What is High-Risk Life Insurance

There are a number of factors that go into creating an individualized life insurance policy, including the policyholder’s age, social habits, past medical history, and health risks. An insurance company will weigh all of these aspects to determine if it wants to insure the individual and, if so, at which rate. Most people have no problem being accepted into a plan but others may face challenges because of their histories or lifestyles that means they have to consider high-risk life insurance. So, just what is high-risk life insurance? What is High-Risk Life Insurance? This term refers to a policy assigned to someone deemed a high risk. Several factors can influence this determination, such as whether the person has a dangerous job or hobby, has a history of risky habits or has been diagnosed with a serious illness. For instance, an occupation such as a firefighter may put someone into the high-risk category, as insurance companies evaluate both the rates of death and injury for such an occupation as well as the company’s own history of insuring people who work in this field. A hobby such as skydiving is another activity that could mean the person has to invest in high-risk insurance. Smoking is one of the most common high-risk habits and one that many people attempt to kick before applying for insurance; typically, most insurance companies will offer a lower rate to applicants once they’ve been smoke-free for at least a year. High-risk diseases are those considered the most serious and life-threatening. For instance, asthma or controlled anxiety or depression shouldn’t affect a person’s ability to get insurance, but...

What is an Accelerated Death Benefit Rider?

An accelerated death benefit generally enables policyholders who have been diagnosed with a terminal illness to draw cash advances against the value of the death benefit. There are several common types of death benefit riders. The purpose of death benefit riders is to give an individual access to the cash value of his or her insurance plan while he or she is still alive. Another option is the enhanced death benefit, which pays out the highest investment gain the policy attained, even if the market value is less. Those with a variable annuity death benefit may be able to attach riders to enable cash advances and a payout that is higher than the minimum.  Pros and Cons of Death Benefit Riders Life insurance is traditionally understood as helping people plan and prepare for the end of their lives. Many policyholders aim to use the amount of their plan to help beneficiaries pay for things like funeral costs, to settle final arrangements or to help reduce debt once they have passed. However, after a lifelong investment, they should be able to use the value whenever they need it and, that’s where a death benefit rider may come in. People with a terminal illness may be able to convert their life insurance policy to cash. Death benefit riders can help policyholders customize a plan that makes sense for them; however, there are some factors to consider. Riders do increase the cost of a plan, which could be a serious consideration for some individuals. Plans that enable policyholders to draw on the value while they’re still alive also come with some drawbacks,...

5 Reasons to Buy Life Insurance

Should I buy life insurance? That may be a question you have asked yourself over the years as you have worked to get your financial future in order. There are plenty of reasons to buy life insurance, yet some people may be hesitant to make the investment, as they envision it primarily as a way to prepare for their passing, which can be challenging to envision. While life insurance is indeed a smart option to help your family manage finances after your death, there are also plenty of advantages that you can reap today. Here are a few of the top reasons to buy life insurance: Financial emergencies: In certain cases, you may be able to take payouts from or borrow against your life insurance to deal with financial emergencies. For instance, with a Life Credit Living Benefit Loan, you can borrow against the value of your policy’s death benefit to cover financial emergencies such as cancer care. Few people budget for medical crises, but with a life insurance policy, it’s possible to save yourself from going into debt and instead focus on your health. Final arrangements: While it can be uncomfortable to think about, funeral and burial costs are high, and assisting loved ones with making your final arrangements is one of the most common reasons to buy life insurance. No one wants to burden their family with financial responsibilities while they’re alive, and life insurance helps you to continue that commitment after your death. Affordable coverage: Despite what some may think, life insurance can be extremely affordable. The wide range of options when it comes to life...

How is my Death Benefit Calculated?

While each policyholder will have individual circumstances — such as varying numbers of dependents or unique health concerns — there are some common ways to determine what your life insurance death benefit payout should be before you finalize a policy. One strategy is to add together the policy holder’s annual income, the cumulative amount that would be lost if he or she died today (presuming he or she would work through average retirement age) and burial costs. Even though this total may seem high, it allows for a worst-case scenario that would enable the person’s family to continue receiving the financial support this person had provided during life if he or she was to pass away at an early age. Life Insurance Death Benefit Payout Once the desired amount of the life insurance death benefit payout is calculated, you can then shop around to find a plan at that level with affordable premiums and that offers all of the other provisions you’re looking for in a policy. In the event of someone’s passing, the funds can be used to cover final expenses, as well as to address income gaps left by the loss. Once the contract is signed and sealed, if the insured does die, all that his or her beneficiaries have to do is submit a death certificate and some other accompanying paperwork to kickstart the process of receiving the pre-set payout. The funds are almost always non-taxable and paid quickly, giving beneficiaries easy access to vital financial assistance needed to lay their loved one to rest and maintain their financial health. A life insurance policy’s death benefit...

Understanding Key Terms in Your Life Insurance Policy

The benefits of life insurance are innumerable — from the peace of mind you get knowing you can protect your loved ones in the future to the immediate financial assistance that a policy can generate in an emergency, such as through a Life Credit Living Benefit Loan. With so many advantages, however, comes complexity, as there are myriad policies and ways in which they can be maximized. To navigate that confusion, there are some life insurance terms to know that, once you’re familiar with, can build a foundation to help you determine the best way to buy and use life insurance. Life Insurance Terms to Know Dividends: If you have what is known as a “participating policy,” you may be eligible for a portion of the life insurance company’s profits, which are known as dividends. You can apply them to your premiums, take the dividends as cash, buy additional insurance or many other options. Cash value: This refers to the value that has accumulated in a permanent, or whole life, policy. As you pay premiums, a portion of each is set aside to generate cash value that you can later borrow against or, depending on your policy, withdraw. Beneficiaries: This is the person or persons who will receive the death benefit associated with your policy after your passing. You can name one or more individuals, and should periodically revisit the beneficiary list. Surrender value: The surrender value refers to the amount you would get if you opted to cash out your policy, as the insurance company may levy hefty surrender fees, significantly lowering the cash value. That’s why many...

The Viatical Settlement Checklist

Life insurance is often considered as a means to help loved ones pay for your final expenses; however, situations may arise that would make having access to those funds prior to your passing the smartest financial option. Life Credit’s Living Benefit Loan Program allows you to borrow against your life insurance policy’s death benefit in order to cover cancer care and other pressing financial obligations. Another option is  a settlement called a viatical, life insurance can be sold to another party. There are pros and cons to viatical settlements, which each person needs to carefully consider before choosing the path that’s right for them. What happens under a viatical settlement? This is an option that can only be considered when someone is diagnosed with a terminal illness, typically with a life expectancy of less than two years. In this case, the person may want to access the funds to take care of end-of-life planning, such as home care or hospice. Consulting with your medical team to have them assess and document your prognosis should be one of the first steps anyone should take who is considering a viatical settlement. Other factors to consider are the length of your policy — viatical life insurance settlements usually only apply to policies older than two years — and whether the policy was issued by a licensed and insured provider. The value of the policy is also a major consideration, and one that involves its age, the cost of the premiums and the unique health circumstances of the policyholder. What happens under a viatical settlement is that the buyer will often agree to...