10 Year Term Life Insurance Policy In All It's Glory

If you are looking for inexpensive life insurance may be the 10 year term life insurance policy would fit your need perfectly. This is life insurance in its simplest form. The 10 year term life insurance policy contains a guaranteed death benefit from the outset and a guaranteed level premium. After the initial 10 years some life insurance companies allow you to renew the policy for an additional 10 years at an increased premium. This 10 year term policy provides you with ample insurance for small outlay over a fairly short period of time.

• Policy Death Benefit
  If you are the proud owner of a 10 year term life policy and if you should die within 10 years of your ownership of this policy the full face amount is paid to your beneficiary, either in a lump sum or in the form of a monthly income The monthly income may take one of several different income options. You may choose to take a life income with no certain period. After the beneficiary begins receiving the income if s/he should die suddenly that would be the end of the income. No one would get anything more from that 10 year term life insurance policy. It does not matter if the income is paid only for one month. There are other options that would assure you, however, that your beneficiaries would receive more of a pay out.
  You could choose to pay them a life income for a 10 or 20 year certain period. This would guarantee that the income is paid for 10 or 20 years respectively. You could choose a fixed period option which would guarantee that the income is paid out for a fixed period, example 20 years or you could use the interest option, which would keep your principal in tact and pay only interest to beneficiaries for a specific period of years. At the end of this period the principal would be paid.
  
• Term Insurance Conversion Privilege
  Most term insurance policies have built in a conversion privilege. The 10 year term life insurance policy is no exception. This is because term insurance is temporary insurance and people usually have a need for permanent for life insurance. You can convert your policy usually to any permanent policy within a specific period of time. Some companies limit your conversion period to 8 years, whereas others may allow the policy owner the full 10 years.
  
• Available Riders To Your Policy
  There are certain riders that you can add to your 10 year term life insurance policy which would tremendously increase it's value to yourself and your beneficiaries. You may add the waiver of premium disability rider. If you should become disabled, anytime after 6 months of disability, the life insurance company will pay your premiums for you even if it is for the entire duration of the policy. Now, isn't that just great?
  Another rider that you can add to your 10 year term life insurance policy is the accidental death benefit rider. This is sometimes referred as the double indemnity rider. If you should die in an accident the life insurance company will pay double the death benefit to your beneficiaries.
  
• Minimums And Maximums
  There are certain minimum and maximum amounts of 10 year term life insurance that insurance companies will be prepared to issue on an applicants life. This may vary by age and medical history. Some companies may be prepared to issue between $20,000 and $1,000,000, others may start at 100,000 and go as high as $10,000,000 or $20,000,000.
  
• Living Benefit Riders
  The aids virus brought about a fairly new idea which many life insurance companies have adopted. Because of a tremendous need for additional cash terminally ill people may sell their policy to investors for a percentage of its value. As an alternative you can add a rider to your 10 year term life insurance policy which would allow you to withdraw a portion of your death benefit during your lifetime. This is called a living benefit rider. It would serve to ease the pressure on the terminally ill and their families.
  
• Spouse And Child Term Riders
  Many insurance companies offer the opportunity for you to add to your 10 year term life insurance policy...a comparatively small term life insurance rider on the life of your spouse and children. These riders are usually 5 year term or 10 year term riders which work out to be less expensive than had the policies been bought separately.

That is basically how your 10 year term life insurance policy would work for you.

5 Year Term Life Insurance Policy Or Rider

The 5 year term life insurance policy has been around in insurance circles for a very long time. It can be sold as a policy or as a rider to a permanent life insurance policy. It was never promoted much by life insurance agents perhaps because of it's extremely low premium which results in a very low commission. Another consideration is that 5 years is a very short period of time for ownership of a life insurance policy. The 5 year term life insurance policy is worth a little of your attention. It is a good policy...depending on your need.
Why A 5 Year Term Life Insurance Policy?

5 year term life does have it's place in the portfolios of many life insurance buyer and can fulfill a very important need. If you have a short term need for life insurance then this type of insurance may be for you. If you find it necessary to take out a loan for a short period of time a five year term life insurance policy on your life can assure the lender that if you should die before the loan is repaid they will get back their money...

Certainly that is a good reason to buy this type of insurance. You may take the loan to pay for a college education either for yourself or a child or grandchild.

The face amount of the 5 year term life insurance policy remains level for the duration and so does the premium. Even though it is initially taken out for 5 years some companies allow you to continue beyond the initial 5 year period at a higher premium. The death benefit is more often than not free of income taxes. You may convert your policy to permanent insurance in the future.

• Waiver Of Premium Rider
  It may be wise to add a waiver of premium rider to your 5 year term life insurance policy. If you should become disabled...anytime after 6 months of disability...the life insurance company will take over the payment of your premiums for you, even if it is for the rest of your life. Think about it for a moment...
  Do you realize that people become temporarily disabled an average of about 5 times during their lifetime. If you become disabled for at least 6 months with most companies they will pay your 5 year term life insurance premium for you...even if your disability lasts for the rest of your life. Now isn't that amazing? If and whenever you return to work you pick up the premiums from that point...you owe the life insurance nothing for the unpaid premiums.
  
• Accidental Death Benefit Or Double Indemnity Rider
  The famous double indemnity rider can also be attached to your 5 year term life insurance policy. If you should die in an accident the life insurance company will pay to your beneficiary twice the face amount of your policy. Let us suppose you bought a $500,000 5 year term life insurance policy with one unit of accidental death benefit for each $1,000 of your policy and you died in an accident. The life insurance company would pay $1,000,000 to your family. That would be just beautiful, wouldn't it?

Private sector life insurance companies: an analysis

In 1992 the Government of Pakistan opened up life insurance to the private sector, issuing licences to three Pakistani companies - EFU Life, Metropolitan Life and New Jubilee Life. The first two companies commenced business towards the end of 1992 while New Jubilee has yet to enter the market, perhaps having reconsidered its initial plans for commencing life business. The caretaker government of Mr. Moin Qureshi took the major policy (and somewhat controversial) decision of opening up Pakistan's life insurance market to foreign insurance companies in 1993, allowing American Life (ALICO) into Pakistan. ALICO commenced business in mid-1995. The barrier to foreign investors in insurance having been broken, Commercial Union Life followed a year later, commencing business in mid-1996.

The financial statements for 1997 of all four new entrants to the life insurance market have now been published. It is an opportune time, therefore, to look at the relative performance of the four companies given that these results reflect at least one full year of operations of even the newest entrant, CU Life.

Table-I sets out, in comparative form, the Revenue Accounts of the four companies, restated to an extent for comparison purposes.

One major impediment in comparing these accounts is the method used by the different companies with regard to the treatment of liabilities against life insurance policies. EFU Life (which set the lead) and Commercial Union Life have set up full actuarial reserves from the very first year of their 'respective operations. This approach is to be commended as it results in the best determination of the companies profitability. Metropolitan Life set up full actuarial reserves for the first time in 1997 and therefore declared a loss for the year of Rs.46 million. This is obviously the accumulated loss as, until 1996, Metropolitan simply showed the net result of income and revenue in the Revenue account as the fund at the end of the year, even if this figure was negative. ALICO has also, unfortunately, chosen the latter route. Even the financial statements for 1997 of ALICO show a negative life fund, although a hint at the actuarial reserves is given in the notes to the accounts which indicate that. reserves of Rs.28.622 million should have been set up as at end 1997. This would indicate a "true" net accumulated deficit in the Profit and Loss Account of Rs.58.1 million and not the Rs.29.4 million shown. It is of concern that these two companies have been allowed by the Department of Insurance and Ministry of Commerce to follow this basis of accounting. Even Metropolitan Life's change of accounting basis is apparently a result of the appointment of more professional actuaries rather than as a result of any pressure from the controller. Some key indicators have been worked out from the above results, which are given in Table-II.

Again there are difficulties in comparisons in that all the financial statements do not give, for example, gross premiums or claims, commissions and expenses separately for group and individual life business.

Ignoring minor inconsistencies, the picture which emerges indicates that EFU Life is emerging as a clear market leader among the private sector companies, writing 60% of total premiums (57% of new individual life premiums and 63% of group life premiums). The company has also made a clear dent in the overall group life market, writing close to 9% of premiums. It's entry in end 1992 brought about the first real competition to State Life which has resulted in sharp falls in group life premium levels to the benefit of insured organisations. Although EFU Life has not really made any significant impression in State Life's individual life business, it is obviously building up a steady portfolio of individual life clients which are the base of any life company's long-term profitability.

CU Life is a surprising second, writing 15% of total private sector life premiums. Given that 1997 represents only 18 months of operations, CU Life's performance is good. It has already captured 28% of the increasingly competitive Group Life market and has come close to individual new business levels of ALlCO and Metropolitan. It remains to be seen whether CU Life is able to make the same impact in the individual life market as it has successfully made in the Group Life one.

ALICO and Metropolitan Life, however, continue to struggle. This is especially surprising in the case of ALICO which has traditionally been a market leader in the countries in this region where it has a presence. It's total failure to penetrate the Pakistani market and to live up to the tall claims made by it's management prior to it's shares being floated on the stock exchange, call into question the wisdom of the caretaker government of Mr. Moin Qureshi in granting the company permission by name.

Whereas premium revenue is an important part of any company's performance, expense control cannot be ignored. The commission expense percentages of the three companies writing substantial group life business are relatively even. Metropolitan's high commission expense rate reflects the negligible group life premiums written. The management expense levels of all the companies are a source of concern. Even EFU Life's expense ratio of 46% is high. However the expenses being incurred by CU and ALlCO is of great concern and is something which needs to be watched carefully. Metropolitan's expense ratio is also high, but can be understood given the company's [TABULAR DATA FOR TABLE-I OMITTED] inability to write group business which has resulted in lower ratios for the other companies.

From a profitability perspective EFU Life is to be commended in showing a surplus of Rs. 1.4 million for 1997. The company has apparently bridged the initial financial difficulties which life insurance companies almost always have to go through, and which the other three companies still seem to be having to cope with. The financial status of Metropolitan Life should be a matter of concern for the Department of Insurance, given that Rs.46 million of it's Rs.60 million paid up share capital has been wiped out. So should the hidden losses being incurred by ALICO. CU Life, despite turning out a loss of Rs.27 million for 1997 (and a total accumulated loss of Rs.36 million), is less of a cause of worry, not least due to its paid up capital of Rs.300 million. However this also indicates that the company's real loss is much larger, as the investment return on the share capital would have reduced the actual loss considerably.

Given the above results the relative prices quoted for the shares of these companies reflect the lack of depth in our stock markets. EFU Life, despite being clearly the most successful company, has consistently been quoted lower than the other three, including Metropolitan Life the shares of which are obviously highly over-prices. ALICO's share prices of over Rs.20 reflects the lack of availability of the company's shares in the market.

[TABULAR DATA FOR TABLE-II OMITTED]

On balance the analysis indicates EFU Life and CU Life as being clear long term players in the market. ALICO and Metropolitan Life, on the other hand, require a serious review of their business plans and management style to date. Metropolitan Life's annual report indicates that such a review has been initiated which is to be welcomed. The analysis also indicates a need for the Department of Insurance to take a closer look at the way life insurance companies are managed.

Life insurance for established families

Life insurance can protect your family and your assets. If you or your spouse should pass away, the right amount of life insurance coverage could allow surviving family members to pay off debts and maintain the same quality of life without having to sell investments or downsize your home.

Growing families mean growing life insurance needs

Many established families already have life insurance. A policy may have been purchased when a couple was newly married or upon the birth of their first child. For these families, the key isn't making sure life insurance is in place, it is ensuring that the family has the right level of coverage.

"Insurance needs increase because the standard of living increases," explains Marv Feldman, President and CEO of The Life and Health Insurance Foundation for Education (LIFE). "In many cases, these families have put themselves deeply in debt."

Feldman advises those with established families to remember that declining interest rates also impact life insurance needs. Generally speaking, families should anticipate investing the death benefit from a life insurance policy and drawing from the interest for regular living expenses. The capital should be preserved for emergencies or future needs. As interest rates decline, the death benefit should increase.

"Families should review numbers every year to every 18 months at a minimum," Feldman notes.

Term life insurance vs. permanent life insurance

Beyond the level of life insurance coverage, families must also determine whether to purchase term life insurance or permanent life. While permanent life, such as whole life insurance, provides guaranteed coverage so long as premiums are paid, term life offers temporary, less expensive financial protection.

The Minnesota Department of Commerce suggests that established families consider a combination of insurance coverage. According to the department, whole life insurance builds cash value that can be used for college tuition, while term life can be an inexpensive way to purchase the level of coverage needed to maintain a family's standard of living.

Feldman points out that determining the right level of coverage is important. Families should look at their cash flow to determine whether they can purchase the needed amount of coverage with term life, whole life or a combination of the two.

Life stages series: Life insurance for retirees

Retirement can change everything: from how you spend your free time to how you spend your money. As retirees adjust to living on lower incomes, it can be tempting to drop life insurance coverage. Some retirees may be able to forego this financial protection, but they should think carefully before eliminating their life insurance coverage.

Do retirees need life insurance?

Your need for life insurance will depend largely on your financial situation upon retirement. For those who have planned appropriately and have ample retirement savings, a surviving spouse may be able to live comfortably. Although having a large savings account upon retirement may be the ideal, it is far from reality for many couples.

"It's not uncommon for people in their 50s or 60s to have a 10 or 20 year mortgage," says Marv Feldman, President and CEO of The Life and Health Insurance Foundation for Education (LIFE). He notes that retirees should consider whether their pension has a survivorship provision and whether they will need to replace lost income to make debt payments and maintain quality of life.

Beyond paying off debt, there are other reasons to maintain life insurance. Life insurance can be used to pay off final expenses, such as funeral costs and estate taxes. Feldman also points out that there may be other reasons to hold on to life insurance protection, "There is a possibility that many retirees may become caretakers for grandchildren." He also states that life insurance can be an affordable way to leave a legacy to a charity or school of your choice.

The right life insurance for retirement

Retirees who decide to maintain their life insurance should take the time to review whether their current coverage level is appropriate. The Illinois Department of Insurance recommends that older couples consider the following to assess their life insurance needs:

• Medical bills
• Funeral expenses
• Outstanding debts
• Impact of income changes on discretionary spending
• Impact of death on assets to be left for children and grandchildren

"As you get older, term life insurance gets more expensive," says Feldman. "For someone older, I would gravitate toward whole or permanent coverage."

According to the Connecticut Insurance Department, permanent life insurance, such as whole life insurance, builds cash value that can be used later to pay premiums for long-term care insurance.

Finally, don't forget to update your beneficiary information. If your spouse has died or you have remarried, you will want to update this information. Others may want to change their beneficiary designations to share a portion of the death benefit with a favorite charity.

Life stages series: Life insurance for newlyweds

For newlyweds, life insurance may be the last thing on their minds. However, the need for life insurance coverage should be discussed by young couples, especially as they begin to plan for the future and their financial lives become increasingly intertwined.

Do newlyweds need life insurance?

Although experts almost universally agree that couples with children should purchase life insurance to replace lost income and provide for future expenses such as college, there is disagreement regarding whether this coverage is needed for childless couples.

Kiplinger's Personal Finance suggests that newlyweds can forgo buying a life insurance policy until they become parents. However, the argument against life insurance for newlyweds assumes that both spouses are working and would be able to support themselves independently should the other die.

On the other hand, the Financial Planning Association (FPA) says life insurance is important as soon as two people become financially tied together. Marv Feldman, President and CEO of the Life and Health Insurance Foundation for Education (LIFE), agrees, saying that young couples may have financial obligations, such as education loans or credit card debt, which warrant coverage.

Before deciding to forgo life insurance, couples should consider whether the surviving spouse would be able to pay monthly bills and achieve future goals like buying a house or obtaining higher education with only one income.

Newlyweds, especially those who marry early on, should also consider purchasing life insurance when they are young and healthy. The California Society of CPAs (CalCPA) acknowledges that childless young couples may not have an immediate need for coverage, but purchasing a policy at this life stage can mean affordable life insurance rates and possibly guaranteed coverage later in life.

Life in

Government prescribes tax credits for high health premiums

New England residents pay the most per person for their health insurance coverage--and in some cases double the national average, according to an analysis by the Kaiser Family Foundation.

The findings are based on insurer filings to the National Association of Insurance Commissioners that compared medical insurance costs across states.

While monthly health insurance premiums average $215 per person nationwide, both Vermont and Massachusetts had average premiums exceeding $400 per person. Rhode Island, New York and New Jersey rounded out the top five in terms of cost with premiums in these states running from $344 to $364 per person per month.

Compared to its northern neighbors, Delaware was an anomaly with monthly health insurance premiums averaging $169 per person. Other states with low premium averages include the following: Alabama, $136; California, $157; Arkansas, $163; and Idaho, $167.

The foundation speculated that premiums may be higher in some states because of reforms that make it easier for those with pre-existing conditions to find health insurance coverage. Massachusetts, Vermont, New York and New Jersey have all enacted medical insurance reform legislation.

Tax credits for health insurance plans scheduled for 2014

Despite the findings, there may be some relief for New England residents currently stuck with steep premiums.

In 2014, the Affordable Care Act will require that all U.S. residents maintain health insurance coverage. In addition, health insurance plans will be made available through Health Insurance Exchanges managed by individual states and the federal government. Families searching for affordable health insurance may be eligible for tax credits to offset the cost of their plan premiums.

The Department of the Treasury recently released proposed rules governing the issuance of premium tax credits. Under the rules, families earning 100 to 400 percent of the federal poverty limit--$22,350 to $89,400 for a family of four in 2011--would be eligible for a tax credit for health insurance purchases made through a government exchange. The credit will be refundable which means that if it exceeds the amount of a family's federal tax liability, a check will be issued for the difference. In addition, for eligible families, the Department of the Treasury will advance the credit and send a payment directly to the health insurance company.

The actual amount of the credit will be tied to the plan premium as well as the family's income. Those earning 100 percent of the federal poverty limit will be expected to contribute 2 percent of their income toward their health insurance premiums. Families earning 400 percent of the poverty limit will be required to contribute 9.5 percent of their income.