What You Need to Know About Borrowing from a Life Insurance Policy

Borrowing from Life Insurance Robert Taurosa

When life insurance policies were first introduced, they were meant to cushion the beneficiary from financial worry in the event of the insured’s death. However, as time passed by, life insurance incorporated savings and investment into the package. Policies such as whole life and universal life insurance provide cash value back to the insured.

What You Need to Know

You cannot ask for a loan if you have a term life insurance policy. This is because the insurer does not offer any additional benefits. A term policy is only meant to benefit your beneficiaries in case you die before the contract expires.

If your policy has a cash value, think before you ask for the loan. Find out how the loan will affect your policy. Typically, when you borrow on your life insurance policy, the cash value acts as collateral. If you fail to pay back the loan, the insurer can take the cash value. However, you run the risk of losing your entire policy if the interest payments plus the actual loan amount is more than the cash value.

Before you borrow on your life insurance policy, the cash value has to be substantial. Usually, you build this value through years of saving. Talk to a qualified financial planner about how you can build up this cash value.

When asking for the loan, the insurance company will give you a form to fill. Watch out for hidden costs in the form. For example, is there an ‘opportunity cost‘ that you may have to pay? Find out if you can afford to pay the interest payments. Make sure that the loan and interest repayments won’t affect the death benefit portion of your policy.

Borrowing on your life insurance policy is much easier than borrowing from the bank. You don’t have to go through a lengthy application process. You ask, and if the cash value is sufficient, you get your loan.  

Before you borrow on your life insurance, make sure that you have the right policy. A term life policy does not allow you to borrow while a whole life policy will enable you to do so. Then, talk to a financial planner to see how the loan will affect policy benefits.

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What You Need to Know About Borrowing from a Life Insurance Policy

Should You Purchase Supplemental Life Insurance at Work?

Supplemental Life Insurance Robert Taurosa

Supplemental life insurance is an extra life insurance policy. The employer will offer this policy as a benefit for the employee. You should purchase supplemental insurance at work if the policy meets your needs. Here are a few reasons why the employee buys this policy at work. The employee can afford the policy. The employee has a family. The employee can keep the policy. Use the following guidelines to help you make an informed buying decision about supplemental life insurance.

Affordable Payments

First, an employee will most likely buy supplemental insurance because it is affordable. Insurance companies will offer lower rates to a group of employees. This is called group life insurance. For example, an employee making $50,000 annually may receive $50,000 of life insurance at no cost. The employer will pay for the policy. Then, the employee may have the option to buy more coverage at a much lower rate. The options can turn the $50,000 policy into a $500,000 policy. A $500,000 policy will fill the gaps and help the family when the employee die.

Provide for Family

Next, the employee will purchase supplemental life insurance to provide for the family. If you get a supplemental policy from work, try to get a guaranteed renewable policy. This is the best term policy. When the employee is sick and cannot work, the insurance company has to honor the contract as long as the employee pay the monthly payment. The family can receive the $500,000 death benefit to pay medical expenses, funeral expenses, credit cards, mortgage payments, college costs, taxes and much more. A low-cost life insurance supplemental policy can help the family.

Keep the Policy

Then, the employee purchases supplemental insurance to keep the policy for life. When buying this policy, it is essential to think about making payments for many years. Buy the policy at work that you can keep for the rest of your life. The objective is to keep the policy enforced and to keep expenses as low as possible. Find out if the policy is portable before you sign the contract. Find out if the policy will also cover you and your family.

Finally, this information is not financial advice. It is written only to inform the readers.

Should You Purchase Supplemental Life Insurance at Work?

What is Health IQ?

Health IQ has introduced an innovative idea that transformed the life insurance market. Established in 2013, the company advocates for health consciousness in the process of providing insurance.

 

This change in mindset highlights the importance of taking charge of managing one’s health and none of the hassle of proving the necessity of paying for better insurance rates. Health IQ provides an incentive to the client to continue living healthy by offering savings anywhere from 4 to 33 percent. As a licensed company across 50 states, Healthy IQ partners with Assurity, SBLI & Ameritas, and global reinsurer Swiss Re in implementing a more health-responsive underwriting process.

 

Through this program, individuals who take care of themselves, eat a balanced diet and lead an active lifestyle pay less and generate savings. Even those with preexisting conditions like diabetes and heart disease, who have overcome their illness through positive health choices, can still get a fair rate.

 

Munjal Shah, Co-Founder and CEO of Health IQ, in a press release, mentioned what the company pushes for, “We believe the best way to change the world’s health is to celebrate the health conscious rather than harass the people who aren’t.”

 

Health IQ developed their concept based on data generated from research. They found out that runners have a 50 percent lower risk of dying from heart diseases, and that vegetarians are less prone to develop colorectal cancer, among other findings. Through a combination of these studies and findings, Health IQ found out that there is a 41 percent lower mortality rate for the health conscious.

 

Qualifying for the reduced insurance rates involves a process where the client has to score the ideal rate on a Health IQ test with 30 random questions. Verification of the individual’s fitness regimen through an app is also part of the requirements. As an example, the app registers the number of running or cycling miles the individual registers on a certain period. The qualifications also take into consideration other active lifestyle choices, such as the individual’s participation in a yoga and exercise program on a regular basis.

 

Mainstream life insurance policies rarely give importance on health consciousness. With Health IQ, individuals who live healthy reap the rewards of their positive life choices by paying better prices for insurance and earning savings. Even those who have conquered certain health conditions or have taken healthy preventative steps to address a family medical history are recognized for their efforts through a better rate.

What is Health IQ?

What You Need to Know About Ethos, a New Kind of Life Insurance

Some of the most difficult financial challenges faced by members of the Millennial Generation are related to making decisions about their futures. We are talking about a generation that was raised in the shadow of the Great Recession and rising income inequality; for this reason, it should not be surprising to learn that Millennials are often apprehensive when discussing financial products such as life insurance.

 

The problem with the life insurance industry is that many companies have not adjusted to the ethos of Millennials, which means that they are still chasing profits through the sale of ancillary financial products. Millennials tend to be suspicious of such motives because they know about the history of the subprime mortgage meltdown, the Dot-Com bubble and the excesses of the student loan industry.

 

Many insurance companies have tried to lure Millennials through fancy mobile apps, but none of them have been able to accomplish the simplicity and transparency of Ethos, an insurer that focuses on the true nature of life insurance.

 

Ethos does not rely on networks of salespeople or intermediaries to offer term life insurance, which is the kind of policy that makes the most sense to young families who rely on a sole breadwinner. Ethos presents term life insurance clauses, costs, payouts, and conditions as they are; this is a company that does not rely on trying to sell investment products to individuals who are mostly interested in providing protection to their loved ones should they pass away unexpectedly.

 

Term life insurance does not have to be complicated; Ethos allows policyholders to define the basic elements such as the term, cash payments and beneficiaries. The terms of the policies last between 10 and 30 years, meaning that they are ideal for providing protection during some of the most financially challenging periods in the life of a family. Single parents whose relatives do not enjoy financial freedom stand to benefit the most from term life insurance since they can have peace of mind insofar as providing a cushion to their children in case of the unthinkable.

 

Ethos allows prospective policyholders to get a solid idea of what their financial life will be like with a term life insurance policy. Since there are no salespeople trying to make commissions, applicants can take their time discussing this important decision with their loved ones, and they can do so without being pressured into considering investment plans to go along with their policies.

What You Need to Know About Ethos, a New Kind of Life Insurance

The Different Types of Insurance

My career, as well as this blog, is focused on life insurance and life settlements. However, I do not mind discussing different kinds of insurance and policies every now and again. I think it is crucial to inform everyone of the importance of insurance in general. We, as a collective society, must be well-informed and well-equipped in the case of emergencies. That is why I wanted to walk through a few of the different types of insurance and briefly touch on their importance.

Car Insurance

When most people purchase a car, they do not drive it for one or two years before getting another one; they tend to use it for all its worth, with most using their vehicles for around six years. That is a lot of time. Cars are not simply man-made machines used to get from point A to point B; they are investments. And you should take care of your vehicle for as long as you possibly can. That is why car insurance is so important. In fact, car insurance is so important that it is legally required to drive a car in all but two states (Virginia and New Hampshire). Car insurance will ensure that both your car and your life are protected from potential damages (depending on the circumstances of the incident). Car insurance can take care of your dented bumper as well as your whiplashed neck. Again, the circumstances of each individual incident are crucial in determining what exactly your insurance will cover, but it is always a great idea to have your car insured.

Home Insurance

Owning a home can be an amazing experience. It is a major step in a person’s life. Much like a car, a house is an investment. Your house is where you grow your family and create new and warm memories. Unfortunately, accidents happen and at a moment’s notice, your house can fall victim to a bevy of attacks. Burglary, fire, flooding and hurricanes are all legitimate threats to your home. If your house isn’t insured, you could potentially lose everything you own and not be able to pick up the pieces quickly, if at all. You must be vigilant in purchasing the best possible insurance you can for your home, and you must know exactly what your insurance covers. Regardless, it’s a great idea to protect both your belongings as well as your loved ones.

Health Insurance

Ive discussed this before in a previous blog, so I will keep this short. Health insurance can cover any medically related issues that arise. It can cover everything from doctor’s visits to surgery to prescriptions. With how expensive healthcare is in America, it is a necessity to own a health insurance policy.

The Different Types of Insurance

Cautionary Tales: Life Insurance Mistakes

As a life insurance agent, I promote truth, honesty and transparency. These are three crucial characteristics of a great life insurance salesperson. Unfortunately, not everyone abides by these three principles. While life insurance can be a tremendous boon for grieving families, it has also been used by those with nefarious intent. I wanted to highlight a few examples of life insurance fraud and use them as examples of why you shouldn’t even consider attempting this.

The Infamous John Darwin

A man by the name of John Darwin had once tried his hand at life insurance fraud. In 2002, John Darwin decided to fake his death in a canoeing accident. For five years, John and his wife, Anne, pretended as though John had actually passed, with John secretly living with his wife while also living next door to his house in a bedsit. During that time, John and Anne had been spending the money from John’s life insurance policy on trips and material items. In 2007, the couple was caught red handed and arrested. Both John and Anne were sentenced to six years in prison and eventually released on parole in 2011.

A Dishonest Agent

Unfortunately, sometimes, it isn’t just policyholders who try to abuse the system. There have been many cases wherein the life insurance agent attempts to scam the system. For example, there was a situation where a Minnesota life insurance agent stole approximately $1.6 million by cashing in fraudulent refund checks. The agent also enlisted the help of a friend in order to cash the vast majority of the checks. While the former agent was able to steal millions of dollars, the reward was short-lived, as the employee was caught and sentenced to almost 3 years in prison.

The Dedicated Fraudsters

This last cautionary tale is absolutely mind-blowing. A pair of Los Angeles funeral home workers decided to create an imaginary relative, purchase a policy in his name, and kill him off. They were incredibly dedicated to the fraud, even going as far as to host a fake funeral. In order to do this, they had to bribe a doctor to forge medical documentation, which he did. The plan went without a hitch; until the doctor they had bribed decided to turn himself, and the pair, in. The two masterminds were sentenced to prison.

Fraud is a very serious crime and should not be taken lightly. Life insurance companies are subject to hundreds of fraudulent claims costing the industry several billions of dollars. Try as you might, if you commit fraud, you will be caught and you will serve time.

Cautionary Tales: Life Insurance Mistakes