The Changing Face of Life Insurance

By: Rajesh Jyotishi

There used to be a time in this country not too long ago, when you had 2 basic choices for life insurance, term and whole life. Term was considered temporary and whole life was considered permanent, which built cash values.

Since then, we have had many changes and modifications. Today you have more choices than ever for your life insurance needs. In addition to term and whole life, you also have universal life, variable whole life, variable universal life, as well as indexed life insurance.

Many insurance companies have also created a new category of term insurance called return of premium term, whereas if you purchase a policy and keep it for it’s entire duration, whether it be 10yrs, 20yrs, or 30yrs, and there is no death claim, you are entitled to your entire premium refunded. These policies generally will have slightly higher premiums than the traditional term products, but it is not a bad option for persons who have temporary life insurance needs and would like to have their money returned at
the end of the term period.

In addition to the various types of insurance, most insurance companies have also created multiple classifications for rates. Even for a category like preferred, there is preferred plus, preferred best or preferred elite. The person who is the healthiest can get the lowest rates. This also allows the insurance companies to compete on the rate wars on the internet. What most people do not realize is that a very few people can qualify for the lowest rates. If your cholesterol is not in the perfect range or if you are slightly overweight, you most likely will get a higher rate.

Cost of Life Insurance Has Dropped
Most of us who own a house have refinanced our homes for lower interest rates to save money. Many have refinanced more than several times thru the years. Let me ask you a question. When was the last time you had your life insurance policy refinanced? With people living longer with increased mortality rates and advances in healthcare coupled with the multiple preferred rating categories of the insurance companies, you may want to see if it makes to replace your current coverage with a new policy.

If you purchased your life insurance policy more than 5 years ago, and if you are in good health, you may want to shop to see if you can get better rates. On many instances, people have been able to save money, double their coverage for the same amount of money or extend the duration for their term period. For individuals that have a cash value policies, they may be able to replace it with a policy with a guaranteed death benefit to age 100 without additional premiums.

Word to the Wise!
We all like to get a bargain. But remember, rates are not everything. Replacement is not for everyone. You also have to look at other pertinent information like the ratings of the company, your health conditions and your personal finances to make sure you can keep a commitment that a particular insurance policy requires. If replacing a cash value policy, be sure to see if there would be any applicable surrender charges and how long the surrender charges would last in a new policy. If in doubt, get second and third opinions.