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All Details About Life Insurance Policy.

All Deep Details About Insurance Policy (Part 1).

By the time we're finished with this presentation, you are going to know more than the average life insurance agent about how life insurance works?
Anybody thinks that's cool yeah. all right so here we go so there are two types of life insurance. there is permanent insurance. in there's term insurance there are two kinds of permanent terminate insurance. there's whole life and there's universal life there's a couple type of term insurance as well. there is a one-year renewable term. and there is level premium term insurance. but what are these things mean other than just words? we'll look at the concepts now behind them. and see why they've named these different names and you'll understand. what products are good what products are not and why you would either want to buy or stay away. from them so the first type of insurance we're going to look at its term insurance. it's called term insurance because it's a type of life insurance policy. that pays a death benefit price right provides coverage for a certain amount of period or a specified. term of your term insurance. will look at the one-year renewable term first. and what it looks like is you have a death benefit. that you're purchasing and you have premiums and the premiums rise based on your age and the amount of coverage. so if you're really young you'll get in at low rate premiums are like next to nothing for someone young buying term as the years progress and you get older the premiums go up accordingly with one-year. renewable term insurance when you buy the policy you have a certain fee for that year and then next year. if you want to renew and keep your coverage.

Best Life Insurance Policy In India 2019

You have any other premiums paid. and it's higher this year so you're always paying on a stair-step pattern there's another type of insurance now that's called level premium. term insurance and what it does is it takes an average of the amount of term that you want so if you want 10 15 20 years. it's going to average the number of premiums that you'll pay and then give you a little discount it's very nice. and you know the premiums if you buy 20 years you know for 20 years your premium is going to be X it's not going to be x plus plus plus plus plus plus. each year and this is nice level premium term insurance also has something that we really really really like and it's called a convertibility option the convertible term insurance is such a beautiful thing and we'll go into it later but remember it's convertible term insurance that we like its convertible level term insurance that we love. now let's talk about Universal Life Insurance and Universal Life Insurance has been around for a while it's a kind of the new insurance and insurance companies love it. because universal life insurance takes the risk from the insurance company. and it puts it on you as the client and they're kind of a fan of that because insurance companies you know insurance takes is supposed to take the risk away from you but insurance companies can make more money. if they put the risk back onto you right so they're kind of a fan of this they like their agents to sell this. because it's taking the risk from them and that makes sense.

Life Insurance Policy Meaning

Universal Life Insurance offers the low-cost protection of term insurance. with a cash or savings element that provides access to cash and this is how it looks you have a death benefit when you buy a universal life policy plus you have a cash fund. that will grow over it over the years and they say and for this, you can have a flexible. Preem so for example if you want to buy in this year at X and next year. you want to pay a little more you can that's nice. well maybe the next year you know it's not doing so well or you want to use the money elsewhere you can just pay a little tiny bit. and you'll still have all your coverage isn't that nice flexible premium. Universal is talking about the coverage amount of flexible premium talks about the premium. and they said this is a nice policy. but let's look at inside now and see what actually is happening. inside the universal life policy. and why it may not be such a nice policy. the universal policies work like this you pay your premiums and those premiums go into your cash. account inside the policy. from the cash account, the money is taken out and put into these different investments. especially if it's index this is exactly what it's doing it goes out into these investments a wide variety and then the investments make a return. and they return back to the cash account so this money is going from you into the cash account over to the investments coming back. oftentimes the universal policies also have a percent cap rate inside the policy. so let's say for example you pay your premiums and they go invest in these different investments. well if the investment does really well that should be good news. for you right if the investment does bad that could be bad news but the insurance company says oh no 0% cap your captain zero. so if the investment does bad you won't lose you know you won't have to pay anything for it so if it goes negative. but they also put a cap on the top as well so if the investment does super well.

Max Life Insurance

Yours capped at 7-7 percent is what you get back even if the investment did well at fifteen or sixteen percent. then once the money comes back in from the investment to the cash account they take premiums for the death benefit so they take the money. out there and this is also the cash account it takes the fees and surrender charges. that the policy may have so now what happens with these insurance policies. that we see that are recently requiring more premium. why would that be I mean if this is happening and the investments are working. like they shouldn't it be okay well the investment is what we have to remember with the universal life policies but the life insurance policy is here with the universal products the death benefit is based. actually sorry I got ahead of myself so we have death benefit Plus now. we'll look at the way they really performed death benefit yes plus a cash fund that actually grows more... like this, so it grows for a while and then it drops off and when it does that look what happens to the premiums. so we asked why does this happen to the premiums the cash account did well. and then it started going down and suddenly you're having to pay premiums why. it's based on the foundation that this policy is built on. and that foundation is the one-year renewable term which is the most expensive kind of term insurance so you could possibly purchase. this term insurance as you go through the years of the policy. and you have your flexible premium the premiums. coming from that cash fund every year it increases the premium amount you may not be increasing what you're paying in. you may actually be decreasing because you're using that flexible option. but the premium for the coverage is increasing and so what happens when all the money in the cash account is used up. you either have to make the payments or your coverage goes away. we have a sad example to look at now of exactly what happened with the universal life insurance policy that one somebody brought to our office. that did just this here's the actual illustration. this came to the office I took out the company name and the client's name and all the personal information. but this is what he brought to us he's 45 when you purchased this policy. he's paying $4,000 a year into this policy for a million dollars of coverage. that's pretty good now he's 62 17 years later he comes to us because he says my insurance wants me to pay more premiums. to keep my coverage and I can't afford the premiums. so can you do something to help me?

Life Insurance Policy Payment

we took a look at his policy total premiums that he has paid to this point are 61 almost 62,000. he has a fund value in his policy of 14,000 almost $15,000. that he could access if he wanted to make money from this policy. he has a surrender value of five thousand five hundred twenty-four dollars. so that means if he decided to get rid of the see and said I'm done with it just give me what you know I can get they would send him a check for 55 24. he has a death benefit of a million dollars next year though and this is why he was concerned if he came to us he'll be 63 years old. he'll have paid almost sixty-six thousand dollars. in premium, by that time he'll have a fund value with zero a surrender value of zero. and a death benefit of zero is this a good deal. for the insurance company he's, he was 45 when he purchased his pulse and he was in good health. when he purchased this policy he got the very best rating possible when he purchased this policy. he's 17 years older now he goes to apply for a new policy his health has changed he does not get a good rating now. he has to pay a lot more for this coverage. he wanted this coverage for his kids. we went to underwriting we tried to get him a policy the premium that came back he said I can't afford it. guess what there's no legacy for the kids. it's really sad. and the New York Times had something to say about this in 2016. about why insurance premiums are skyrocketing and they said by the way here the guarantees guaranteed zero. non-guaranteed even if it performed well still zero. but New York Times said the money in the accumulated cash account can be used to help pay the policies to prune. but there is a risk because if the money runs out the policy lapses there's no coverage left. and the article went on to say not to be morbid and don't take this the wrong way but your mother really needs to die. because she was the one insured her premiums are increasing. so you know I guess you have two options when you purchase Universal Life Insurance. you can either purchase it knowing that the coverage. will go away someday that you'll pay a lot of money into these policies that aren't worth it. or you could plan to die before the policy runs out. I don't think he wants to be dying at age 62. what end and so contacting the insurance company. they tell us lots of people exchange their universal life policies that aren't performing to permanent insurance. whole life insurance lease says it happens every day. but it's sad all the same so it comes there's the question.

Life Insurance Policy Information.

Why do people sell these kinds of products if they're so horrible? and it really comes down I think to Commissions. so let's talk a little bit about how Commission's are made. and how the Commission's are earned. and so you can understand exactly how they work you'll know where they're coming from. and I'll help you may be to get a little clearer picture of what's happening Commissions unlike when you sell or when you purchase a home or you purchase a car are different with the insurance company. when you purchase a home or car you pay the money. and then a portion of that goes to the agent or the sales rep whoever sold you the car that's their Commission. Right so you're paying higher to pay them that's fine with the insurance company it's a bit different then. the insurance company has these products that they offer when you buy a policy. you pay the money to the insurance company and they put it directly into whatever product you bought. all the money that you paid is purchasing your insurance. then the insurance company has also had something that they call their general fund. this general fund is what they use to help pay the utilities so that they can have lights at the insurance company's office. they can have computers to calculate the transactions or to you know set up the program so you can see your policy online. they use this fund to pay their employees that are there running the insurance companies helping you to take loans or processing paperwork. they also pay their underwriters out of this they also pay their agents out of this so when commissions when your policy is purchased they look at the policy they look at the amount they look at the type of policy that it is and they say to their agent out of our general fund this is what you earned.