No More Life Insurance

This afternoon I received a call from a 70 year old women. She was referred to me by a major life insurance carrier, after calling them to discuss her life insurance plan. She and her husband (74) bought two $50,000 term life insurance policies 15 years ago. As their 15 year policy anniversary approaches, they received a letter stating that if they wish to keep their policies beyond the term period, that their policy would automatically convert to a whole life insurance policy and their new premium would be $1400 a month (each). Without the life insurance policy, if either were to pass away, the other could no longer afford to stay in their small condo alone.

With a history of cancer and her husband with a recent triple by-pass surgery, they would now be considered uninsurable. Needless to say, the woman was very upset - not at her agent; but herself for spending over $30,000 in premiums and having nothing to show for it.

Term insurance is a "temporary problem solver". Most term policies do not result in a claim, but rather as a policy lapse due to non payment (as you get older it becomes too expensive to keep - for most people).

Life insurance is designed to provide "dollars". Term insurance is ideal for short term business notes, having extra coverage while the kids are approaching college years, alimony years or any other situation that is short lived. Life insurance is also used to pay off debt, a mortgage or most commonly used to replace a lost income. In these situations you need permanent coverage, whether that be whole life or universal life coverage. For more consumer friendly information about life insurance, disability income, medicare supplements or long term care, visit the insurance information institute at www.iii.org

For life insurance policy reviews, comparisons or quotes, click here

AIG to sell American General Life

During the past several weeks we have all seen tremendous swings in US financial markets, one of which was the bail out of the world's largest insurance companies AIG. As many of you may be insured with AIG's subsidiary insurance company; American General, you may have heard rumors that this company may be up for sale.

Yesterday American International Group, Inc.’s (AIG) CEO announced his plan for the company’s future, which includes the sale of the AIG American General insurers. American General is very well capitalized with significant reserves and continues to be a safe and profitable insurance company. Because of the desirability of American General as an asset, AIG has announced they will sell American General as part of their restructuring. The proceeds from a sale of these assets can be used toward paying off the two-year $85 billion secured credit facility issued by the Federal Reserve Bank in September 2008 to help AIG with its short-term liquidity needs.

If you have an American General policy, you should not panic or be convinced by an agent that "The sky is falling" and cancel your policy. This may not be a wise move as you will need to re-qualify for a new life insurance policy, which will start a new contestability period and you may also be adversely affected financially with any policy "surrender charges".

For those of you looking for affordable term life insurance or health insurance, use an online quoting tool that allows you to shop the market in minutes to locate the best insurance prices for your situation.

The Truth about Term Life Insurance

First we must understand what Term Insurance "is and is not". Term life is the simplest type of life insurance. Term gets its name from the limited length or "term" of the contract. Term insurance usually has no cash value, generally lasts for 1, 5, 10, 15, 20 or 30 years, or to some specified age such as age 65 or age 100. If you die during the term, the insurance company will pay the death benefit if all premium obligations are met. If you do not die during the term, no benefits will be paid. You may be able to renew the contract at the end of the term, or you will need to buy another policy (if you qualify medically and can afford the increased cost).

For term insurance, the premiums for each one thousand dollar of face amount death benefit roughly follows a curve reflecting the chances of dying - obviously getting very steep as one gets into his or her age 70's, 80's, and 90's when the chance of death is close to 100%. In contrast, the idea behind permanent life insurance is that the person "over-pays" (over and above what the cost of term insurance would be to cover the probability of dying in those early years) in order to keep the premium payments level during the older ages when the cost of term insurance would become prohibitively expensive. And because providing "life insurance" security for a family was deemed to be in society's best interests, a special tax break was given to the internal buildup of cash values within the life insurance policy - so they could build up more efficiently - free of income tax.

But is Term Life Insurance a Deal or No Deal? Term insurance has it's place in situations that require life insurance for a short or "temporary" period of time, or if you need large amounts of insurance until you can afford permanent insurance.

The truth is that Life Insurance companies love selling you this product. In an industry actuarial study, it was estimated that only 1 - 1.5% of all policies sold would result in a death claim.

Will you be the exception to the rule? For more information visit www.quotebroker.com