How To Buy Permanent Life Insurance Without Paying Permanently

old man future past coveryoungpeople permanent life insurance dallas fort worth arlingtonYes! You Can Have Life Insurance For Your Entire Life While Only Paying Premiums For A Few Years

Many people avoid whole, or permanent, life insurance because most policies of this type require the individual to pay premiums until their death. However, this is not necessarily the case.

In some instances, a life insurance policyholder can find a plan that only requires them to pay premiums for a defined period of time, such as 3, 5, or 10 years.

While the premiums will be higher, it can be a relief to some people to know that they do not have to pay on their policy forever, especially in their senior years when they will have a diminished income.

You don’t buy life insurance because you are going to die, but because those you love are going to live.
— Unknown Author




Things To Know About Limited Pay Whole Life Insurance Policies

Paying for only a certain period of time on a whole life insurance policy is called a limited pay policy. While limited pay policies are great, there are some things you must know, such as:

  • What is the difference between a whole life policy vs. a term life policy?
  • Limited pay plans are sometimes reserved for those in good health.
  • Premiums will be higher than a conventional life insurance plan.
  • Make sure the insurance is good from Day 1.
  • Not all insurance companies offer limited pay policies.
  • Use of an insurance agent, while not required, will help you navigate your options.

Lets learn a little more about each of these…

What Is The Difference Between Whole Life and Term Life Insurance?

There are a number of types of insurance policies, but the two most popular are whole life insurance and term life insurance. This article has a good explanation of both, but to summarize, whole life insurance is a policy that is good for your entire life. As long as you continue to pay your premiums, you beneficiaries will receive a payout upon your death. The flip side is that you must pay your premiums for your entire life. For many people, this is a terrifying thought.

Term life insurance policies only have a payout if you die before a certain age, such as 60 or 65. Since the policy expires at a certain age, you only pay premiums until you reach that age. Because the policy doesn’t have a guaranteed payout, the premiums are lower than a whole life policy.

Many people accumulate enough savings during their life that they don’t believe they’ll need whole life insurance, and instead just want protection for their family in the event they die before they have had the time to save. This is the allure of a term policy.

Both types of policies are good options. It’s just a matter of which best fits your situation.

Limited Pay Policies Are Sometimes Reserved For Those In Good Health

Some insurance companies will only allow people in good health to purchase a limited pay insurance policy. Carriers like this will exclude people that have diabetes, cancer, heart problems, hepatitis, and more.

Every insurance company is different, and some are more lenient than others. Most will still allow you to be covered in one way or another, just not with limited pay options.

A good conversation with your insurance agent is the best way to fully understand your options.

Most life insurance companies will allow you to be covered one way or another.

Limited Pay Premiums Are Higher Than Conventional Premiums

As you might expect, since you are only paying premiums for a defined amount of time your premiums will be higher than if you are paying for the rest of your life.

What this means is that if you die during your payment period, you will have paid too much (assuming your family receives the full benefit, which we’ll go into in a bit). If you die after your payment period, then there is a chance that you will pay less than you would have under a typical whole life policy.

Since the premiums are higher, do your homework to determine if a limited pay policy really makes you financially better off. Just because you pay for less years doesn’t mean you’ll pay less money.

Consider these monthly rates for a 50 year old who buys a $10,000 whole life insurance plan. These rates are from an actual insurance company that my agency works with.

 

 
Conventional WL Policy
10-Year Limited Pay WL Policy
Monthly Premium
$30.70
$56.60
Payments After 10 Years
$3,684
$6,792

 

As you can see, while the premiums under a limited pay plan stopped after 10 years, the policyholder paid over $3,100 more than he would have under a conventional whole life policy.

A policyholder would have to pay conventional premiums for more than 18 years before he would pay what he paid under a 10-year limited pay plan.

Did he win by taking the limited pay plan? It depends on when he died. If he dies within 18 years then he spent too much money. If he lives longer than 18 years, then he saved money.

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Make Sure Life Insurance Is Good From Day 1

The payout on most limited pay plans is good from Day 1. Even if you have only paid 1 premium, if you die the next day, your family will receive the policy’s full face amount.

However, not all limited pay plans are like this. Some of them only pay a percentage of the face amount, while others just return the premium paid plus a little interest.

Make sure you fully understand how your life insurance policy works and what your beneficiaries will receive.

Not All Insurance Companies Offer Limited Pay Plans

When you go looking for life insurance, don’t assume that your favorite insurance company will offer a limited pay plan. Some do, some don’t. And those that do will sometimes require good health.

Even if you can’t find a good limited pay plan, you will still be able to get some life insurance, even if you have to pay a little bit more for a guaranteed issue life insurance plan.

And who can help you out with all of that?

A Good Life Insurance Agent Will Help You Navigate Your Options

The internet has made it much easier to buy things on our own. Insurance is one of those things. However, there is some nuance that is required to buy the right insurance policy for you and your family. Expertise is still required.

This is where a good insurance agent comes in handy. Your agent will be able to talk you through various options and make sure a limited pay plan is right for you.

Agents work on commission, but you won’t get a better rate by cutting out the agent. The insurance company will just pocket that commission themselves.

silhouette of a family holding hands walking through a big red heart whole permanent life insurance coveryoungpeople.com gee insurance solutions arlington fort worth dallas

Permanent Life Insurance Doesn’t Have To Mean Permanent Premiums

While it is possible to have a permanent life insurance policy that doesn’t require premiums to be paid for the rest of your life, you need to make sure that it makes sense for you and your family.

Also make sure that you understand the financial risk/reward for buying a limited pay whole life insurance policy. The last thing anyone wants is to spend money on something that isn’t worthwhile, so do your due diligence with your agent to buy the right plan.

Life insurance is one of the best ways to show your family you love them. Death will come to all of us, and we need to make sure we financially protect our family one way or another.



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What Is The Difference Between Whole Life and Term Life Insurance



You are not alone if you think life insurance is a confusing concept. It seems like it shouldn’t be this confusing, but it can be. After all, you just pay a premium, and your family receives a benefit when you die, right?

For the most part, that is correct. It’s just a matter of how long you want the benefit to last and how long you want to pay premiums.

Let take a look at the difference between whole life insurance and term life insurance…

What Is Whole Life Insurance?

As its name implies, whole life insurance lasts for your whole life. As long as you pay your premiums, the benefit will be there for your beneficiaries when you die. However, because it will be there no matter how long you live, you will also be paying premiums for virtually your entire life.

Some whole life policies have limited-pay options, but for the most part, you will be paying premiums until age 100 or age 120. See what I mean by paying premiums for your entire life?

One of the biggest advantage of whole life over term life is that a whole life insurance policy accrues cash value over time. Therefore, you can take out a loan on your policy after a few years. The loan will be counted against your face value, so your family will not receive as much of a payout, but at least it is there as an option.

Premiums for a whole life policy tend to be higher than a term life policy, and for good reason. Since the benefit will definitely be paid out, insurance companies have to make sure they have enough money to pay the benefit.

Whole life policies can be great for estate planning and final expense insurance.



What Is Term Life Insurance?

Again, as its name implies, term life insurance is a policy that expires after a certain timeframe, usually somewhere between age 60 and 70. You also only pay premiums until you reach that age.

The reason many people purchase term life insurance is that it is cheaper than a whole life insurance policy, and by the time someone has reached their 60s they may have enough money is savings to provide for their family.

Term life insurance is a death benefit only. There is no cash value that accumulates.

How To Buy A Life Insurance Policy?

There are more details to know when figuring out the difference between a whole life and term life insurance policy, but these are the highlights.

One way to know for sure which option is best for you is to talk to a licensed agent. Look online for agents near you, and get references from people you know. Chances are, you already know someone who sells life insurance.

I’m in north Texas, and one of the companies I like best is Gee Insurance Solutions. They are very professional and knowledgeable, which is what I like in my agents.

Life insurance is a necessity. No, you won’t be around to enjoy it, but it is a great way to leave a lasting legacy with your family.



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