You won’t find many people who find joy in planning their death. Although it is a topic many choose not to discuss it is very important. What will happen to your family, loved ones, friends, and all your personal possessions after you pass on? Will your family be left with debt and payments that they can not possible afford? Does your life insurance cover all of your funeral costs or just up to a certain amount. These are all valid questions and you need to know the answers. The cost of funerals are rising is the insurance benefits rising with them? I know just last year my grandfather passed and his insurance paid up to $9,000 for funeral costs. His funeral ended up costing over $14000 and it wasn’t even an extravagant affair. I don’t think people are really thinking about all the little details that go into planning a funeral for someone you love. When the time comes your so emotionally upset and they are telling you would you like the pine box for $4,000 or the nicely lined super deluxe box. You don’t want to rip off your recently deceased loved one so you spring for the nice one having no idea what it costs because you want the best. Its fine to want the best just make sure your family knows how much they have to work with.

Life Insurance provides you with insurance cover for a specific period of time (known as the policy’s “term”). Then, if you were to die whilst the policy is in force, the insurance company pays out a tax-free sum. If you survive to the end of the term, the policy is finished and has no residual value whatsoever. It only has a value if there is a claim – in that context it’s just like your car insurance!

Life Assurance is different. It is a hybrid mix of investment and insurance. A Life Assurance policy pays out a sum equal to the higher of either a guaranteed minimum underwritten by the policy’s insurance provisions or its investment valuation. The value of the investment element is then a reliant on the Insurance Company’s investment performance and length of time you have been paying the premiums.

Each year the insurance company adds an annual bonus to the guaranteed value of your life assurance policy and there is normally an extra “terminal bonus” at the end. Therefore, as the years go by your life assurance policy increases in value as the investment bonuses accumulate. The value of these bonuses are then determined by the insurance company’s investment performance. Once investment value has been assigned to the policy, you can cash it in with the insurance company. However, most people get a far better price for their life assurance policy by selling it to a specialist investment broker rather than cashing it in with the insurance company.

If you were to die during a Life Assurance policy’s term, the policy pays out the higher of either the guaranteed minimum sum or the accumulated value of the annual investment bonuses. However, if you are still living when the policy terminates, you usually get a bigger payout. This is because with most insurance companies, an additional terminal bonus is awarded.

There is a also a specialised form of life assurance called “Whole of Life”. These policies remain in force for as long as you live and as such, have no preset term.

There is also a practical difference for the internet user. Whereas you can buy life insurance online, the Financial Services Authority view life assurance as fundamentally an investment product. As such they believe it is best suited to being sold by a Financial Adviser with advice based on the Advisors full understanding of your personal details. Therefore, you will be unable to buy life assurance online. However, you can use the internet to find a suitable financial adviser with whom you can meet and discuss your requirements.

What are Life Insurance polices and Life Assurance policies used for?

Life Insurance is usually a focal point of the family’s financial protection. It is ideally suited to ensure that known debts such as a mortgage, are repaid in full in the event of the policyholders death.

When it comes to providing a lump sum for general use in the event that the policyholder were to die whilst the policy was in force, either life insurance or life assurance can be used. The differences are that with life insurance the size of payout would be preset whereas with life assurance it would depend on the guaranteed minimum and the insurance company’s investment performance. But remember, at the end of the policy’s term life insurance is worthless, whereas life assurance should payout a sizeable investment sum. In this context Life Assurance seems far more worthwhile but in practice more people elect for life insurance. Why? It’s a matter of cost. Life Insurance is considerably cheaper than Life Assurance. Furthermore, in recent years, investment returns on Life Assurance policies have fallen significantly and many insurance companies have placed penalties for cashing in policies early. This has adversely affected the resale value of Life Assurance policies.

Finally, if you want a product to provide a lump sum on your death whenever that is with a minimum payout guaranteed, you’ll probably elect for Whole of Life insurance. It’s really a form of lifetime investment with the benefit of a guaranteed minimum. They’re particularly useful for Inheritance Tax Planning.

Your life insurance quote will be less once you’ve got one year smoke free under your belt. I had a renewed sense of self-confidence and hope for my health, auto and life insurance needs. Firstly, a Life Insurance policy combined with Critical Illness cover will work out significantly cheaper than buying two separate policies.

This agreement is funded buy a small business life insurance policy specially bought for that purpose. However, in the author’s view it will take more than a decade to get people covered by life insurance above the 50% level. = Life Insurance Can Help Pay for the Care and Education of Your Children = If you are a family with ’special needs’ children, you may be paying for special tutoring or child care.

To make sure that you will be able to pay it back at the end, you take out an endowment policy with a life insurance company. These policies will enable you to convert your current term coverage to permanent life insurance at a later date, and generally a medical exam is not required.

Life Settlement Regulations As of June, 2003, eighteen (18) states have enacted statutes addressing the sale of life insurance policies insuring non-terminally or chronically ill individuals and an additional seventeen (17) states have laws that only regulate the sale of life insurance policies insuring terminally or chronically ill individuals.

Life insurance buys you the time you need. Other Options If you come to the conclusion that selling your life insurance policy is not for you, there are other options (though none that would provide you with such a large lump sum). The basic idea behind life insurance is that if you die prematurely, there will be a pot of money there to take care of your loved ones.

Senior Life Settlement Industry focus all the effort on senior citizens, who possessing an unwanted or unneeded life insurance policy, decide to sells life settlements to a third party company instead of surrendering it back to their default life insurance company. For those who are not terminally ill, selling the life insurance might be a good idea for a number of reasons. As a Life Insurance person, I always try to put myself in a position to win.

Not the same way you would commit to a life insurance policy premium. Also referred to as second-to-die life insurance, common abbreviations are SWL for survivor whole life and SUL for survivor universal life. These jobs fall under Civil Service and, as such, offer excellent benefits, including generous health plans, thrift savings plans, life insurance, annual leave, sick leave, and a student loan repayment plan.

In a guaranteed or non-profit endowment policy, the life insurance company agrees to pay the amount of money you borrowed at the end of the term (or on your death, if you die before then) and does no more than that. ‘I’m in Hardware’ ‘I’m a Plumber’ ‘I sell life insurance and used cars’, thinking about a Joint Life Insurance Policy.

Come and type in ‘life insurance quote’, notify your husband’s employer and file for any benefits owed you, such as pension income, life insurance and health insurance coverage. Well, there is a reason you are interested in purchasing a term life insurance policy in the first place.

The Jamesons own two cars, a modern home and have some savings. The house is mortgaged to the bank and the cars have been financed through the bank’s Motor Finance division.

Sean was already running late for the regular Monday morning management meeting when he received a call from the bank’s broker. He hastily agreed to a meeting with the broker.

The meeting took place at the Jameson’s home in the early evening. Sean and Cindy were brought face to face with the bare facts. If anything happened to Sean, the family would be all but destitute. Their savings would last a year at most and Cindy would probably lose the house and cars. The private school would have to go.

This huge risk could be covered by a life insurance policy. The needs analysis’ revealed that a capital sum of at least $1 million will be required as an investment to ensure that the family could maintain their lifestyle in the event of his death. The broker’s plan will provide the required capital. A part investment, part life cover mix. In just 25 years the premium of $1000 per month will have turned into an illustrated $1 million and the family will be protected. The premium will increase by 5% each year. In addition, the policy would include disability cover at no charge! The broker completes the form, Sean signs and undergoes the required medical tests.

The policy is known as a universal life’ policy. At the beginning, a significant portion of the premium is used to cover life insurance, and the remainder (after expenses) is invested. As the investment portion grows, the requirement for life cover diminishes.

The life insurance company uses mortality tables to calculate the risk of Sean dying within the next year. These tables show the proportion of people that die at each age. Between the ages of 40 and 41, roughly 0.2% or 2 out of every 1000 people of that age die. The statistics vary from country to country, by gender and by race. For a white male the risk is 0.25% or 2.5 per 1000. Females have a much lower chance of dying! As the age increases, so does the risk.

Being healthy, Sean’s risk of dying is actually less than that of the general population.

The risk of death for the first year is 0.25% or 1 in 400. The cost

The suicide clause is part of what is called “Standard inclusions”

two other major ones are:

The incontestability clause, where for a certain period, the insurance company has the right to void a policy because they discover fraud, usually 2 years, after the 2 year period, the insurance company cannot void a policy for any reason other than failure to pay the premiums.

The Free look rule, where the insured has the right to look over the policy and still has one chance to return the policy and request a full refund, the time is usually 10 to 20 days after the executed policy is delivered to the policyholder

What is life insurance?

 Life Insurance is an agreement that guarantees payment of a stated amount of monetary benefits at the end of a specified term or on the death of the life insured. Life Insurance provides for financial security in the event of death or on the inability to earn due to physical disabilities. Taking out life insurance responsibly can help you live the life you want to and protect your family after you’re gone. Without life insurance many people would be left destitute in the event of an unexpected disaster. Besides providing for financial security in the case of one’s untimely death, it can be used to accumulate a kitty for your old age, systematically build assets, for funding your child’s education and also for saving on taxes.

Let us study the roles of life insurance in detail:

Role 1: Life insurance as an “investment”

Insurance is an attractive option for investment. While most people recognize the risk hedging and tax saving potential of insurance, many are not aware of its advantages as an investment option as well. Insurance products yield more compared to regular investment options, and this is besides the added incentives (read bonuses) offered by insurers.

In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured.

Now, let us compare insurance as an investment options. If you invest Rs 10,000 in PPF, your money grows to Rs 10,950 at 9.5 per cent interest over a year. But in this case, the access to your funds will be limited. One can withdraw 50 per cent of the initial deposit only after 4 years.

The same amount of Rs 10,000 can give you an insurance cover of up to approximately Rs 5-12 lakh (depending upon the plan, age and medical condition of the life insured, etc) and this amount can become immediately available to the nominee of the policyholder on death. Thus insurance is a unique investment avenue that delivers sound returns in addition to protection.

Role 2: Life insurance as a “risk cover”

First and foremost, insurance is about risk cover and protection - financial protection, to be more precise - to help outlast life’s unpredictable losses. Designed to safeguard against losses suffered on account of any unforeseen event, insurance provides you with that unique sense of security that no other form of investment provides. By buying life insurance, you buy peace of mind and are prepared to face any financial demand that would hit the family in case of an untimely demise.

To provide such protection, insurance firms collect contributions from many people who face the same risk. A loss claim is paid out of the total premium collected by the insurance companies, who act as trustees to the monies.

Insurance also provides a safeguard in the case of accidents or a drop in income after retirement. An accident or disability can be devastating, and an insurance policy can lend timely support to the family in such times. It also comes as a great help when you retire, in case no untoward incident happens during the term of the policy.

With the entry of private sector players in insurance, you have a wide range of products and services to choose from. Further, many of these can be further customized to fit individual/group specific needs. Considering the amount you have to pay now, it’s worth buying some extra sleep.

Role 3: Life insurance as “tax planning”

Insurance serves as an excellent tax saving mechanism too. The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. Under Section 88 of Income Tax Act 1961, an individual is entitled to a rebate of 20 per cent on the annual premium payable on his/her life and life of his/her children or adult children. The rebate is deductible from tax payable by the individual or a Hindu Undivided Family. This rebate is can be availed upto a maximum of Rs 12,000 on payment of yearly premium of Rs 60,000. By paying Rs 60,000 a year, you can buy anything upwards of Rs 10 lakh in sum assured. (Depending upon the age of the insured and term of the policy) This means that you get an Rs 12,000 tax benefit. The rebate is deductible from the tax payable by an individual or a Hindu Undivided Family.

But many people make the mistake of burdening themselves with too many life insurance policies to the detriment of the quality of their lives while they’re alive.

Keep the following in mind when buying life insurance:

• The best insurance for your family is having a roof over their heads that no-one can take from them after you die. Before putting large amounts of money into a policy, pay off your debts and increase your assets.
• Rather than taking out a number of life insurance policies, take out one good one with a reputable company that has a sound track record.
• Make sure you don’t buy too little or too much insurance. As a rule of thumb, your policy should pay out 15 to 30 times your annual income as capital when you die.
• If you are financially dependent on your partner, make sure that there is adequate life insurance to cover your and your children’s needs should your partner no longer be able to generate an income.
• When taking out protection against loss of income, you must be sure that you can maintain the same standard of living as when you were working.
• Protect yourself against debt. People to whom you owe money have first claim to your assets. Make sure there is life insurance to pay off your house, car, etc when you die.
• Your premiums will depend on your age (the younger you are, the less you will pay), your state of health (the healthier you are, the less you will pay) and your lifestyle (if you smoke, you will pay more). Be completely honest with your insurers. Many people have had their claims rejected because they did not tell the broker about their smoking habit or a particular health problem.
•   Be specific about naming a beneficiary – the person the money will be paid to after you die. If you do not name a beneficiary, the money will be paid into your estate and it could take months before your family is able to have access to the money.