life insurance

Joint life insurance
When a husband and wife or business associates need life insurance, it is often cheaper to buy a joint life insurance policy instead of two or more separate policies. While this type of insurance saves on administrative costs, the policy usually only pays the death benefit on the first to die. However, some companies issue “second or last to die” policies for estate planning.

Family insurance
This is basically a whole life insurance policy on a parent with smaller amounts of additional term insurance on other family members.

Final expense insurance
Also known as “burial policies” or “senior life insurance packages,” these small policies cover or pre-pay a person’s funeral costs. Historically, some of these policies had a very high price compared to the death benefit. In response to consumer complaints, Washington created the high-priced life insurance regulation.
This regulation includes a special formula that bans companies from marketing certain high-priced life insurance policies with small death benefits. Companies cannot sell life insurance polices in Washington when the amount paid into them quickly exceeds the possible benefit. For example, during the first 1 0 years of the policy, the death benefit must be greater than the sum of the premiums compounded at five percent interest. Otherwise, you would be better off with your money in a savings accPlease note: This rule does not apply to policies with a death benefit of $25,000 or more.


Waiver of premium
If you become seriously ill or injured and cannot work, you may not be able to pay your premium. A waiver of premium benefit lets you waive paying your premiums as long as you remain disabled (according the definition in your policy). You must remain disabled at least six months to collect this modest disability income benefit. You can usually add this life insurance extra to your policy for only a few cents more per month per thousand dollars of insurance coverage.
Accidental death benefit
The industry also refers to this life insurance extra, as “double, triple, or additional” indemnity. If an accident causes your death, this life insurance extra allows your beneficiaries to receive double, triple, or even more of your policy’s death benefit value.
Accelerated life insurance benefit
This permits life insurance companies to include policy language that allows for an early, discounted benefit payment to terminally ill policyholders. A doctor must certify that policyholders have less than 24 months to live.
What you should know about trading in policies
It’s become more common for policyholders to use their life insurance cash values in various financial actions. Some people borrow the base value of their policy to take advantage of the low interest rate. Some cash their policies in and put the cash in higher interest accounts while making other plans for their insurance needs. Others may look into new developments in the life insurance market, such as policies that include investments or variable interest options.
Be careful if you are tempted to use your life insurance coverage as described in these examples. Your individual and family situation will help you decide if any of these options will work for you.
If you decide to change your coverage, you should never drop your old policy until the new one takes effect, and you have reviewed it. Ask your agent or broker for complete disclosure on any new policy you are thinking about buying.
If an agent or broker suggests you exchange a policy for a new one, ask for a comparison of the new offering and the old policy. Be sure to get it in writing before you agree to the transaction.
Be aware that any replacement policy may contain new restrictions such as a new two-year suicide clause, and may allow the company to revoke your policy for false statements on your application. Replacement policies may also include important new surrender penalties if you wish to cash them in. A surrender penalty is a financial penalty you pay for canceling a policy or contract early. Older people should be wary of trading in current policies for new ones that require a substantial new surrender penalty.
If you trade in policies, by law you must receive a “Notice Regarding Replacement of Insurance.” This will help you make the best decision when you’re thinking about replacing an existing life insurance policy. The agent or broker should give you a completed replacement notice at the time he or she takes your applications for the new insurance policy.