The good news is numerous methods exist for finding life insurance leads. As for which of these methods is best, the answer depends on the individual agent However, the fact that company leads have no up-front charges does not mean you do not pay for them Networking with other professionals provides a great way to procure life insurance leads without cold calling, relying on overworked company leads or spending your own money Suppose the personal trainer in your networking group is guiding a client through a set of bicep curls when the client makes an offhanded comment about a recent medical scare, and then says his kids would not be able to afford college if he were gone.
Naming who should get the life insurance money after you die sounds simple, but designating beneficiaries can get tricky.
Mistakes are common, financial advisers say -- and they can be heartbreaking and expensive. When mistakes are made "you're not creating problems for you," says Keith Friedman, principal of FBO Strategies, an estate planning and insurance firm in Stamford, Conn.
"You're creating problems for the people you leave behind." > 1. Naming a minor child Life insurance companies won't pay the proceeds directly to minors. If you haven't created a trust or made any legal arrangements for someone to manage the money, the court will appoint a guardian, a costly process, to handle the proceeds until the child reaches 18 or 21, depending on the state. Instead, you can leave the money for the child's benefit to a reliable adult; set up a trust to benefit the child and name the trust as the beneficiary of the policy; or name an adult custodian for the life insurance proceeds under the Uniform Transfers to Minor Act.
Consult an estate attorney to decide the best course. 2. Making a dependent ineligible for government benefits Naming a lifelong dependent, such as a child with special needs, as beneficiary puts the loved one at risk for losing eligibility for government assistance.
Anyone who receives a gift or inheritance of more than $2,000 is disqualified for Supplemental Security Income and Medicaid, under federal law. Work with an attorney to set up a special needs trust, and name the trust as beneficiary. A trustee you appoint will manage the money for the dependent's benefit. Here's more on .
3. Overlooking your spouse in a community-property state Generally you can name anyone with whom you have a relationship as beneficiary, even a secret lover. "Life insurance is not a judge of someone's morals," Friedman says. However, in community-property states, your spouse typically would have to sign a form waiving rights to the money if you designate anyone else as beneficiary.
Here are the community-property states: • Arizona • California • Idaho • Louisiana • Nevada • New Mexico • Texas • Washington • Wisconsin • Alaska and Tennessee are opt-in states where spouses can choose to participate in the community-property system.
4. Falling into a tax trap Life insurance death benefits are generally tax-free -- except when three different people play the roles of policy owner, the insured and the beneficiary. In that case, the to the beneficiary, says Amy Rose Herrick, a Chartered Financial Consultant and life insurance agent with offices in the U.S. Virgin Islands and Tecumseh, Kan. For example, a wife owns a life insurance policy on her husband's life and names their adult daughter as beneficiary.
The wife effectively is creating a gift of the policy proceeds to her daughter, Herrick says. The person who makes the gift -- the wife -- is the one who would be subject to the tax, if the amount of the gift exceeds federal limits. The problem could be avoided in most cases by having the husband own the policy, insuring himself.
However the situation can get tricky in community-property states. Consult a financial adviser to decide the best way to structure the policy. 5. Assuming your will trumps the policy A life insurance policy is a contract. Regardless of what your will says, the life insurance money will be paid to the beneficiary listed on the policy. That's why it's important to contact your insurer to change your beneficiary, if needed. See more information on 6. Forgetting to update "Designating beneficiaries are not 'set it and forget it' events," says Tara Reynolds, vice president at MassMutual.
You should review your policy every three years and after major life events, such as marriage, having children or divorce. Change the beneficiaries when circumstances change. Unfortunately, many people forget to do so. "Half of my practice is second or third marriages," says Peter Blatt, a tax attorney and financial adviser in Palm Beach Gardens, Fla.
"It's not uncommon to find the ex-spouse still listed as beneficiary on the life insurance policy" when reviewing a client's portfolio. 7. Neglecting details Life insurance beneficiaries: By branch or by person? You want to leave life insurance money to your kids and grandkids, and you want it divided evenly.
But how? There are two ways of distributing the money -- per stirpes and per capita. You can specify either method on the life insurance policy, and both are acceptable options when naming beneficiaries, says Ed Graves, a professor of insurance for The American College in Bryn Mawr, Pa. "But the possible outcomes can be drastically different from one approach to the other." Per stirpes means the proceeds are divided by branch of the family, and per capita means they are divided by head.
Say, for instance, you want to leave the money to your two children, Bob and Sue, or to your grandchildren if Bob or Sue predeceases you. Bob has three children and Sue has one child. Now suppose Bob dies before you do. Under per stirpes, half the money would go to Bob's three children, and half would go to Sue. Under per capita, the money would be divided equally among Bob's three children and Sue; each would get 25 percent.
Choose the distribution method to match your intentions. Graves recommends you diagram the possible scenarios. "Complex situations should probably have an attorney involved," he adds. Be specific when you name beneficiaries. Instead of "my children," list their names, Social Security numbers and addresses, says Ed Graves, a professor of insurance at The American College in Bryn Mawr, Pa.
Otherwise, "the insurance company has to launch a search and that can take a lot of time," Graves says. When naming multiple beneficiaries, decide whether you want the money divided "per stirpes," which means by branch of the family, or per capita, which means by head.
(See sidebar.) 8. Staying mum "The most important thing is to tell someone so they know you have a life insurance policy, where it is and how to find it," says Joshua Hazelwood, vice president at MassMutual. Open communication with beneficiaries now can save a family from chaos later - or even worse, never claiming the benefit.
9. Giving money with no strings attached Naming your young-adult children as beneficiaries without setting any conditions for how the money is dispersed can be a setup for financial failure. How many 18- or 21-year-olds can handle a huge influx of cash? One way is to set up a trust with specifics for how the money can be released and what it can be used for until the young adult reaches a certain age. "It allows me as a parent to instill what I feel is valued in my absence," Friedman says.
"I don't want to leave my children with millions of dollars when they're 18 with unfettered access." Insurers are beginning to introduce policies that let you arrange for the death benefit to be paid out in installments.
Minnesota Life Insurance Co.'s new indexed universal life product, Omega Builder IUL, includes that option, calling it an "income protection agreement." 10. Naming only a primary beneficiary "Most people just think they're going to make their spouse beneficiary, but don't take into account the spouse might predecease them," Friedman says. "It's conceivable that something would happen to you and your spouse together." Blatt says he even sees cases where people fail to name any beneficiaries.
When there is no living beneficiary, the benefit typically goes into the estate and is subject to probate. That leads to two complications. One, heirs might face a long wait to get the money. Two, the life insurance proceeds, which normally would be protected from creditors, can now be open to creditors' claims. Advisers recommend naming secondary and final beneficiaries. If the primary beneficiary dies before you do, then the money passes to the secondary beneficiary. If the secondary beneficiary has passed away when you die, then the death benefit goes to the final beneficiary.
• Marlen Are insurance companies able to change the amount the potential pay out can be? When the plan was originated for a certain amount years later the company has reduced how much the payout will be in the event of passing.
» • Bobo Fillimin Thanks Greg. You're kind. » • GuyGreg Having an SSN isn't a prerequisite for being a beneficiary, it's just a good way to help the insurance company find them (and be sure it's the person you intended). It's perfectly fine to name a beneficiary and not provide an SSN--just provide the company everything else possible--llike a correctly-spelled full name and address, date of birth, and phone number.
» • Jhonson Barrera If I have my life insurance. I want to name my mother as primary beneficiary but she doesn't have social security number because she is from another country, what can I do? » Copyright 1984-2018 Quinstreet, Inc. All rights reserved Insure.com is a part of the Insurance.com family Disclaimer: The insurance products on Insure.com are from companies from which QuinStreet may receive compensation. Compensation may impact where products appear on Insure.com (including the order in which they appear).
QuinStreet does not include all insurance companies or all types of products available in the marketplace. Copyright 1984-2018 Quinstreet, Inc. All rights reserved Insure.com is a part of the Insurance.com family Disclaimer: The insurance products on Insure.com are from companies from which QuinStreet may receive compensation. Compensation may impact where products appear on Insure.com (including the order in which they appear). QuinStreet does not include all insurance companies or all types of products available in the marketplace.
best way to set up life insurance - How to Buy Life Insurance [Easy Step
Nothing can fully protect your family and loved ones from the unexpected. But life insurance is among the best ways to help the people you love get back on their feet more quickly when you’re no longer able to provide for them. A life insurance policy can present your family with the financial support necessary to settle your debts, pay for funeral arrangements or care, execute any requests and even set up a future inheritance.
Optional riders can provide additional peace of mind, allowing you to enhance your policy to cover specific anticipated needs. That way, your loved ones can more easily focus on healing and life without you.
Compare quotes from 16 life insurance companies side by side. • Compare multiple providers • Calculate how much coverage you need • Get a quote in 2 minutes Why we like: Policygenius Compare quotes from 16 life insurance companies side by side. • Get the coverage amount and term that's right for you. • Choose between term or whole life insurance.
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Many younger adults decide to buy life insurance because they have assumed major responsibilities—marriage, a house, starting a family.
Older folks have the same responsibilities: dependent spouses, children and grandchildren, and home mortgages. Turning 65 doesn’t mean you’ve outlived your use for life insurance coverage.
Which means it’s good news is that you can still find life insurance at age 65 and even when you’re older. Can You Buy Life Insurance After Age 65? Luckily, many life insurance companies offer policy choices to people of almost any age, including life insurance for seniors. Some insurers offer term policies to people in their seventies and offer whole life policies to those up to age 85, so it may be easier than you think to find a life insurance policy that offers you peace of mind.
While most people can purchase a life insurance policy, it’s important to learn about the different kinds of policies available to people 65 years of age and older. That way you can understand all of your available options and choose the right type of life insurance for yourself and your loved ones, no matter your age.
Why Consider Buying Life Insurance? The first thing you need to decide is how you and your loved ones could benefit from life insurance coverage. Once you have a grasp of what you want, and how life insurance for seniors will benefit you, it will be easier to choose the best senior life insurance for your situation. Dependents who rely upon you for income Do you know how you would provide for your loved ones if you pass away? This is a question that people of any age might have to wrestle with, obviously, but you may have particular concerns if a dependent suffers from a disability and relies upon you for income or care, or if your spouse is no longer of working age.
Debt Large debt—and many reach retirement age with debt—could reduce the amount your family would inherit from an estate. If your loved ones couldn’t handle the debt without you, they may lose important assets. Could your family pay your mortgage or other obligations without your support?
Would your estate lose a lot of value if it first had to pay debts? If so, life insurance coverage may help. Business or farm ownership Inheritance taxes or family squabbles could force your loved ones to liquidate a farm or business after the owner passes away.
For instance, you could have most of your money tied up in assets needed to run your farm or small business. In other cases, you might want to leave your business to one child but still give other children an inheritance. The proceeds from a life insurance policy could solve some of these problems, and bring you peace of mind in your old age. Concerns over final expenses These days, funerals and burials can cost several thousand dollars, and your survivors may find themselves caught between honoring you in the way they want to and the potential financial burden a funeral could impose on them.
If you and your family don’t have a lot of cash, a final expense policy can help your loved ones plan a dignified burial and funeral without added stress. Heirs with an immediate cash need Estate planning can help your heirs avoid a costly and time-consuming probate process. At the same time, keep in mind that beneficiaries can typically collect the death benefit from a life insurance policy very shortly after providing the insurer with a death certificate.
So if you have a complicated estate, or if there’s the potential for legal challenges, you could help your spouse and children avoid serious financial problems by guaranteeing them a life insurance death benefit. Worthy causes As some folks age, they find they want to create a legacy by donating money to a favorite charity or other worthy cause. You can donate some or all of the proceeds from a life insurance policy to these organizations.
Transfer wealth to the next generation or a spouse One of the biggest advantages of life insurance is that the death benefit isn’t considered taxable income. You can use life insurance to leave them money even if you’ve reached retirement age with only modest assets. Finally, while people consider buying life insurance primarily for the death benefit that beneficiaries receive when they pass away, you might also take advantage of the other benefits that some kinds of life insurance offer.
Which Seniors May Not Need a Life Insurance Plan? In most cases, life insurance pays out cash directly to beneficiaries and doesn’t generate any additional taxes.
Some kinds of life insurance may also grow a cash value that you can borrow against or sell if you need the cash as you age. In return, you have to pay premiums. Depending upon your current life expectancy, you may find that you have to pay premiums for a long time before you pass away. You could also outlive your term policy.
That could be a great thing, but if you do outlive your term, you may not get a payoff from for your term policy. For example, says that women who are turning 65 may expect to survive until at least 86.
If you are that average woman, and you buy 20-year term at age 65, you’re likely to survive the policy. Term policies do offer less expensive premiums, but make sure your term policy is convertible to permanent life insurance. That way, if you get close to the end of your term, you can always switch your life insurance coverage to whole or universal life insurance. The policy might cost a little more than non-convertible policies, but it will give you a way to hedge your bet.
Finally, in some cases, your beneficiaries may not really need the death benefit, meaning that you could find other uses for the money you might otherwise spend on premiums. For instance: • You might invest the money or use it to payoff debts. This might give you a more comfortable retirement and improve the health of your estate more than life insurance. • You could set up an emergency fund with one or more of your beneficiary’s names on it, so they can withdraw money even faster than they could access the death benefit.
• You can set things up so that your financial accounts and even the title in your home automatically transfers to your heirs upon your death. Look into payable-on-death, or POD, accounts. • You might consider long term care insurance or an annuity. Both of these financial products may help your family because they provide money for your future care needs or extra income, so you don’t have to rely upon your savings or adult children so much.
Some life insurance policies may have living benefits too, so you should consider the pros and cons of using life insurance to plan for certain situations.
People may simply buy life insurance as a way to transfer wealth easily to the next generation. Few beneficiaries ever regretted having their name on a life insurance policy.
Still, you may find other options that work better for your family. If your finances are complex, you might speak with a financial planner who specializes in helping people with retirement and estate planning for advice. While it’s admirable to want to leave money behind, you should also consider your own retirement finances. Affordable Life Insurance Over 65 Years of Age Before you decide if you should consider buying life insurance for senior citizens, you should also learn more about available options.
If you purchase a policy with level premiums and benefits, you don’t have to worry about premium increases or coverage decreases as you age, while cost of new policies will most likely increase. With everything else being equal, expect for new policies to increase at least eight percent for every year of age.
You’re not going to enjoy the same cheaper rates at the age of 65 as your 55-year-old spouse or 35-year-old child. That’s why it’s so important for senior citizens to compare premiums and benefits from different companies and for different kinds of coverage.
Typess of Life Insurance Policies for Seniors These are the types of policies that life insurance companies usually offer senior citizens: Term life insurance: At age 65 or above, if you’re in relatively good health, you should find companies who will at least offer you 10-year or even 20-year term insurance.
Because insurers offer lower life insurance rates for term insurance, you may be able to afford more coverage than you could with permanent life insurance. Term won’t grow a cash value or cover you after the term ends, however, so you may have to pay much more for life insurance or go without if you age beyond the term of your policy.
If you believe that your need for a lot of coverage is temporary, term provides you with a budget-friendly option. Whole life insurance: With this type of life insurance, you can enjoy coverage for level premiums for the rest of your life, as long as the premiums get paid.
Permanent policies cost more than term, but you won’t have to worry about your policy expiring if you age beyond the term.
In addition, these policies allow you to grow a cash value that earns returns in a tax-advantaged way. That means that whole life may provide you with an asset you can use while you are still alive. You may also be able to pay your policy off after a few years, so you won’t have to worry about making payments when you are older. Universal life insurance: Universal life is another kind of permanent life insurance that doesn’t expire after a term. It’s more flexible than whole life because you can vary your premiums from month to month within limits.
Any money that you pay that’s in excess of what the life insurance company needs to fund your death benefit goes into a cash account, and this can earn returns. People may choose universal life because it’s more flexible than other options and can serve as a savings vehicle in the long term. In some cases, you can even use the cash account to make premium payments as you age.
Final expense insurance: Often called burial policies, these are whole life insurance policies with fairly small death benefits.
Typically, the face amount ranges from about $5,000 to $25,000. These are mostly meant to provide your beneficiaries with cash for funeral expenses and other associated costs that occur at the end of life. At the same time, the beneficiaries are free to use the cash in any way they choose, just as with other life insurance.
For instance, if you name your daughter as the beneficiary of a $25,000 policy, she might spend $10,000 on final expenses and still have $15,000 to spend or save. Options in Term Life Insurance for Seniors If you hope to have coverage for several years, you’ll probably be happiest with level premiums and a term that lasts as long as you need it.
To get lower premiums, you can even buy annual renewable term. You may see this type of policy called guaranteed renewable. You could have the option to renew your term policy every year or every few years. The takeaway here is that you should look for level premiums if you want to be sure you pay the same premiums for the life of your policy.
Guaranteed renewable only means that the insurer has to allow you to renew your policy, but they may increase premiums. Guaranteed renewable policies may appear a lot cheaper when you first buy them, but premiums could increase rapidly. Buying level premium life insurance will keep your premiums predictable. Guaranteed Acceptance, Fully Underwritten, and No Medical Exam Life Insurance You have probably seen advertisements for senior life insurance that you can buy without a medical exam.
You may have even seen life insurance companies that will guarantee acceptance without having to answer any health questions at all. If you do need a medical exam, the life insurance company will pay for it. Most of the time, these life insurance medical exams are quick and non-invasive.
In many cases, the insurer will even send a paramedic to your home or office to collect samples, weigh you, and so on. In order to understand these application options, consider some of the pros and cons: Guaranteed acceptance/Guarantee issue/Guarantee life insurance: While some people, especially those with pre-existing conditions, may benefit from not having to answer any health questions or take an exam, everybody should know that life insurance companies charge more for the same amount of coverage because they factor in the risk.
In addition, these kinds of policies always have waiting periods that the insured person must survive before they will pay the full face value. If the insured person dies before a two- to three-year waiting period, the policy will usually refund premiums with interest or pay some portion of the face value. No medical exam: Sometimes you may see these kinds of policies referred to as simplified issue or no-exam life insurance.
While you don’t need a medical exam, you will probably need to answer some medical questions. The life insurance company will probably verify your answers from sources like your state’s Department of Public Safety or the Medical Information Database. If you have certain pre-existing health conditions, the insurance company may charge you more or even decline you. Still, you can get an immediate death benefit and lower premiums than with guaranteed acceptance policies.
Fully underwritten: In this case, the insurer will require a health application and a medical exam. This takes a bit longer, but if you’re fairly healthy and want a large amount of coverage, you should look for a fully underwritten policy.
You have a chance to get offered lower rates and will always have an immediate death benefit if accepted. Which kind of application should you look for? Depending upon the kind of life insurance and amount of coverage, you may not have all of these choices. Obviously, insurance company requirements for underwriting will increase as the face value of the policy gets bigger and as you age. By agreeing to underwriting, you also have the chance to get lower premiums and better benefits.
Any relatively active senior should consider a no medical exam life insurance policy over guaranteed acceptance. Guaranteed acceptance policies offer people who are already diagnosed with serious diseases or who need personal care a chance to buy coverage, but many seniors can get cheaper life insurance rates, more coverage, and better benefits if they answer health questions on a short application.
If you’re not sure about your own situation, you might speak with a life insurance agent. Agents can look at their underwriting guides and applications to provide you with advice about the best choice. Living Benefits Payment Riders The primary reason that most consider buying life insurance is to provide their beneficiaries with cash from the death benefit.
But permanent policies may also accumulate a cash value. These days, many companies offer that can offer you peace of mind when you need to handle certain circumstances while you are still alive. These riders may vary by state, but they typically pay out some portion of the death benefit if the insured person has been diagnosed with a terminal illness and isn’t expected to survive more than 12 months.
The policy pays the insured person and not the beneficiary, and these benefits are intended to help with medical and personal care expenses. Any money that is paid out will reduce the death benefit. At the same time, many families find that they benefit from having this extra income more while the insured person is still alive and needs care than they would after that person passes away.
Some insurers may also offer other riders to help pay for long term care, critical illnesses, and accidents. While the living benefits rider may be included with the policy, these other riders generally cost extra. How to Use Money from Your Life Insurance Policy If you buy a permanent whole or universal life insurance policy, you can use the cash value by borrowing against it. You can also simply surrender the policy for its cash value. If you borrow against the policy, you have a chance to pay the loan back, so beneficiaries can still inherit the full cash value.
Otherwise, the death benefit may be reduced by the amount of the loan. Still, this is one way you can use your permanent life insurance as an asset and not just for coverage on your life. People over 65 who have permanent policies or term life insurance policies that are guaranteed convertible to permanent life insurance may also consider looking for a senior life settlement.
Life settlement brokers handle these transactions by shopping around for the best offer. Depending upon the insured person’s age and life expectancy, investors may offer to buy the insurance policy for some portion of the face value. You may get more money by selling your policy in a senior life settlement than by surrendering it for the cash value. Terms and state rules might vary, but you usually have to be at least 65 of age and have held the policy for a minimum of two years to qualify.
How Much Does Life Insurance for Seniors Cost? At this point, you should understand that life insurance premiums increase with age. Premiums might also vary because of location, gender, and certain lifestyle factors. Commonly, smokers pay more than people who do not use any tobacco.
Term costs less than permanent policies because the life insurance company takes less of a risk. Of course, life insurance companies are free to set their own rates, so it’s always wise to shop around to find a company that will offer you competitive quotes. Even a seemingly minor difference in rates can add up to hundreds or even thousands of dollars as you age if you keep your coverage for many years 10-Year Term Life Insurance Sample Premiums These are some sample term rates that are intended as informational.
Since life insurance premiums for seniors can vary so much, you should not assume these premiums will represent your own quotes. These monthly are for a 65-year-old woman who doesn’t smoke and wants to buy a 10-year term life insurance policy with different death benefit amounts: $100,000: $38.25 $500,000: $148.80 These samples are for a 75-year-old woman who also does not smoke and wants a 10-year-term: $100,000: $115.60 $500,000: $454.57 Whole Life Insurance Sample Premiums These sample quotes for for guaranteed acceptance and no-medical-exam whole life policies that are mostly intended as final expense policies: Guaranteed acceptance $10,000 : $80.00 No-medical exam $10,000: $47.43 These examples show that you will pay almost twice as much if you’d rather not answer health questions.
Insurers may offer as much as $50,000 in whole life without a medical exam, but you will almost certainly need to have an exam for greater amounts of coverage. If you are relatively healthy and agree to a medical exam, you could enjoy lower premiums than the ones listed above and qualify for more coverage. Senior Life Insurance Payment Options Most life insurance companies will give you the option to pay monthly, quarterly, or annually. Typically, insurance agents and companies will advise you to set up an automatic bank draft to keep you from accidentally forgetting to pay your premium and allowing your policy to lapse as you age.
If your policy does lapse, you will almost certainly have to pay higher premiums to reinstate your policy. If you’ve developed a medical condition since you first bought your life insurance coverage, you may have trouble even getting accepted for adequate insurance. Some life insurance companies may offer you a discount if you set up automatic payments too.
Who Pays Senior Life Insurance Premiums? Some senior citizens pay their own policy premiums, but that’s not always the case. Very often, seniors name one or more of their adult children as beneficiaries, and these grown children may be in a better financial position to pay premiums than a senior citizen on a fixed income.
Since the main reason that people purchase life insurance is to provide a death benefit for heirs, the beneficiaries are of course, the ones who will benefit.
In many cases, adult children offer to pay premiums for the life insurance policy that covers their parents. If you’re an adult child who is researching life insurance options for your elderly parents, you might discuss this option with them. Compare, Compare, Compare If you decide that you and your family can benefit from life insurance, you should compare different kinds of policies. You should also compare premiums from different companies for the same type of coverage.
These days, it’s pretty simply to obtain free online quotes on life insurance for seniors. You might also work with a life insurance agent who has experience working with seniors: These professionals can consider your requirements, preferences, and budget in order to provide you with good solutions.
You know that life insurance for seniors will cost more for older people than for younger people. That doesn’t mean that you need to overpay or think that you won’t be able to afford the premiums. And it can be one more way that you secure peace of mind for yourself and your loved ones.
What the Life Insurance Companies DON'T Want You to Know