10 Things You Didn't Know Your Life Insurance Policy Can Do

Over the last several years, the term "life hack" has come into vogue. A life hack is an object or process used to make a small part of your life easier, usually by taking a common object and repurposing it for something that it wasn't originally made for. Examples include using old socks as wearable dusting rags during spring cleaning, a contact lens case for pill storage during an overnight trip, or a muffin tin as a condiment holder for an outdoor barbecue.

In a sense, a life insurance policy acts as a financial "life hack." After all, it can be utilized for something other than providing a death benefit upon someone's passing. Here are ten innovative ways that a life insurance policy can be used:

1.     As a safeguard against being uninsurable. People who are very old and/or unhealthy may not be able to obtain a new life insurance policy. But if you already have a term life insurance policy, you can extend the term or convert it to whole life insurance before it expires - so your coverage never lapses.

2.     As collateral. If you ever need to apply for a loan of any sort, you can use the cash value of a whole life policy as a source of collateral in order to receive a higher amount or a lower interest rate.

3.     As an investment tool. The value of a whole life policy will always grow and never decline, which is more than can be said for many other investments on the market. Some policies even pay dividends to the policyholder.

4.     As a way to pay for college. With the costs of tuition rising, you can tap into the cash value of your whole life policy to help pay the costs of higher education for your children or grandchildren.

5.     As a way to pay off your debts. If you ever need to repay loans, you don't have to wait until you die to access your payout. Just draw upon the cash value of your whole life insurance policy to settle those debts.

6.     As an additional source of retirement income. If Social Security and your retirement savings do not provide enough income during your golden years, you can arrange to withdraw a regular stipend from your whole life policy - or even surrender the entire policy in favor of the cash value.

7.     As funding for long-term care. Many older adults require partial or round-the-clock medical care, which can be expensive. Funds from your whole life policy can be allocated toward these long-term care costs while you are still living.

8.     As a way to fund a favorite charity. If you want to support a cause or organization that has become important to you, part or all of the death benefit of your life insurance policy can be earmarked for that charity upon your passing.

9.     As a way to help pay taxes. If you've accumulated significant wealth, your heirs may be left with a hefty estate tax bill upon your death. As a result, many people acquire life insurance policies in order to offset or pay off any post-death tax bills.

10. As financial security for your heirs. If your loved ones know that they will receive a portion of your life insurance death benefit as part of their inheritance, they can enjoy the peace of mind of having a fiscal safety net while they are alive.

 Source: http://blogs.rediff.com/lifeinsuranceplans/2016/06/29/ritikashah11998-18/

Life Insurance

Checklist for buying Life Insurance Policy

It is important for you to know answers to a few crucial questions before buying an insurance policy. This not only helps in understanding the policy better, but also ensures peace of mind during the entire policy term and afterwards. In this article we shall cover what questions to ask one before buying a life-insurance policy, understanding the policy, terms and conditions.

What you would like your life insurance policy to achieve?

Ask yourself what it is you want the insurance to do. For example, do you want to have coverage that will:

Pay the outstanding balance owing on a mortgage and other debts?

Offset the loss of your income? For how long?

Contribute to the future education of your children?

A combination of all or part of the above?

Knowing what you would like to accomplish with your life insurance policy will help you determine how much life insurance you need to buy. If you have insurance before then what is the purpose of the new policy? What value will it add to existing policy? Why are you buying the policy?

Who would you like to insure?

Most life insurance companies offer a variety of products to suit your lifestyle and family. You can get a life insurance policy

On your own life, or

You can get one policy for both you and your spouse (called a joint life insurance policy) or

For your child.

Remember that the purpose of insurance is not to soothe us emotionally, but rather to mitigate the financial losses we might suffer if some unfortunate event happens. Identify the potential events that would be catastrophic in a household. This means events that would cause a family to suffer serious financial losses and that would cause its members to substantially change their lifestyle and goals. These are risks crying out for cover, such as the death, serious illness, or disablement of the bread-earner(s). Although the death of the breadwinner(s) is catastrophic from a financial point of view, the death of a child, though awful, is not likely to be.

Biggest advantage of child insurance plan is the benefit of premium waiver. In case of child plans, if the proposer, usually the parent, dies then the future premiums of life insurance policy are waived off for the child’s benefit. These types of plans are double benefit plans. At the time of death of the life insured, the sum assured would be paid to the family to meet the immediate expenses but the policy continues. The future premiums are waived off from the policyholder, but the insurer continues to pay the premiums on behalf of the life insured, so that the maturity benefit is secured for the child’s future.

Joint life insurance policies

Joint Life insurance policies are designed to enable two people, typically spouses or business partner, to share in one life insurance plan. It covers two individuals (spouse, business partners) under same policy i.e. jointly. Since the probability of claim is twice than of individual life insurance plan, the premium is bit higher than single individual life insurance plan. Also if claim is made, the policy gets terminated after the payout. However joint insurance policy is cheaper than buying two individual term insurance policies.  Joint Life Insurance could be endowment or term plan; If the policy is a joint endowment policy, the cover amount (sum assured) is payable on the first death and again on the death of the survivor during the period of the policy. If one or both partners owning the joint policy survive to the maturity date, the cover amount and the vested bonuses are payable on the maturity date.

Source: http://blogs.rediff.com/lifeinsuranceplans/2016/06/22/ritikashah11998-17/

Life Insurance Companies

A Guide to Who Needs Life Insurance

Life insurance can fill a wide variety of needs; including covering the finite years of a mortgage and protecting the interests of a special-needs child who will need financial support after you’re gone.

In fact, 63% of Americans consider life insurance a necessity, according to the nonprofit industry group Life Happens. But 30% say they don’t have enough coverage, 19% have only group life insurance (the coverage that’s available through work and often doesn’t provide enough money to meet a family’s needs), and 43% have none at all.

Life insurance can provide “income replacement” so that your family can continue to pay everyday expenses.

Life insurance would cover the cost of paying for services the parent does for “free,” such as child care.

A policy could cover the support payments that a divorced parent makes.

Life insurance can make sure the child will have financial support no matter when a parent dies.

A policy can cover mortgage payments, so your family doesn’t have to move if you die.

Life insurance could cover the cost of the debt. Life insurance can provide funds for heirs to pay estate or inheritance taxes.

If you don't have a lot of wealth, life insurance can provide a small inheritance to heirs.

Life insurance can pay off business debts if you die, help heirs to the business pay off estate taxes, or fund a buy-sell agreement that allows a business partner to buy out your share.

Life insurance with a cash value component can provide a supplemental source of retirement savings.

Small life insurance policies can pay for your funeral and final expenses. People who are interested in permanent life insurance should consult a financial advisor to find the right policy type.

Source: http://blogs.rediff.com/lifeinsuranceplans/2016/06/16/ritikashah11998-16/

Choose suitable Life Insurance plan not the cheapest..

With increasing number of insurance products in the market, customers enjoy a wide array of choices. Many competitive products are being offered; some at comparatively lesser rates as well. Predictably, many of us also prefer products which are cheaper. However the question we need to ask ourselves is - whether every cheap product is good?

Life Insurance, one of the most crucial of all the products are available in a wide range; each plan with something unique to offer. Insurance companies are in a competition to lure consumers with attractive features. Although most of the features are beneficial to us we do need to evaluate thoroughly before finalizing one.

We tend to go for the cheapest plan possible. The reason being the popular belief and the advices that are offered to us, again and again! There is nothing wrong in choosing a cheap plan. However what we need to consider is whether that is the only deciding factor? Should rates of the product be the only criteria we need to follow?

No. Let us discuss why?

Buying a life insurance, unlike any other product affects our entire life. That is the reason why it becomes even more important to be careful while purchasing. There are a few things which we must keep in mind before buying a life insurance plan

Here are a few ways which can help you in making an informed decision. First review all your insurance needs. Understand what your requirements are; Plan for your future and for your family. Decide whether you want to buy a term insurance or a permanent insurance. Term insurance offers cover for a stipulated period of time while permanent insurance offers cover as long as you pay the premiums.

Evaluate your financial condition - check whether you have any debt or mortgages. Decide on the amount of coverage you would want and for how long. Decide on the amount of premium that you will be able to pay regularly. Whether you have any dependents or not; whether you need to provide financial support to your family. If in case something unfortunate happens, how much of financial support you must provide to ensure a financially stable life for your children, parents and spouse. These are just a few factors that can influence your purchase of life insurance policy.

Rates of plans may vary from one company to other. However, for a suitable product, one must consider above mentioned variables along with looking in to the cost of the plans. A life insurance is to help us at times of need. Hence, we shall buy a product which fulfills our requirements on time and in ways we would prefer.

Source: http://blogs.rediff.com/lifeinsuranceplans/2016/06/08/ritikashah11998-15/

Give extra financial care for family’s safe future

In life, we always wish to protect our loved ones with some form of financial security. We purchase gold, invest in equity stocks or mutual bonds to give them necessary security. But due to the rising inflation costs, better lifestyle, these investments are not sufficient to meet the future scenarios. Therefore, the modern way that provides complete financial security would be life insurance policy. There are lot of insurance companies that cater different customized products with variety of offerings. Right from fuelling investment needs to meeting different financial goals, they come with many objectives for the investor. While you have various types of insurance policies in market, they are also add-ons to supplement life insurance policy with added coverage. These policy add-ons are termed as “Rider”. Riders vary from insurance companies, policy structure, workings and costs. Adding a rider increases your premium to be sure for an extra coverage which is worth the costs. There are many riders available across the industry such as:

Critical Illness Rider

As the name suggests, this rider is your added security towards critical illness scenarios at a minimal cost. It requires the insurance company to pay you a lump sum if you’re diagnosed with one of the major illnesses specified in the insurance policy such as cancer, heart attack, stroke, kidney failure and others.

Term Conversion Rider

It lets you convert your term policy into a permanent one without undergoing a medical exam. This would be beneficial to young couples who may start a family and want to then convert for life-long coverage. It is most often a feature of a term insurance contract that is added to the policy at no costs.

Waiver of Premium Rider

This rider gives waiver so that you don’t have to pay the premiums on your life cover when you are struck with total disability and cannot work. Most companies limit policy till 65. So, just in case you are disabled during the old age for longer than six months, your premiums will be waived and, depending on the policy, the premiums you were paying for the previous six months will be reimbursed.

Disability Income Rider

This rider is a vital one as it sets a regular income for people who are totally disabled and cannot work. The policy will specify the amount of income and how long it will be paid. While some riders only pay if you became disabled from an accident others pay for an accident or illness.

Spousal Rider

It allows you to give extra insurance cover to your spouse instead of buying two separate life insurance policies. It provides term coverage for a specific period of time. So why not just go ahead, and give your spouse the best gift ever?

Return of Premium Rider

With this rider, you pay higher premiums for the opportunity to get all of your money back if you live past the term on your insurance policy.

There are various factors to consider when buying an insurance cover. The amount and type of cover depends on factors like your family members & their future needs, income source, debt, lifestyle, asset in hand, inflation costs etc. Also it determines on your risk taking ability as well. It is advisable that you never set a policy premium beyond your income sources else if you cannot afford to pay premium in time your policy might lapse. Life insurance policy is a very personal decision and should be determined thoughtfully.

Source: http://blogs.rediff.com/lifeinsuranceplans/2016/06/07/ritikashah11998-14/