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When someone passes away leaving debts behind, you might be wondering if you have any personal liability to pay them. If you have aging parents, for instance, you may be worried about having to assume responsibility for their mortgage payments, credit cards or other debts. If youâve asked yourself, âCan I inherit debt?â the answer is typically no, even though those debts donât automatically disappear. But there are situations in which you may have to deal with a loved oneâs creditors after theyâre gone.
How Debts Are Handled When Someone Passes Away
Debts, just like assets, are considered part of a personâs estate. When that person passes away, their estate is responsible for paying any and all remaining debts. The money to pay those debts comes from the asset side of the estate.
In terms of who is responsible for making sure the estateâs debts are paid, this is typically done by an executor. An executor performs a number of duties to wrap up a personâs estate after death, including:
- Getting a copy of the deceased personâs will if they had one and filing it with the probate court
- Notifying creditors and other entities of the personâs death (for example, the Social Security Administration would need to be notified so any Social Security benefits could be stopped)
- Completing an inventory of the deceased personâs assets and their value
- Liquidating those assets as needed to pay off any debts owed by the estate
- Distributing the remaining assets to the people or organizations named in the deceased personâs will if they had one or according to inheritance laws if they did not
In terms of debt repayment, executors are required to give notice to creditors who may have a claim against the estate. Creditors are then giving a certain window of time, according to state laws, in which to make a financial claim against the estateâs assets for repayment of debts.
If a creditor doesnât follow state guidelines for making a claim, then those debts wonât be paid from the estateâs assets. But if creditors are less than reputable, they may try to come after the deceased personâs spouse, children or other family members to collect whatâs owed.
Not all assets in an estate may be used to repay debts owed by a deceased person. Any assets that already have a named beneficiary, such as a life insurance policy, a 401(k), individual retirement account, payable on death accounts or annuity, would be transferred to that beneficiary automatically.
Can I Inherit Debt From My Parents?
This is an important question to ask if your parents are carrying high amounts of debt and youâre worried about having to pay those bills when they pass away. Again, the short answer is usually no. You generally donât inherit debts belonging to someone else the way you might inherit property or other assets from them. So even if a debt collector attempts to request payment from you, thereâd be no legal obligation to pay.
The catch is that any debts left outstanding would be deducted from the estateâs assets. If your parents were substantially in debt when they passed away, repaying them from the estate may leave little or no assets for you to inherit.
But you should know that you can inherit debt that you were already legally responsible for while your parents were alive. For instance, if you cosigned a loan with them or opened a joint credit card account or line of credit, those debts are legally yours just as much as they are your parents. So, once they pass away, youâd be solely responsible for repaying them.
And itâs also important to understand what responsibility you may have for covering long-term care costs incurred by your parents while they were alive. Many states have filial responsibility laws that require children to cover nursing home bills, though they arenât always enforced. Talking to your parents about long-term care planning can help you avoid situations where you may end up with an unexpected debt to pay.
Can I Inherit Debt From My Children?
The same rules that apply to inheriting debt from parents typically apply to inheriting debts from children. Any debts remaining would be paid using assets from their state.
Otherwise, unless you cosigned for the debt, then you wouldnât be obligated to pay. On the other hand, if you cosigned private student loans, a car loan or a mortgage for your adult child who then passed away, as cosigner youâd technically have a legal responsibility to pay them. Federal student loans are an exception.
If your parents took out a PLUS loan to pay for your higher education costs and something happens to you, the Department of Education can discharge that debt due to death. And vice versa, if your parents pass away then any PLUS loans they took out on your behalf could also be discharged.
Can I Inherit Debts From My Spouse?
When marriage and money mix, the lines on inherited debt can get a little blurred. The same basic rule that applies to other situations applies here: if you cosigned or took out a joint loan or line of credit together, then youâre both equally responsible for the debt. If one of you passes away, the surviving spouse would still have to pay.
But what about debts that are in one spouseâs name only? Thatâs where itâs important to understand how living in a community property state can affect your liability for marital debts. If you live in a community property state, debts incurred after the marriage by one spouse can be treated as a shared financial obligation. So if your spouse opened up a credit card or took out a business loan, then passed away you could still be responsible for paying it. On the other hand, debts incurred by either party before the marriage wouldnât be considered community debt.
Consider Getting Help If You Need It
If a parent, spouse, sibling or other family member passes away, it can be helpful to talk to an attorney if youâre being pressured by debt collectors to pay. An attorney who understands debt collection laws and estate planning can help you determine what your responsibilities are for repaying debts and how to handle creditors.
The Bottom Line
Whether or not youâll inherit debt from your parents, child, spouse or anyone else largely hinges on whether you cosigned for that debt or live in a community property state in the case of married couples. If youâre concerned about inheriting debts, consider talking to your parents, children or spouse about how those financial obligations would be handled if they were to pass away. Likewise, you can also discuss what financial safety nets you have in place to clear any debts you may leave behind, such as life insurance.
Tips for Estate Planning
- Consider talking to a financial advisor about how to manage and pay off debts you owe or any debts you might inherit from someone else. If you donât have a financial advisor yet, finding one doesnât have to be difficult. SmartAssetâs financial advisor matching tool can help you connect with an advisor in your local area. It takes just a few minutes to get your personalized advisor recommendations online. If youâre ready, get started now.
- The Fair Debt Collection Practices Act caps the statute of limitations for unpaid debt collections at a maximum of six years, although most states specify a much shorter time frame. However, some debt collectors buy so-called zombie debts for pennies on the dollar and then â unscrupulously â try to collect on them. Hereâs how to deal with such operators.
Photo credit: Â©iStock.com/NiseriN, Â©iStock.com/AndreyPopov, Â©iStock.com/FatCamera
The post Can I Inherit Debt? appeared first on SmartAsset Blog.
Accidental death insurance, also known as accidental death and dismemberment insurance, is a type of limited life insurance often acquired for a nominal fee or added to an existing policy. As the name suggests, it releases a benefit if the policyholder dies from an accident or suffers a dismemberment.Â
Accidents kill an estimated 160,000 Americans a year and are far more common amongst men aged between 18 and 44. Many of these deaths occur as a result of falls and motor traffic accidents, both of which are covered by most accidental death insurance policies.
When You Donât Need Accidental Death Insurance
If you already have life insurance, you can probably overlook accidental death insurance. In such cases, it will simply increase the value of the payout when you die, known as âdouble indemnityâ coverage.
Unlike whole-life insurance policies, it does not provide policyholders with a separate investment vehicle that they can cash out at a later date. Generally, accidental death insurance doesnât offer anything that a traditional life insurance policy canât provide, and it may therefore be deemed an unnecessary expense.
However, there are exceptions.
When You Need Accidental Death Insurance
An accidental death benefit canât provide you with anything that you wonât get from a traditional life insurance policy. However, itâs a different story with dismemberment insurance. This will cover you in the event that you lose a finger, toe or arm, which means youâll have the money you need for medical costs and may be compensated for lost work.
Accidental death insurance can also help to cover any additional medical fees that result from necessary treatment taken after an accident and before death. Your family may be forced to cover these bills, and an additional death benefit can help them with that.Â
Accidental death and dismemberment insurance is not something we would recommend in lieu of traditional life insurance, but if you have the option to add it to an existing policy for a few bucks a month, itâs well worth considering.
How Much Does Accidental Death Insurance Cost?
The price of your accidental death insurance premiums will depend on your payout as well as your risk factor. The average person can expect a charge of roughly $5 per month for every $50,000 of coverage, which means a benefit of $100,000 could cost as little as $10 a month.
But, as we have discussed many times before, underwriters focus on probabilities. The more likely you are to die from an accident, the higher those premiums will cost. For instance, if youâre an 18-year-old who has just started driving and enjoys a few high-risk hobbies, you may see those premiums climb.
How Long Does Accidental Death Insurance Last?
Accidental death insurance policies typically run for up to 40 years. You choose the desired term at the start and this is used to calculate your premiums, with longer terms leading to higher prices on account of the increased risk.
What is Not Covered by Accidental Death Insurance?
Accidental death insurance generally doesnât cover all accidents and all dismemberments. The exact coverage will depend on the policy, and itâs possible to tailor your policy to include some of the things not traditionally included, but this may increase the premiums.
Suicide is a tricky one. Many life insurance policies will payout if the policyholder commits suicide, but only if it occurs after the first two years and it is proved that they committed suicide so their loved ones would benefit (although this is not easy to prove).
However, accidental death insurance policies tend to rule suicide out altogether. Many deaths caused by misadventure may be queried as suicide, such as falls and drownings, but unless there is actual proof that they intended to take their life, the death will often be ruled as misadventure, in which case an accidental death insurance policy may payout.
Accidental death insurance rarely pays out for deaths resulting from war injuries. This is true whether the policyholder is shot or dies from an explosion or fall. That death was certainly not intentional, so you could argue that the policy should pay, but most insurers will refuse.
Illness and Disease
An accidental death insurance policy is not designed to payout in the event that you die from an illness or disease. Your beneficiaries may also face some resistance if you had a serious illness or disease at the time of your death but an accident was ultimately the thing that killed you.
For instance, if you have a serious mobility problem and this causes you to fall, hit your head, and die, then technically an accident killed you, but that accident wouldnât have happened if not for the illness, creating some technicalities that will no doubt lead to problems when filing a claim.
Drugs or Alcohol
An accidental overdose is rarely covered by accidental death insurance. There will be no benefit for your loved ones if it leads to your demise, and no benefit for you if it leads to long-term health complications.
This is not true for all policies, however, and there may be exceptions for drugs that were prescribed.
How Can the Cause of Death be Proved?
As alluded to already, the cause of death isnât straightforward. With a traditional life insurance policy, if the policyholder dies outside of the contestability period, the insurers will rarely get involved. That changes if they have suspicions about the death and believe that a crime was committed (fraud, murder) but itâs rare.
With accidental death insurance, however, there are many more nuances. As a result, an official investigation may be ordered, and this can include an autopsy.
How Does the Dismemberment Payout Work?
If the policyholder losses an appendage as a result of an accident, they may receive a partial benefit paid direct to them. The policy will dictate how much is paid and why, but generally the payout will be made following a non-excluded accident that results in the loss of:
- An arm
- A leg
- A finger
- A toe
Higher payouts may also be provided if the policyholder suffers complete paralysis.
What is Accidental Death Insurance, and do you Need it? is a post from Pocket Your Dollars.
A contingent beneficiary is a person, estate or trust that receives the assets of a person who dies if the primary beneficiary, for any reason, cannot receive the assets.
It is commonly recommended by attorneys when their clients are making a will to have at least one contingent beneficiary.
It is possible to have several contingent beneficiaries and they can be listed in a specified order.
After a person dies, his or her assets will usually go through probate. The probate process can be avoided and the assets more efficiently passed to the heirs if primary and contingent beneficiaries are named.
While the contingent beneficiary is one of the most important factors of the life insurance policy process, itâs typically one of the most confused and misunderstood. Any mistakes or misunderstandings can lead to a lot of problems down the road that can cause major headaches for your loved ones.
Why It’s Important To Name Contingent Beneficiary
There are a few key reasons why itâs important to name a contingent beneficiary.
Beneficiaries take precedence over wills
If a beneficiary is assigned to a bank account, that beneficiary has the rights to that account after the ownerâs death even if the will states the assets in that account should go to someone else.
Contingent beneficiaries can also be assigned to retirement plans, annuities, and life insurance policies
There will be one primary beneficiary on the policy. This is usually a spouse or partner. They receive the proceeds from the policy upon the death of the policyholder. If a contingent beneficiary is named such as a child or other family member or friend of the deceased and the primary beneficiary cannot receive the proceeds, it will pass to the person next in line.
Electing a contingent beneficiary in wills as well as in insurance policies is a simple way of making sure the surviving loved ones are cared for if the primary beneficiary is incapable of doing so.
Provides a way to donate to a special cause or charity
It is also a way to donate to a special cause or charity after the death of the policyholder. The disposition of assets is not complicated by unforeseen events such as the death of the prime beneficiary.
For example, if a will gives all the deceasedâs assets to the spouse as the prime beneficiary, but the spouse is incapable of managing the assets, they can be given to the contingent beneficiary, who may be an adult child, on the condition that the child cares for the spouse during their lifetime. After the spouse dies, the assets can go to the child.
Circumstance Where A Second Beneficiary Makes Sense
There may be circumstances or stipulations that must be met before a contingent beneficiary may inherit the assets. The contingent beneficiary may need to finish college, reach a certain age or kick a drug habit, and only then they will receive the assets.
A policyholder and their primary beneficiary may die at the same time. This could happen in a car accident or natural disaster. If a contingent beneficiary has been named, the transfer of assets will be easier.
The next in line is usually someone who is financially dependent on the policyholder, but if there is no one dependent, the contingent beneficiary can be anyone else or a charity or cause. It is not advised to make the estate the contingent beneficiary of an inexpensive life insurance policy because the proceeds would be subject to the deceasedâs creditors. Life insurance proceeds paid to a person are not usually subject to creditors.
If the primary beneficiary is the spouse, the contingent beneficiary may be a minor child. Consideration needs to be given as to who will manage the assets until the child reaches 18 or 21 years.
It is recommended to assign two guardians for the children including one guardian to manage the money and one guardian to look after the well-being of the child.
In policies from some of the best term life insurance companies, a person can assign a primary beneficiary, a contingent beneficiary, and a tertiary beneficiary. This is another kind of contingent beneficiary and only receives assets or proceeds from the estate or insurance company if all the primary and contingent beneficiaries are unqualified to receive the benefits or are deceased.
When a contingent beneficiary wants to claim assets, they need to provide a certified death certificate for the prime beneficiary and any other contingent beneficiaries that precede them on the list of succession as well as valid personal identification.
Each insurance company might require different documentation depending on their standards. When you name a secondary beneficiary, you need to ask what the requirements are going to be.
Consequences For Not Naming Beneficiaries
There are a few consequences for not naming beneficiaries.
Insurance proceeds could be subject to huge estate taxes
Insurance proceeds could be subject to huge estate taxes if the policyholder names the spouse as sole beneficiary and there is no contingent beneficiary. If the insured outlives his or her spouse, by a few days if they are both in a car accident, the proceeds will pass to the estate incurring huge unnecessary taxes.
If you donât name a beneficiary, your other family members or loved ones can lose thousands and thousands of dollars because of the taxes that are going to be placed on the payout from the policy.
Your loved ones may struggle to get the money you left them
The other problem is that your loved ones could struggle to actually get their hands on the money itself. Without naming a contingency, the company is going to have to determine who the money should go to, depending on your family situation, this could cause a lot of problems and delays.
ALWAYS Name a Contingent Beneficiary
A contingent beneficiary is a safety feature and a control device. It is the most practical way to control the future distribution of wealth. Itâs a simple thing today, but not something that should be decided on lightly. You should spend a lot of time determining who your beneficiary should be.
Itâs also something that you should continue to maintain. There are dozens of different life changes that could impact who you would want to name as your beneficiary, which means that once youâve named the primary beneficiary, it could change years down the road. Donât forget to look back at your policy and ensure that the beneficiary is still the valid recipient and the best choice for the policy payout.
Life insurance is the most important investment that youâll ever make for your family and loved ones. You may ask yourself at what age should I get life insurance policy, of course, we recommend the younger the better because the more you age the more risk you are to having health problems, which will increase your premium rates. Purchasing life insurance at age 20 versus purchasing life insurance over the age of 50. Tomorrow is not the day to start your life insurance application.Â Begin the process today!
Contingent Beneficiary Review
Time for the pop quiz! Hopefully, you know exactly what a contingent beneficiary is at this point. Not only should you know what it is, but hopefully you understand why YOU should name one.
If you want to learn more about life insurance or naming a contingent beneficiary, we researched and wrote about the process of getting life insurance. We are ready to answer those questions and ensure that youâve got the best life insurance to fit your needs.
The post What Is A Contingent Beneficiary? appeared first on Good Financial CentsÂ®.
If you own a car or truck, you know it can be expensive. Your loan payment, ongoing maintenance, fuel, taxes, and auto insurance can take a big chunk of your budget. According to a 2019 AAA study, the average cost to own and operate a new vehicle was $9,282 per year.
When you consider just auto insurance, the most recent data from the Insurance Information Institute shows that the average cost is $936 per year nationwide. However, where you live significantly affects your rate. New Jersey drivers pay the most, $1,309, and Iowa drivers pay the least, $628 per year.
Many personal attributes get factored into your base car insurance rates that you can't change. They include where you live, if you’re a homeowner, your age, gender, marital status, and credit rating.
Insurance savings are available, but many policyholders don’t know what discounts exist or that they need to ask for them.
However, when it comes to getting auto insurance discounts, you have more control. Insurance savings are available, but many policyholders don’t know what discounts exist or that they need to ask for them.
In this post, we’ll review 20 auto insurance discounts that can easily save you money. What’s available depends on your insurer and the state where you live.
But even if you only qualify for a few insurance discounts, they can add up. Then you can put your savings toward something more rewarding, such as taking a vacation or boosting your emergency fund.
20 Money-Saving Auto Insurance Discounts
See how many of the following discounts you qualify for.
1. Safe Driver Discount
Your driving history plays a significant role in how much you pay for car insurance. It makes sense that auto insurers love safe drivers and are willing to reward them for being claim-free.
If you have a clean record with no moving violations or at-fault accidents over the past three to five years, most insurers typically give you a nice discount.
Potential savings: 10% to 20%.
2. Educated Driver Discount
But what if you don’t have a squeaky-clean driving record? You may be able to redeem yourself by passing an in person or online defensive driving course. Insurers know that boosting your education and skills can make you a better driver.
Potential savings: 5% to 15%.
3. Affiliation Discount
Did you know that belonging to a particular group can qualify you for a car insurance discount? Depending on your insurer, it’s likely that they have hundreds of different partner organizations that allow members to get a break on the cost of car insurance.
They may include alumni associations, education organizations, certain fraternities or sororities, honor organizations, and recreational groups.
Potential savings: 5% to 10%.
4. Occupation Discount
There are also auto insurance discounts if you work in specific industries or occupations, such as being in the military, a teacher, medical professional, or government employee. Also, members of professional associations, such as unions and state bar associations, often qualify for reduced rates.
Potential savings: 5% to 15%.
5. Good Student Discount
An often-overlooked car insurance discount is for students who make good grades. You typically qualify if you’re in high school, college, or graduate school (up to age 26) and have at least a “B” average.
Insurers consider good students less of a risk when they’re behind the wheel. So, parents shouldn’t miss the opportunity to make it more affordable to insure their young drivers.
Potential savings: 10% to 25%.
6. Distant Student Discount
Another way to cut the cost of insurance for students who live away from home, no matter their grades, is to request a distant student discount. It applies if a student lives at least 100 miles away from home and doesn’t have an insured vehicle with them on campus. They’ll be covered when they come home for breaks, but at a reduced rate.
Potential savings: 5% to 25%.
7. Low Mileage Discount
Maybe you’re driving less for a new job or keeping a car in the garage more often. If your driving patterns change, be sure to let your car insurance company know. Vehicles that are on the road less have fewer claims, and that earns you a substantial insurance discount.
Potential savings: 5% to 15%.
8. Usage-Based Discount
Many insurers offer usage-based insurance or UBI, which adjusts your rate based on how you drive. Data may be collected using a device that you keep in your vehicle or that gets reported from a smartphone app.
UBI programs evaluate different driving behaviors such as the time of day you drive, your average speed, how hard you brake and corner, and your mileage. If you’re considered a safe driver, your discount gets applied at renewal.
Potential savings: 5% to 40%.
9. Loyalty Discount
Every auto insurer wants to retain existing customers and give you every reason not to switch. Being loyal to one company for at least a few years often results in substantial savings.
Potential savings: 10% to 25%.
10. Multi-Car Discount
If you have more than one vehicle in your household, insuring all of them with the same company usually gives you a multi-car discount. Insurers offer incentives to make sure they get as much of your business as possible.
Potential savings: 10% to 25%.
11. Bundling Discount
In addition to insuring more than one vehicle, getting different types of coverage with the same insurer is known as bundling or a multi-line discount. Many insurers cover more than just cars. You could get auto and homeowner, renters, or life insurance with the same company and score savings.
Potential savings: 5% to 15%.
12. Paperless Discount
Some insurers offer a discount if they don’t have to mail paper documents, such as your policy description and bills. Merely electing to be a paperless customer can qualify you for a small discount. You can get your information by email or an online account.
Potential savings: 3% to 5%.
13. Full Payment Discount
Instead of making monthly or semi-annual auto insurance payments, paying your entire annual premium upfront may qualify for savings.
Potential savings: 5% to 10%.
14. Automatic Payment Discount
Also, signing up for automatic premium payments using automatic withdrawals from your bank account can help you save a small amount.
Potential savings: 3% to 5%.
15. Online Quote Discount
Some auto insurers offer a discount if you sign up for a policy after getting an online quote. You could shop directly on a carrier’s website or an aggregator site, such as Bankrate.com.
Potential savings: 5% to 10%.
16. Switching Discount
Just like your existing auto insurer wants to keep you, others want to entice you. A switch or transfer discount is a promotional offer that cuts your rate for a time after you sign up with a new carrier.
Potential savings: 5% to 15%.
17. New Car Discount
If you purchase a new vehicle or one that’s less than three years old, many auto insurers offer a discount. Newer cars typically have modern safety features that reduce the likelihood that you’ll make a claim.
Potential savings: 5% to 10%.
18. Anti-Theft Discount
Car insurance companies want to help you prevent car theft, so most offer discounts for having any device, feature, or system that helps keep criminals away from your car. They could be factory-installed or an after-market product that you install.
Examples of systems that may lower your insurance rate include a GPS-based location system, such as OnStar, or a theft recovery system, such as LoJack. VIN etching, which is a permanent engraving of your vehicle’s identification number on the windshield and windows, may also qualify you for a discount.
Potential savings: 5% to 20%.
19. Safety Features Discount
Cars with modern safety features, such as anti-lock brakes, airbags, and rear-view cameras, are less likely to get in an accident and cost an insurer. So be sure to let them know every on-board safety device in your vehicle.
Potential savings: 5% to 30%.
20. Mature Driver Discount
If you’re at least age 55 and pass an in-person or online defensive driving course, you can qualify for a discount. Insurers know that maintaining good driving skills reduces your risk and makes you less likely to file a claim. Most insurers offer a mature driver discount in many states.
Potential savings: 5% to 30%.
Understanding Auto Insurance Discounts
The savings you get from auto insurance discounts are typically capped. For example, an insurer may only allow a total discount of 40% off your base premium, even if you qualify for multiple discounts.
You don't have to wait until your auto insurance policy is up for renewal to compare quotes.
Also, it’s important to remember that not all discounts are applied to your rate automatically. You may have to ask for discounts that an insurer wouldn’t know you qualify for, such as getting a new job or having a driver in your family who qualifies for a good student discount. And not every insurer may offer all of the discounts we’ve covered.
Auto insurance prices vary from company to company, and they can even change from month to month. You don't have to wait until your auto insurance policy is up for renewal to compare quotes. So, if you haven’t reviewed your car insurance lately or it’s been a while since you’ve shopped policies, you may be leaving money on the table.
Life insurance offers protection for your familyâs financial security. Many people buy themselves a life insurance policy that will protect their family. Itâs also possible for people to purchase life insurance policies for someone else. For example, children can purchase policies for their parents and vice versa.
Life insurance coverage offers valuable financial protection. You need to find a policy that meets your coverage needs and fits your budget. Here are three tips that will help you find the right fit:
Understand Policy Options
Premium rates vary based on the kind of policy you choose. There are two broad categories of life insuranceâtemporary and permanent.
Temporary life insurance, or term life insurance, offers a death benefit payout if the insured passes away during the timeframe the policy covers.
Policyholders can choose the length of the term and the death benefit amount. Some companies offer additional coverage options, called rides, that can be attached. These range from accelerated death benefit riders to return of premium riders. These additional riders add more value to the policy, which also affects the rates.
Permanent life insurance has its own two categoriesâwhole life and universal life. Both kinds of permanent life insurance accrue cash value over time. The cash value can be used to purchase paid-up additions, pay premiums or be borrowed against.
Like term life insurance policies, policyholders can choose to add additional coverage with riders. Riders vary by company and affect the monthly premium.
Whole life policies typically have the highest premiums because the coverage is permanent, and thereâs generally a guaranteed cash value growth rate. Most whole life policies come with high death benefit amounts. Policyholders can choose the amount when they sign up for the policy.
However, for those who need less coverage or only enough to cover funeral expenses, final expense insurance policies are a great option. Final expense insurance is designed for seniors. Itâs a type of whole life insurance, but the death benefit amounts are much lower. Because the death benefit is only enough to cover funeral expenses, premiums tend to be lower.
There are a few kinds of universal life insurance policies. The biggest difference with these policies is how the funds are invested. The cash value of variable universal policies is invested in multiple accounts, including stocks and bonds. The cash value of indexed universal policies is invested in indexes, which are diversified investments.
Because there is no guarantee of how the cash value will grow in the investments, universal life insurance premium rates tend to be lower than whole life insurance premium rates.
Work with an independent agent
While the various types of life insurance are common among life insurance companies, not all companies carry every kind. Itâs a good idea to know what kind of life insurance policy you want before starting to work with companies.
If youâre not sure what kind of life policy you want, work with a life insurance agentto ensure that you find an affordable policy that meets your coverage needs. A licensed agent can help you through the entire process of selecting and applying for a policy.
Working with a licensed independent agent also has other advantages. The specific terms, riders and premium rates can vary by company. Independent agents sell policies from multiple companies, so they can help you compare similar policies across companies.
An independent agent can help you understand the underwriting process and find a policy that is a good fit for your situation. In addition to comparing coverage and terms across companies, an independent agent can help you compare premium rates.
Working with an independent agent makes the research process easier for you because you donât have to reach out directly to companies. Instead, you can work with one person to find the best company and rate for you.
Use quote websites wisely
While some people like working with an agent, others may prefer to do independent research. Quote websites come in handy because they make it easy to quickly view your options.
There are many life insurance quote websites to choose from. So, how do you know if youâre working with a good company?
First, itâs important to understand what kind of quote website youâre using. Some websites, like Geico and Progressive, show quotes from multiple life insurance companies. These quotes allow visitors to compare their policy options across companies. However, these companies just show quotes and connect their visitors to companies.
Others, like Bestow, Haven Life and Ladder, only show quotes for the policies they offer. These companies help their clients through the application process, which is another benefit of working with them.
Others, like Quotacy, show quotes from multiple life insurers and help their clients through the application and underwriting process. Quotacy agents even assist their clients in making updates to their policy after they purchase a policy.
Second, itâs important to know what kinds of policies the website shows. Many online tools focus solely on term life insurance. While this is a shared characteristic across many quote websites, each one has its unique features.
For example, Ladder stands out because its policies allow policyholders to adjust coverage during the term as their needs change.
In contrast, other quote websites show quotes for different kinds of permanent life insurance. This is true of many sites that only offer quotes, like Geico and Progressive. Websites that offer more comprehensive services, like Quotacy and Policygenius, also offer quotes for permanent life insurance policies.
Finding affordable life insurance
Life insurance offers valuable financial protection for your family. It can pay off remaining debt, cover funeral expenses and even replace income.
While the protection offered is highly valuable, itâs important to find a plan that fits into your monthly budget. The first step is determining what your needs are and which kind of life policy best meets those needs. From there you can work with an independent life insurance agent and do your research into policies and premium rates offered by different life insurance companies.
Alice Stevens loves learning languages and traveling. She currently manages debt and tax relief, life and health insurance, and car warranty content for BestCompany.com.
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