How to Find Cheap Life Insurance Policies

Accidents are a very valid concern for everyone. They are the situations that arise at the most unexpected times and inconvenience each individual terribly. The damages that are caused by each accident are varied in their extent ranging from very minor incidents to devastating catastrophes. Accidents are not only of the vehicular kind, being caught in a freak rainstorm without an umbrella is also an accident of sorts. Preparing for every situation life is going to throw at you can be very difficult. There are certain situations that can occur that you never even considered would happen to you. But just because life has thrown you a curve ball does not mean you cannot go on living. In fact, life really waits for no one. That is the reason why we get insurances. These are contingency measures that we take to protect ourselves from serious expenses that may befall us.

There are several different types of insurances that you can get – life, home or building, car or auto, contents, etc. All these policies are designed in different ways to help you prepare for the future, just in case something was to happen to your life or your house or your car. Every individual needs to get a life insurance policy. It is to protect your family from having to deal with the financial loss that will be coupled with the emotional loss if you were to die. This is important especially if you are the breadwinner of the family. Your loss can be a major blow that your family will find emotionally very difficult to deal with. Do you really want them to be in financial problems too?

Getting life insurance is not as expensive as people might think. Yes, there are a number of policies that can be very pricey and have very high monthly or annual premiums but there are those that are cheap enough to be affordable for the average Joe. The way to get the cheapest premium on this sort of policy is to take quotes from all the different companies before you make your choice. In fact, if you hire an agent, he or she will make sure that you get the best policy at the cheapest premium. You can even avail certain discounts and offers that the agent may be able to get for you.

If a full policy is too expensive for you then you can even opt for a Term Policy. This is a policy that has a coverage validity for a specific term that can be anywhere between 1 year to 20 years even. These policies are way cheaper than the full type because they have a set expiry period. If anything happens to your life during this period then your family will be able to make a claim. Also, if you live past the expiry date then you will no longer be covered. Each of the policies has a number of different terms and conditions that you can get from the company or from your agent.

An Endowment Life Insurance Policy Is a Term Life Policy With a Cash Back Feature

When you are looking for a good life insurance plan and whole life is not an option you might consider an endowment life insurance policy. An endowment life insurance policy is a term life policy where you are insured for a set period of time. If you should die during the period you are insured, your beneficiaries will get the proceeds. However, when you are searching for term life policies you will find that this type of insurance policy has and added benefit. It accumulates a cash payout over the years.

Therefore, if you do not die within the time you are insured you will be able to take out the money on its maturity date. Traditionally these types of policies have been taken out to provide funds for college or anything that a family may want money for at a future date. How much the cash value builds at any given time depends largely on how well the insurance company is doing with their investments. Endowments also provide cash surrender value if the insured cashes out before the maturity date. Though it is not recommended to use the endowment in this way, it can cushion a disastrous financial setback.

There are different types of endowments with different levels of flexibility for the insured. Full endowment policies will provide a cash surrender value equal to the death benefit. A unit-linked endowment often allows the insured to decide which funds their policy will invest in and how much will be invested. Traded endowments are endowments that have been sold to a new insured when the former policyholder has surrendered the policy; yet, there is still potential for growth and cash value accumulating within the policy. Finally, low-cost endowments are usually purchased to pay off the interest portions of mortgages, if the insured does not die beforehand.

Generally speaking when you compare term life insurance rates you are going to find that this type of term insurance is more expensive. The reason of course is because the typical term life insurance policy does not have an accumulated cash value. Term insurance pays the death benefit if the insured dies within the term of the policy. In the end, when you compare term life insurance rates you must decide if you want the most affordable coverage or coverage that will offer some additional cash back, but will cost a little extra per month.

How Personal Bankruptcy Impacts Your Life Insurance Policy

Filing for bankruptcy is usually person’s worst nightmare, but when it comes to protecting your assets (including the value of your life insurance policy), information is key.

A life insurance policy is considered valuable property, which means creditors may attempt to “acquire an interest in the policy’s values,” but all states and the federal government have “enacted legislation providing protections for life insurance against the claims of creditors,” says Glenn E. Stevick, Jr., a professor with The American College.

Here’s some basics you should know when it comes to bankruptcy and how it affects your life insurance policy.

First, more people file for bankruptcy than you might imagine. With the latest economic downturn and mounting bills, the current bankruptcy-filing rate is at a 5-year high, according to recent data released by Automated Access to Court Electronic Records (AACER). What’s more, the American Journal of Medicine reported that more than 1.5 million people filed bankruptcy last year, 60 percent of those filings were the direct result of medical bills.

The American Journal of Medicine, for example, found that 1 in 25 people in the Bay Area have filed for bankruptcy last year, says bankruptcy attorney, Jeena Cho of San Francisco-based JC Law Group.

“It’s like the dirty little secret,” Cho says. “Two things that we don’t talk about are death and money. When people start talking about their financial issues, they find there are plenty of people in the same boat.”

There are two types of bankruptcy for individuals: Chapter 7 and Chapter 13.

Chapter 13 is where you can hold on to your assets and aren’t at risk for losing property, but you must repay some of the debt over a three to five year period. If your cash value for life insurance is worth more than the exemption in your state, then consider filing Chapter 13 to protect your assets, Cho recommends.

If you pass a means test and can file a Chapter 7, you must liquidate your possessions and assets, which typically takes four months. It also means your life insurance policy could be affected.

Cho says one of the worst things someone can do is liquidate their assets and start borrowing money from their life insurance and retirement funds, which are almost always protected in bankruptcy.

“People start taking whatever little money they have to see if they could get out of debt by re-paying it,” Cho says. “I see people drain their $40,000 retirement fund for $100,000 in credit card debt. They start selling their cars and homes without an exit strategy. The game plan is to keep as much as possible.”

Also, make sure you disclose everything including the current, accurate cash value of your whole life insurance policy. Some people don’t “because they are afraid to and end up losing it because they failed to disclose it’s true value,” says David Leibowitz, a bankruptcy lawyer for Lakelaw in Chicago, Ill.

Under state and federal bankruptcy law, an individual filing for bankruptcy may elect exemptions under federal or state law, but not both. Explains Stevick, 34 states like Illinois, New York, California and Florida have “opted out” of the federal law and have inducted their own state protections.

Sixteen “choice states” – including Texas – allow debtors to choose between federal and state exemptions. Under federal exemptions, one can protect up to $10,775 of a life insurance policy’s cash value (doubled for married couples). Also, in some states the unused portion of the homestead exemption (real and personal property) may be used for other property, including the cash value from a life insurance policy. Some states require the policy to be in force for one to two years for protection under a state exemption, to prevent using life insurance as a shelter in bankruptcy planning.

In order to be eligible to file bankruptcy under state protections, you must be considered a resident and live in a state for 24 months.

In Illinois, whole life insurance is exempted from creditors to the extent that it is necessary to support a dependent (a spouse and dependent children), but the legal interpretation is up to your bankruptcy judge.

When you file your bankruptcy petition you’ll typically include a schedule or list of your exempt property, which can include your life insurance policy.

Ron Caruthers, a financial planner, who helps individuals pay for college with over funded life insurance policies, says Florida, is the most debtor-friendly state to file bankruptcy since it has a strong homestead exemption. Another debtor-friendly state is Texas, which allows large exemptions for cattle and homesteads.

“It’s why O.J. Simpson took all his assets and moved to Florida and put them into life insurance and a home, since they couldn’t touch either when he filed for bankruptcy,” Caruthers says.

On the opposite end of the spectrum is Arizona. Caruthers says Arizona is the most creditor-friendly state.

Keep in mind that all 50 states are different when it comes to bankruptcy protections, so it’s best to contact a financial planner or bankruptcy lawyer in that state to learn more.

Here are some suggestions for what to look out for before you file for bankruptcy.

Death benefits: How much of the proceeds in the death benefit are protected against creditors (some state have a dollar amount like $5,000 or $10,000 other states allow the entire amount.)

It is important to review how much of your life insurance policy is protected. For example, in California an unmatured policy is exempt up to $11,475 for homeowners filing jointly or separately under code 704 (c ), non-home owners file under 703.140 (b) which allows for up to $11,800. Say your life insurance policy exceeds $11,475 than you can use the wild card exemption of $23,250, which can be applied in part or in whole to the policy as well.

Look up the exemption statistics where you do business because every state is different. Pay close attention to differences in state and federal laws and what parties are protected – the policy owner, beneficiaries, etc.