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.

How Is a Term Insurance Policy Beneficial?

In order to understand how a term life insurance policy can be beneficial to us, we first need to understand, what it actually is? In simple terms, an insurance policy that insures you for a fixed term or a fixed period of time is called a term life insurance policy. Here, the term is your life and the insurer insures you with a financial backing against loss of life. Such an arrangement is necessary for people who are responsible for the financial needs of others and need to ensure that they keep them provided even when they are not around. Hence if you take up a term insurance policy and unfortunately there is loss of life, the sum insured would be paid to your family or beneficiary. This way you can ensure that you take care of their financial needs even after you are not with them. A typical term insurance is cheaper in comparison to other insurance products and hence do not even put much of a strain on your pockets.

Term insurance is a little different from any other life insurance product. Most life insurance products cover you financially for life as well as promise you a fixed sum of money at the end of the agreed period. In case of a term insurance you get the financial coverage, but no money is earned at the end of the insurance term. The benefit of a term insurance here is the fact that a term insurance is the cheapest form of life insurance. The choice here is between an insurance that gives you a better coverage at a lesser cost and a policy that costs you a lot more but ensures a fixed sum of money after a fixed period.

Term Insurance comes beneficial for people who don’t look at insurance as an investment, but as a security provider. Even when it doesn’t earn you anything at the end of the policy’s maturity, it provides security to your family and loved ones. Moreover, the fact, that it is the cheapest form of insurance; it doesn’t strain your pocket much and leaves with more scope to invest into other financial products. With some intelligent planning, one can have a good mix of investments in term insurance and other money earning products like ULIPS, mutual funds etc. The benefit of such a combination of financial products is that one has a good income from investments during his/her lifetime and in case of loss of life, the family and dependents get the secured amount from the insurance company.

However, one needs to be extremely careful in investing in any policy. A thorough research on all plans available is mandatory. Some points to consider before opting for a policy includes:

1. Reputation of the Insurance Company – one should go only for a reputed and government recognized company to be sure of getting the claims settled legally

2. Clams Settlement Ratio – Also ensure that the Company has a good track record to settling claims. Companies that take too long to settle claims or reject too many claims should be avoided.

The best policy to go for is always the one that gives you the maximum benefits for the least amount of premium. Go for a good balance between low premiums and required coverage amount.

A Life Insurance Policy and the Principle Reasons it is Required

A life insurance policy should be seen as a fundamental part of an overall investment portfolio. The principle reason for a life insurance policies existence is to provide for the future financial security of your loved ones in the advent of your early death. Many financial burdens will arise through ought your life time such as having a family, buying a car, paying off a mortgage, providing for your children s education, looking after your parents or even starting out in your own business.

With all these financial burdens in your life wouldn’t it be nice to know your family would have absolute financial security due to your life insurance policy? If you have a family who are basically reliant on you as the bread winner then it should be obvious that it is essential to have a life insurance policy in place.

Your immediate considerations before buying a life insurance policy should be what is currently happening financially and what is likely to occur in the not so distant future. You need to look if you have people who are financially reliant on you and consider how they would stand in the event of your death. You do not need your family struggling to pay off any debts you might have accrued as well as battling to create an income of their own. Although all this is not so pleasant to think about the typical funeral would cost 8 thousand dollars and upwards.

Another thing to consider is the immediate financial needs of your family just having enough to simply get by can be daunting without the principle bread winner. There is also the hidden cost of taxes the insured might owe after death. Anyone who is set up in a business must make sure there is enough capital to continue running the business. Considering all the above the case for a life insurance policy is very well justified.