Whole Life Insurance Policies: Collateral for Purposes of Receiving Loans

The whole life policy guarantees a payout if left active by the end of the coverage or policy term. Life insurance should be featured in the financial planning process. Therefore, it is advisable to undertake some form of research before settling for any insurance company. An insurance policy plays an important role in safeguarding the future of the family. In the event of the death of the breadwinner, insurance offers protection. It can be used to pay for college education and mortgage. The whole life insurance policy remains effective throughout the lifetime of the applicant for as long as the payment of premiums continues. Many times the policy is used as collateral for purposes of receiving loans. It is also used in exchange for receiving cash payments.

Opting for a financially sound company

Purchasing whole life insurance policies is similar to making a life commitment. This explains why it is important to think carefully when making this decision. In addition, the applicant needs to opt for a financially sound insurance company. This will guarantee the existence of the company in addition to the claims being paid long after the insured has gone. With thousands of companies available in the industry, this might prove challenging. This explains why it is so important to deal with leading insurance companies; they are rated highly.

There are various factors to consider when deciding why the whole life insurance policies is right for the family. Therefore, it is perfectly in order to understand the purpose, premiums, policies and benefits of the policy. You need to calculate the amount of money that the family will need to live comfortably with, in the event of passing away. You will also need to ascertain whether the family will have access to the money to cater for the burial expenses. It is equally important to decide whether indeed your passing away will generate a tax burden for the heirs.

Shopping for whole life policy is highly recommended. This should overcome the mistake of comparing two companies or selecting the first company that appears on the internet. In case you are not going anywhere with shopping online you need to contact a financial consultant. It is equally important to determine the financial strength of the life insurance company by checking where they stand in terms of insurance rankings. Make sure that you select a top insurer. Contrary to popular belief, leading insurance companies are known to offer competitive rates.

Settlement Options for a Life Insurance Policy

Most of us, at one point or another, will find it necessary to purchase life insurance. This is a wise decision, for many times, usually, we have people who depend on us financially, from elderly parents, children, and even our partners. So what happens when these needs change? Are you suppose to keep paying the expensive premiums for something that is not needed? Do you just let the policy lapse? In this article, we will discuss the multiple avenues you can travel when trying to figure out settlement options for a life insurance policy.

Your first option would be to just let the policy lapse. This means, just stop paying it, this will effectively cancel your insurance policy, and your insurance company will really enjoy this, as they have taken your premiums for years and years, and have paid you nothing in return. However, this is one option I would only use for a last resort, as the only benefit to you is you no longer have to pay the premiums.

Your second choice is to take the cash surrender value. That’s right, some policies accumulate cash, these are typically permanent policies and not term life policies. You may realize that the cash your life insurance carrier is willing to give you is far less than what you have actually paid. Obviously the insurance company needs to make money, but at the same time, you likely want a fair deal. A life settlement will yield you approximately four times the cash surrender value, which is your third option, when you think, “Should I sell my life insurance policy for cash?” Historically, selling your life insurance policy to a third party financial institution will yield the largest offers.

This last option is usually the most financially rewarding, if you meet the simple criteria, you must be over 72 years old, typically have $250,000 of insurance coverage, and that’s it! If you have a term insurance policy, it would have to be a convertible product, which any life settlement company would be able to find out. In this scenario, you will find offers from multiple financial institutions who are willing to pay you a rather large, lump sum for your life insurance policy.

With a few choices, try to find out which settlement option is ideal for your current situation. This will only ensure you are satisfied with your final decision. If you have any questions, speak to a licensed agent who is able to transact life settlements in your state.

Important Tips on Buying a Life Insurance Policy

Introduction

Life Insurance comes with many benefits. Nowadays, life insurance isn’t just a contract between the insurer and insured, which provides protection against risk of life by paying a premium. For sustainability in the market, every company and product need to adopt the current demand and circumstances and same goes with the life insurance products too. In these years of change in the market, regulator and life insurance companies have taken major steps to meet the changing demands which have provided customers with following options and benefits:-

  • Wide range of product portfolio
  • Options of saving and investment
  • Added benefits with life insurance
  • Different ways of getting low premium and high coverage
  • Additions in list of key features of life insurance polices
  • Transparency and hassle free procedure

With a pool of different companies, products and benefits to choose from, you need to pick out the best one for you. There are many things which you need to keep in mind before buying insurance and there is no specific guideline for choosing the best one, it all depends on your need and situation. But there are some important points related to every policy which can help you to filter the best insurance policies. Based on those important points, we have outlined following important tips for buying a life insurance policy.

Tips

  • Start early

Buying a Life insurance when you are young, gives you a lot of benefit. You will be able to get high coverage at a very low rate of premium because age has a direct effect the premium rate (younger the buyer, lower the premium is). In addition, with low premium, you will get better financial planning, long duration of coverage and your premium will be locked at a very low rate for your entire policy term.

  • Choose the right coverage amount

Don’t decide your policy coverage on your feelings or on calculations based on single factors (like 10 times of your salary). While deciding upon the coverage amount, always consider your current lifestyle, debts, assets, future obligation (college education of children, settlement of your family to different locations, etc.), and rate of inflation. Choosing low coverage will give you zero benefit while choosing a high coverage will be a costly deal for you.

  • Comparison is the key

Comparison is very much necessary before buying an insurance policy. It helps you to choose the best policy at the best rate. There will be many polices which will not offer benefits which you are looking and may be available at different rates. There are many IRDAI certified comparison portals which provide a comparison of different policies on their websites which is unbiased and easy.

  • Choose the right policy

Different policies have different benefits, eligibility criteria, terms and conditions, exclusions and inclusions. You can choose the right policy for yourself only if you know about it well. So the key in choosing the right product is better understanding about it. Know about the riders available, add on benefits, what is not covered under your policy, premium rates and all other aspects related to your policy. Know your needs well and then find policies accordingly.

  • Choose the right company

There are more than 20 companies in India and it very much necessary to choose a trustworthy company. There are some companies which provide best insurance policies and are trustworthy also. You need to check the claim settlement ratio, review (by customer and experts), claim settlement process, product portfolio, price, etc. of different companies to choose the right one.

  • Understand the brochure

There is a brochure available with every Life Insurance product which is available on the company’s website. It contains all the key benefits, features, eligibility, inclusions, exclusion, term and condition related to the policy. Go through every fine line of the brochure to understand your policy well. It will help you to use the available benefits and avoid any bad surprises in future.

  • Disclose your information correctly in the proposal form

Some people hide facts about themselves while filling the proposal form and giving personal details to the company. For example, some people tick themselves as a non-smoker while giving details to get low rate of premiums. But later, at the claims stage, it could result in zero benefit as the claim will be rejected due to misleading information provided by the insured. You can’t fool the company by giving wrong information. So to avoid any hassle during the policy or at the time of making claims, it is always necessary to provide the right information about yourself to the company.

Never buy a Life Insurance policy in a hurry because it’s a decision which will have an effect on your whole life. Give some time for research and understanding your needs well because a policy bought with precision gives you exactly what you want.