Category Archives: Personal Finance

Buying Life Insurance for Grandchildren

One of the most rewarding roles in life is that of a grandparent. Often eager in showering their grandchildren with gifts of toys and clothes, grandparents can play an instrumental position in providing the gift of peace of mind and financial benefit throughout their grandchild’s life. Grandparents can choose to purchase affordable life insurance for grandchildren.

What is Whole Life Insurance?

Whole life insurance is a form of permanent life insurance that provides lifetime protection.  Coverage continues as long as the premiums are paid.  Even though the coverage amounts and premiums vary depending on the insurer for whole life insurance, all whole life insurance policies provide a savings fund, which accrues over time. This cash value account is a key component for buying life insurance for grandchildren.


The Life Insurance Rules for Grandparents

Grandparents are qualified to purchase whole life insurance for theirrules grandchildren due to the fact that they are considered extended caregivers.  The policy is purchased in the grandchild’s name, and then once adulthood is reached, the grandchild becomes the policy owner.  Eligibility does vary from state to state, but most allow the grandparents to purchase a policy without the parents’ permission.

Peace of Mind Now

Whole life insurance provides a death benefit in the event of the unimaginable.  The death benefit provides coverage for the cost of the funeral, as well as the cost of family counseling, and any uninsured medical bills accumulated on behalf of the child.  This allows the family to grieve without the unnecessary financial stress.  It has been found that 80% of survey participants believed that life insurance coverage played a vital role after the suffering of their loss.

Peace of Mind Later

Whole life insurance guarantees that coverage will be available for the child should he or she become disabled or develops a chronic illness later on down the road.  These situations would otherwise possibly be exorbitant in cost or even impossible to secure coverage.  Obtaining insurance while the child is still young can ensure lower premiums, which is an asset should the child’s family have any significant medical history.  Upon adulthood, the child may then choose to purchase more coverage without having to provide a medical examination.  The future insurability offered by whole life insurance is the key to providing peace of mind.

Financial Advantages

In comparison to term life insurance, which is purchased for a defined number of years, whole life insurance continues until the premiums are no longer  Accordingly, premiums are lower for a child than an adult.  The low premiums are locked in for life , and as the premiums are paid, the savings accumulate, thereby offering a cash value which is tax-deferred.  Taxes will only be paid when the money is withdrawn (unless the cash value is taken as a loan).  As the savings increases, money can be borrowed from the policy anytime.

Additional popular ways of saving for your grandchildren’s future include certificates of deposit (CDs) or 529 Plan (College savings fund).  However, it is worth focusing on the two distinct ways that whole life insurance is the better option, and that is the rate of return and its flexibility.

A guaranteed rate of return around 4-5% is typical on the cash value of a whole life insurance policy.  This rate of return is substantial when comparing to the return on traditional savings channels, such as high-interest savings accounts and CDs.

Furthermore, life insurance for grandchildren is more flexible than a 529 Plan.  The money may be borrowed against, surrendered in order to pay for schooling or a down payment on a new home, or essentially anything else the policyholder chooses.

Other Considerations

Before deciding to purchase a whole life insurance policy for your grandchildren, further considerations need to be evaluated.  First, research whether parental consent is required in your state.  Next, you will want to review the premiums very carefully.  Some policies approve of premiums being paid in lump sums or shorter-than-lifetime payments (e.g., 10 or 20 years), while others may require lifetime payments.  Finally, you will also want to carefully review the rates of return, surrender fees, or any other costs associated with the policy.

Final Thoughts

Grandparents offer unconditional love and support that is incomparable.  There is no doubt that this is an incredibly unique and special bond.  It is not surprising that as a grandparent, you would also want to give your grandchild the gift of peace of mind and financial advantage.  Purchasing a whole life insurance policy for your grandchild will do just that.

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Life Insurance for E-Cigarette Smokers

Life insurance premiums are not arbitrary and are greatly influenced by many factors in your life.  During the application process, the company providing the life insurance will evaluate contributing factors such as occupation, age, weight, to name just a few.  One of the most important factors that will be considered as well is if you smoke or use tobacco products.  Life insurance premiums may be substantially higher if you are a smoker.

One of the most important purchases that you can make for your loved ones is life insurance.  However, many people believe that life insurance is too costly and so they never purchase a policy.  Do not allow your electronic cigarettes (e-cigarettes) to prevent you from providing the insurance coverage that your family will need.

Life Insurance and E-Cigarettes

Due to the decreasing popularity of smoking cigarettes coupled with the risingvaping kit life insurance premiums, most smokers are turning to tobacco alternatives, such as the e-cigarette.  The purpose of the e-cigarette is to simulate the feel of smoking tobacco, while actually inhaling vapor.  Even with society’s new view on smoking actual cigarettes, most companies providing life insurance coverage have failed to recognize that e-cigarettes do not present the same risks as regular cigarettes – except for one life insurance provider.

Non-smokers pay significantly lower rates for life insurance – most often 60-75% less than their smoking counterparts.  However, many e-cigarette users are not informed that they can get non-smoker rates for their life insurance coverage.  This article will detail how exactly you can receive non-smoker premium rates while using an electronic cigarette.

Rate Samples – Smoker versus Non-Smoker

Smoker versus Non-Smoker Rates

$250,000 death benefit for a 30-year-old Male Non-Smoker :

Prudential Life Insurance: $20.34 per month

$250,000 death benefit for a 30-year-old Male Smoker

Prudential Life Insurance: $45.28 per month

It is crucial to investigate and find a company that will offer non-smoking rates for electronic cigarette users.  As was presented in the above example, smokers typically pay twice as much for their coverage when compared to non-smokers.

Prudential Life Insurance and E-Cigarette Smokers

It is not surprising that most e-cigarette smokers are seeking out insurance companies that offer more affordable rates.  Prudential is currently the only company that will not impose smoker rates if you have abstained from traditional cigarettes for at least a year and have made the switch to using e-cigarettes.  E-cigarettes offer a healthier alternative to traditional cigarettes.

In fact, Prudential is quite tobacco-friendly by offering non-smoker rates for those that smoke cigars, a pipe, chew tobacco, e-cigarettes, and even for marijuana smokers.  As long as you abstain from traditional tobacco cigarettes, you can receive non-smoker rates with Prudential.  Hence, many e-cigarette smokers are looking to Prudential for their life insurance needs.

Getting Cheaper Life Insurance

The cost of life insurance should no longer be a worry.  In most cases, applicants are amazed at the affordability of life insurance.  However, there are several ways that you can lower premium rates while pocketing the savings.  Just by making a few changes in your daily routine, you could save thousands of dollars.

The most important change you can make is to improve your overall health.  Prior to approval of an insurance policy, you will be required to take a medical exam.  This exam will evaluate your weight, blood pressure, heart rate, and more in order to determine your present physical health.  The more optimal your health is, the lower your rates will be.  Hitting the gym and making healthier food choices will not only improve your overall health but will also assist in the reduction of weight and health-related issues and/or complications.

It is best to compare multiple plans side by side for life insurance in order to ensure that you are getting the lowest possible rates.  The medical underwriting used by providers varies, and each company is different.  The difference in finding an affordable policy compared to a high-priced policy lies in finding the perfect provider.

With the numerous companies on the market, you could spend an excessive amount of time calling and comparing providers.  Let our team do the work for you!  It is our mission to ensure that you are getting a superb policy.  We are a group of independent insurance agents that work with various highly rated insurance companies nationwide.  Prudential is one of those companies that we currently represent.  Our team can provide you with a personalized set of quotes based on your needs.  You will save both time and money when working with our agents.

With no certainty of tomorrow, it is imperative to get the life insurance protection that your family needs and deserves.  In the event of a tragedy, your loved ones would be responsible for any bills or other debt left should you not get adequate coverage.


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What is Mortgage Protection Insurance?

Mortgage protection insurance is a life insurance policy that is designated and used to pay off your mortgage in the event of your death. It typically provides coverage for the same amount of time as your mortgage. Subsequently, if you take out a mortgage for 15, 20, or 30 years, your mortgage protection insurance policy needs to be the same or longer than your mortgage.

If you should die during the term of your insurance policy, your insurance company pays the death benefit directly to your beneficiary who can then pay off the mortgage. It’s important to note, however, your beneficiary can use the death benefit for any reason they choose, so it’s critical that you and your beneficiary agree on using the death benefit to pay off the mortgage.

You can also assign the insurance policy to your lender as their interest appears. In this scenario, the insurer would pay the lender the balance of the mortgage and the beneficiary would be paid any funds that are left over. This type of insurance does not cover your monthly payments if you cannot work due to a short or long-term disability.

In almost every situation, Term Life Insurance is used for the insurance coverage because it is the most affordable product available.

Types of Mortgage Protection Insurance

As we mentioned above, term life insurance is the most affordable insurance product to use for mortgage protection and term insurance can be purchased with very large face amounts very easily.

In the past, insurance agents would offer a Decreasing Term Policy where the benefit would decrease each year as the mortgage was paid down. This made sense because it was considered much cheaper for the policyholder.

Today, however, the cost for a level term policy (benefit stays the same) and the cost of decreasing term insurance is generally the same, or at least within a few dollars, so agents nowadays typically use level term insurance to cover the home mortgage. This way if you were to die late in the policy term, there would be a substantial amount of money left over for your beneficiary after paying off the mortgage.

Broaden Your Protection Using Riders

Most term life insurance policies are designed to pay a death benefit only. They do not build cash value like whole life insurance, and they are not flexible like universal life. The good news is, however, the times have changed.

Most insurers now offer several riders (optional coverage) that will allow the policyholder to broaden their coverage and create a more comprehensive life insurance policy. All companies do not offer the same riders, so it’s important you check with an independent agent to make sure they have a policy that will meet your needs. The following riders can broaden your coverage and offer living benefits:

1. Accelerated Death Benefit: This rider has become one of the most popular riders available. In fact, many companies have added it to their core coverage at no extra charge. The rider provides for the insurer to advance the insured a large portion of the death benefit if they are diagnosed with a terminal illness and expected to die within a year. When the insured does pass away, the amount that was advanced is deducted from the policy’s death benefit and then paid to the beneficiary.

2. Disability Income Rider: The disability income rider is another very popular option because it is a living benefit. This rider provides for the insurer to pay the insured a monthly benefit in order to help replace lost income as a result of a disability. Many companies differ on the benefit amount and the maximum benefit so be sure and speak with your agent.

3. Critical Illness Rider: This rider is similar to the accelerated death benefit rider accept the advance on the death benefit is triggered by the type of illness rather than the expected death of the insured. The illnesses covered depend on the insurer, so once again check with your agent for specifics.

4. Term Conversion Rider: Although normally built into newer policies, the term conversion rider allows the policyholder to convert all or a portion of your term insurance to permanent insurance like whole life or universal life without having to prove insurability. This is a big deal if you want to turn your temporary insurance into permanent insurance after you’ve developed some medical conditions.

5. Return of Premium Rider: This rider actually converts your cost of insurance from an expense to an investment. The return of premium rider provides for the insurer to return all the premiums paid on your policy if you outlive the policy term. This refund is paid in a tax-free lump sum to the policyholder and can be used to supplement your retirement plan or for any other reason you choose.

Depending on your insurance company, there are several other riders available as well. Speak with your independent agent to discover which rider best meet your needs.

What if I sell my Home and Purchase another with a Larger Mortgage?

If you move from your current home to another home with a larger mortgage, your policy will still provide the coverage because your insurance covers you, not your home. If your current mortgage protection insurance is not sufficient to pay off the new larger mortgage, simply purchase some additional insurance to cover the difference. When the new mortgage is reduced to the amount of the old policy, you can cancel the new one or keep it in force.

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