Reasons why you shouldn't cancel your life insurance policy

Maybe your very fortunate and no longer require life insurance. This can happen for many reasons but a common scenario is when an individual receives or earns a large amount of cash. Enough cash to easily cover all expenses your family may receive when you pass away. If you have millions of dollars in an interest baring account, a home thats paid for and very little other expenses perhaps you don't need life insurance. You should consult with your life insurance agent to see if this is feasible scenario but in certain instances it is.

So you no longer need your life insurance policy. Should you call your life insurance company and tell them to cancel your life insurance policy? Remember, this is the same life insurance policy you've paid $X in premiums every year for however many years. Essentially, it's as good as flushing money down the toilet at this point if you decide to just cancel the policy. Sure it protected you when you needed it but now that you don't need it why keep it?

There are a couple good reasons to keep your life insurance policy. As I mentioned above, you've already invested some money into it. Your family is already covered in the event you pass so why not make the beneficiary someone else? Perhaps leave your death benefit to your brother in law (the struggling actor) or someone else that could really use it. Another good option is to leave your life insurance benefit to a Charity. Personally, I love the Animal Shelters so I would consider leaving the death benefit to a local Animal Shelter. You may want to consult with your Accountant but I believe when the beneficiary is a Charity then your premium payments are tax deductible.

So even if you don't need the death benefit consider keeping your life insurance policy.

What is No Exam life insurance?

A lot of people are talking about the new buzz which is no exam or guaranteed issue life insurance. No exam or guaranteed issue life insurance is a fairly new product in which an individual may purchase life insurance online with a credit card and receive coverage without having the annoying blood and urine tests done.

Get your free No Exam Life Insurance quote.

What does this mean? It means that almost anyone can purchase life insurance today and receive coverage the same day. Some people have problems scheduling time for testing and some people simply don't do needles very well. The convenience of being able to purchase insurance online and receive your policy in your inbox is very attractive.

There are some drawbacks and no exam life insurance isn't for everyone. No exam life insurance usually is limited to a certain death benefit. Most companies I have seen that offer no exam insurance have a maximum of $150,000 in coverage. It's necessary for a life insurance company to set a maximum to cover potential losses. The chance of an insurance company receiving a claim for no exam life insurance is much greater than standard Term or Whole life insurance policies because they make those individuals take medical exams and they only insure the healthy ones or they have such a high premium it's still profitable for the life insurance company.

Another drawback is the policy premium. Since the risk is greater for the life insurance company the premiums for no exame life insurance tend to be higher. To some, the higher premium and lower death benefit are good deals compared to going through a full medical exam.

Whole Life Insurance is Still a Preferred Choice

For a long time in America, whole life insurance was what most people bought. Lately, insurance companies have been offering other insurance at lower rates, but in most cases, whole life insurance is still the most beneficial of all plans.


Good For Life Policy

While term life insurance is for a specified period, whole life insurance is designed for life time coverage. This makes it ideal for someone with a steady income who wants to plan for the future.

Whole Life Insurance Premiums and Death Benefits

Whole life insurance rates have the steady quality that drives long-term policy holders to this option. While term life insurance premiums generally go up each time the holder renews the policy, whole life insurance rates usually stay the same until time of death or cancellation of the policy. Some policies do have increasing rates, but the increases are defined in the contract when the policy is purchased. So there?s no reevaluation and no surprises.

The benefits paid at the time of death stay the same with whole life insurance, so the holders can rest assured that their families are taken care of.

Cash Value Turns Whole Life Insurance Into an Investment

A term policy begins and ends (with the policy holder loosing all the money he or she paid into it). A whole life insurance policy builds cash value. How? A portion of the premium is put towards investment in the company, so the policy holder also becomes a share holder. Over time, this builds into an amount of money that can be used. That amount is called the ?cash value?.

The policy holder can cancel the whole life insurance policy and take the cash or re-invest it in a new policy to better suit his or her needs. Or the holder can take the cash value, and stop payments, but still retain a portion of the death benefits (this is called "Paid Up Insurance").

Loan Values

As the cash value of a whole life insurance policy grows, policy holders can borrow money using the cash value as collateral. This allows whole life insurance policy holders to keep the insurance policy, but still use the money. If the debt is unpaid when the policy holder passes away, the benefits paid might be smaller.

Flexible Payment Methods for Whole Life Insurance

Single Premium: This whole life insurance quote is usually the most beneficial. It involves one single payment, and produces an instant cash value. The death benefits are defined and never change. It’s ideal for anyone who has a portion of money they want to put away for their family.

Limited Payments: This is when the premiums are only paid for a specified number of years. The amount for the premiums is specified in the whole life insurance quote and never changes. The cash value of the whole life insurance policy rises steadily.

Modified Premiums: The premium amounts increase over time, and then level after a specified number of years. All of the specifics are clearly defined in the whole life insurance quotes. The benefits amount stays the same, so it allows someone to purchase a larger policy than they can afford at that time.

Continuous Premiums: Continuous premiums never change and are due for the life of the policy holder. The cash value rises steadily. This is the most popular whole life insurance policy.

Other Whole Life Insurance Options

Whole life insurance companies often offer other options like ‘term riders’, where holders can add temporary policies for short terms. Whole life insurance policies also sometimes offer child and spousal riders, so holders can add someone to the same policy.

Choosing the right insurance policy isn’t always the simplest decision. Ask for the advice of an insurance agent who has the benefit of experience and can help you find decide if whole life insurance is right for you.