover final expenses could make sense.

Questions to Ask When Converting

Before you convert a term policy, there are several questions you should ask yourself and your life insurance agent or company

What’s your goal in converting? Hoang says you need to know your objective when converting to a permanent policy. Discuss what you want to achieve with your insurance agent so you can choose the right permanent policy for your goal.

What can you afford? You will pay more for a permanent policy. So you need to consider not only whether you can afford the higher premiums now but also in retirement. You might find that getting another term policy will meet your goals and be more affordable than a permanent policy.

What permanent policies are available? In the past, it was common for insurance companies to let term life policyholders convert to any permanent life insurance policy in the company’s portfolio, says Jason Hill, a financial advisor and founder of CFA Insurance. Newer policies tend to have more restrictions. For example, you might only be able to convert to a universal life policy. So check with your insurer to see what policies are available before committing to a conversion.

Can you get a long-term care benefit? You might be considering converting to a permanent policy because some of those policies offer the option to add coverage for long-term care. However, your insurer might offer a long-term care benefit only on a certain type of permanent policy, or not at all. For example, Spealman says State Farm offers long-term care benefits only on universal life policies.

Can you get a rising death benefit? Typically, if you want to convert to a permanent policy with a higher death benefit than what your term life policy has, you’d have to go through the underwriting process again. You can get around the underwriting requirement, though, if the insurer offers a permanent policy with a rising death benefit, Hill says. The premium will be higher, but the value of the policy will rise over time, giving you a bigger death benefit than you originally had, Hill says.

By asking these questions, you might find that the permanent policies your insurer offers aren’t right for you. If you are in good health, shop around to see what else is out there, LaVoy says. You might find that by getting rate quotes from other insurers for either term or permanent life policies that there are better deals available than what you’d get by converting.

#lifehealthadvisors #ethos #lifegoal #healthishappiness

Credits by: Cameron Huddleston

Date: Mar 26, 2021

Source: https://www.forbes.com/advisor/life-insurance/convert-term-life-to-permanent-life-insurance/