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Term Life Vs. Whole Life Vs. Universal Life

8/25/2015

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Have you ever wondered about the differences between term and permanent life insurance options? Though every type of life insurance is designed to provide a death benefit, policies can differ in length of coverage, flexibility and timing of premiums, accumulation of cash value, and other factors. While specific details vary by company and policy, there are some basic differences between term, whole, and universal life insurance you should know:

Term Life Insurance
Term life insurance is designed to cover you for a stated number of years, transferring the risk of your death during that period to the insurance company. Term policies do not accumulate cash value and premiums are typically level or fixed for an initial period. Many people choose to purchase term policies to pay off a mortgage or provide for their family in the event of their unexpected death. Because term life insurance doesn’t accrue any value over time, the policy will expire at the end of the term. Generally, term policies have much lower premiums than whole or universal life, though premiums and benefits depend on factors like age, employment, and health status.

Whole Life Insurance
A whole life policy is intended to provide coverage for your entire lifetime – even if you should live to be over 100 years old. During your life, it accrues a cash value at a specified rate and provides a benefit at your death. The obvious advantage of a whole life policy is that it does not expire at the end of a term, and can help you protect and provide for your family at every stage of life. The main drawback is that these policies require more cash flow to fund.

Universal Life Insurance
Universal life, also known as flexible premium or adjustable life insurance, is a variation of whole life insurance. Like whole life, universal life is a permanent policy intended to provide a death benefit at any point in your life and build cash value during your lifetime. The major difference is that universal life policies are eminently flexible: Premiums, cash value, and death benefits can all be scaled up or down (within limits) based on your needs. However, this flexibility also comes with additional risks and you must be mindful to manage your premiums carefully to avoid letting the policy lapse and losing your coverage. This can be done by reviewing an in-force illustration prepared by the customer service department of the company the policy is with.  Because of the complexity of this type of insurance, we strongly recommend consulting with a qualified insurance expert who understands your overall financial situation before making changes to your policy.

Still have questions about different life insurance options? Give our office a call at 954-290-5142 or email to info@symfinancialgroup.com to speak with myself or one of our licensed agents who can provide personalized advice.  Personalized Life Insurance Quotes can be run from our website by clicking the button at the top of this post.

Brian Symanski - President
Symmetry Financial
4611 S. University Dr.
Suite 475
Davie, FL 33328
954-290-5142

Info@symfinancialgroup.com

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The Life Insurance Process Explained

8/17/2015

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What is Term Life Insurance?
Term insurance policies provide affordable, temporary coverage. This product is good for a certain term that you determine up front. The premiums are level for the time frame of your policy, for example 10, 15, 20, 30 years and will remain in effect for the duration of that period.

What is Return of Premium (ROP) Term Life Insurance?
You'll pay extra for a regular Term Life Insurance policy, but if you don't die after the guaranteed term period is over, you'll get back the money you paid in for the policy (the Insurance company invests your extra premium for capital growth, enabling them to return your premiums to you at the end of the premium period).

What is Permanent Life Insurance?
Permanent insurance, also known as Whole Life insurance, combines a term policy with an investment component (this option is more expensive than term life). The coverage lasts for the length of your life, requires yearly payments and can be borrowed against under certain circumstances.

How do I request a Life Insurance Application?
After running a Life Insurance Quote, select a company that meets your needs and request an application online.  One of our licensed representatives will call to help complete the application via phone or online.  You're always welcome to contact us
 to request an application as well.

Is a Medical Exam Required?
Yes. Most life insurance companies require a short medical exam, which can be completed in your home or another convenient location, by a licensed paramedical examiner at no cost to you. The medical exam generally includes the following:
    • Blood and urine specimen
    • Blood pressure reading
    • Height and weight measurement
    • Questions regarding your medical history, including medications, surgeries or other medical conditions.
    • Requests for physicians or hospitals that have treated you
(You may request a copy of the lab results from the insurance company)

How to get the best results from your Insurance Medical Exam?
    • Wear a short sleeve garment or one with sleeves that easily roll up for blood pressure measurements, etc.
    • Fast for at least 4 hours before your screening (8 hours is preferred). Drink lots of water the day before and the day of the screening to ensure the best lab results, best rating class and greatest savings to you.
    • Schedule a morning screening. If a weekday is not convenient, check with the screener to arrange an appointment for the weekend. The screening can take place at your home or work, whichever is most convenient for you.
    • Gather information regarding medical conditions, surgeries, medications or other treatments you may have had, as well as contact information for physicians and hospitals, to have on hand at your screening.
    • Avoid coffee, soda, tea or other products that contain caffeine for several hours before screening. Avoid smoking or chewing tobacco for at least 24 hours prior to the screening.
    • Avoid alcoholic beverages and nasal decongestants at least 24 hours prior to the screening.
    • Get a good night's rest before the screening. Schedule the screening at the least stressful time of the day for you, and refrain from strenuous exercise for 24 hours before your screening appointment.

When does my life insurance coverage begin?
For online applications, most companies will provide a temporary and conditional coverage at the completion of the medical exam provided a premium payment is made when the application is submitted for review (underwriting). 

This coverage is subject to the conditions outlined in the conditional receipt (temporary coverage). Most companies issue up to 250,000 while the application is in underwriting, if the first premium payment is included with the application. The coverage is only binding if the applicant is deemed insurable at the end of the underwriting process.

Replacing an existing policy? It’s very important to continue coverage until a new policy is approved at a satisfactory premium.

While you have the option to include payment with the application to receive the temporary and conditional coverage, it is not required.

Should I have coverage on my spouse, dependents, and / or children?
You may want to consider spouse coverage, even if they're not currently employed. The emotional and financial burden due to the premature death of a spouse can be significant, and you may find it necessary to cover medical or burial expenses associated with the loss of a spouse. 

Generally, you'll want to estimate that a non-working spouse or homemaker should be insured at a typical income replacement of at least $35,000. Insurance coverage for children is available through most companies and will require a small additional premium that will cover children in the family up to age 18.

**Note: It is recommended that a separate application be filled out for spousal insurance. 

Will your price quote always match the rate of the carrier I apply to?
No. While we strive to provide you the most accurate and realistic proposal based on your personal circumstances, each company has their own underwriting guidelines. Areas reviewed may include: medical history, height, weight, cholesterol, driving record, family history of heart disease/cancer, hazardous sports, etc. If you don't receive the rate quoted, the company may offer an alternative, which you may choose to accept or decline.

How will my "Health Class" and rate be determined?
Companies differ in the criteria they use to determine applicant health class and insurance rates. For instance, a person who rates as a standard health rate with one company, may rate as preferred with another.  Here are some general health class rating statistics:
    • Preferred Plus rates, the cheapest, typically go to 21% of applicants in the best health
    • 48% of applicants fit into the second highest health rate
    • About 27% of applicants will be assigned to the Standard Plus and Standard health class
    • Only about 3 to 4% of applicants will be denied coverage
Will my policy ever by canceled because of health or other reasons?
No! After the policy is issued, the insurance company CANNOT cancel it during the policy period for any reason, provided the applicant does not misrepresent their information on the application and continues to pay the required premiums.

How will my life insurance cost change after the guaranteed period?
Renewable insurance policies have a guaranteed maximum renewal premium as explained within the policy. At the end of your initial guarantee period, you can reapply for new coverage with the same company (or another company if you choose). Provided you quality, you'll begin a new period of guaranteed rates. This "re-entry" is not guaranteed, however, as the future of your health is also not guaranteed. Conversion privileges may apply for should you not qualify for re-entry, allowing you to convert your term life policy to permanent insurance coverage. Keep in mind that conversion terms and periods may very from company to company.


Getting Started
You can start by running your own Life Insurance Quotes by clicking 
here.  You may also contact us and we can run the Life Quotes for you.  Once you have an idea of the type of coverage you would like to put in place, one of our licensed agents can help you with starting the approval process.


Brian Symanski - President
Symmetry Financial
4611 S. University Dr.
Suite 475
Davie, FL 33328
954-290-5142
Info@symfinancialgroup.com



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    ​Life Insurance Blog

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    Brian Symanski - President
    Symmetry Financial
    4611 S. University Dr.
    Ste 475

    Davie, FL 33328
    SymFinancialGroup.com

    View my profile on LinkedIn

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4611 S. University Dr.
Suite 475
Davie, FL 33328
(954) 290-5142