Is Life Insurance Is A Con?

Is life insurance cover a big con or are too many people using this fallacy to cover up a mistake on their own behalf? There are many questions when it comes to life insurance cover and the most common is usually how much a beneficiary will be paid should the policy holder die. It is a simple enough question and one of the most important factors to consider, but the terms and conditions of the policy plus filling out a form accurately is just as vital and are too often overlooked as secondary issues when creating cover while the majority focus solely on the payout clauses.

Why the payout amount is just one thing to consider…

There have been many horror stories over the years where people have faked their own deaths in the hope their partners will receive the benefits from their policy, but many others are filled with stories of cons and rip offs that make many think life insurance cover is a huge mistake.

More often than not the main reason people shout for the heads of the companies offer life insurance cover is because they lied or made an honest mistake when filling out the paperwork for their policy. Terms and conditions are often overlooked in favour of the payout amount and as such, policy holders (or those left behind) end up feeling ripped off when the payments are not quite what they presumed they would be.

Application form inaccuracies are not the same as being conned…

Case 1 – A woman from London attempted to sue her life insurance broker after her husband died from liver failure and his policy was never paid out. Unfortunately his policy was never valid as he had written his date of birth incorrectly and lied about his income levels, which as per the terms and conditions of the policy made it invalid. His wife failed in her bid to sue.

Case 2 – Lying on a form can be just as destructive. In France two years ago a man was diagnosed with lung cancer but with no health insurance the British-born man travelled to London to visit a life insurance broker. The man in question was found to have fraudulently taken out insurance because he lied on the form and said he was in good health after already being diagnosed with lung cancer in France. He later died from his cancer and left his family in debt for his treatment costs.

John Darwin – A canoeing con man

The recent case of John Darwin shows how the tables can be turned. The British man was thought to have died in a canoeing accident, but turned up safe and well five years later claiming not to remember anything. An investigation led to the discovery that Darwin had been staying in the bed-sit next door to his wife and was able to get into her room through a secret hole in the wall facts even their grown children were unaware of. Both are currently serving jail time.

So conning can happen on both sides and as long as the paper work is accurately filled out with honest answers and the terms and conditions are adhered to the beneficiary is unlikely to encounter any problems.

Life Insurance Lies

The price of your life insurance policy often depends on your answers to a range of application questions, plus the results of your life insurance exam and personal medical records. Some applicants succumb to the temptation to lie on their applications, hoping their misrepresentations will sneak through the approval process and garner them lower rates. If a life insurance company finds out a person lied about past information and then dies due to a related cause, there are two outcomes: The company could alter the death benefit to be equal to the amount the person would have gotten with a rated policy, or the company could rescind the entire policy. An insurance companys range of remedies depends on specific state laws. Here are some of the most frequent lies discovered by life insurance companies in screening applications.

I dont use tobacco: The desire to get affordable life insurance drives many applicants to not only check the non-tobacco boxes on their applications but to also abstain for several weeks before their medical exams so that nicotine does not show up in their lab results. This lie pops up more than anything elseand some applicants lie unintentionally. Applicants who use nicotine in other forms, such as a patch or chewing tobacco, may not realize they are in the tobacco category. In their own minds they are not tobacco users, but in life insurance companies eyes they are.

Im not depressed: Neglecting to mention depression is common. Depression can be impossible to detect by an agent or the paramedical examiner who performs the medical review. However, any medical diagnosis of depression will be apparent in your medical records.

Ive only had that one DUI: Lying about drunken driving happens, but lies about the second, third, or fourth offense are the most common. The also applies to traffic or moving violations such as speeding.

Theres no cancer in my family: An applicants own history of canceralong with cancer among immediate family memberswill result in a higher life insurance costs, increasing the temptation to fudge. Any personal history of cancer is no doubt in your medical records, and so is family history.

I dont plan to travel anywhere dangerous: The number of applicants who misrepresent their travel plans has increased, especially as more parts of the world become dangerous. Applicants will sometimes adjust their plans, saying theyll be traveling in a dangerous land for only two weeks when in fact they plan to reside there for an extended period of time.

I make $100,000 a year fixing cars: Some people will lie about their income in order to receive more coverage than they are eligible for. A couple may claim that the husband is a self-employed mechanic making $100,000 a year and the wife is a self-employed housekeeper making $50,000 a year. When red flags go up in a case like this, insurers may pull a credit report or ask the applicant to fill out a financial supplement that details assets, liabilities, and other information.

Life Insurance Policy For Future Savings

Losers live in the past winners learn from the past and enjoy working in the present towards the future. So dont always live in the past rather work towards your future today. A policy that can save you during your old age and at the time of financial crisis is California life insurance policy. How it can be a saving for your future and in what way it protects you from financial crisis is what we are going to see in this article. As by the name goes, it is insurance for life and the insurance experts call this policy as life assurance policy. So let us proceed in brief into the article. What are the different steps that you take in order to make a saving?

Most of you would be following the same old techniques such as investing in banks, share markets and save by themselves. Yes, of course these techniques are good ones, but the disadvantages are, you are forced to take money from these places very often and these are not permanent solutions for your future savings. So you need to approach in some different ways and the best methods that are widely used now are California life insurance policies. In California or Los Angeles life insurance policies, there are different types of insurance policies available and each type is best for your future savings. When you avail the Los Angeles term life insurance, you can save your money for your future for particular terms or years. The advantage in California term life insurance policy is you can pre plan well before and can avail the policy as per your decision.

For example, you can start to avail insurance at the time when your child is born so that the money grows along with your child and it would save you money during the time of your childs education. The Los Angeles whole life insurance itself acts as a tax shelter and offers you a saving benefit and provides a risk free avenue for your loved ones. This policy last throughout the policy holders life and it is one of the best insurance policies to protect your family after your death. The middle class family always likes California universal life insurance because it has benefits such as loans, withdrawals, collateral assignments, pension funding and tax planning. This insurance policy is called as a two part process and has two components such as insurance and cash account.

So in all means, the Los Angeles life insurance policies are best for your future savings. As like other techniques, you cant take money as you do in bank investment and share market. These are called as permanent savings and also one of the better options for your safety and security in future. Mr. John M Richardson has quoted about future and it is When it comes to future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened so decide yourself on which category you are going to come under. Think well and act soon and have a secured life during your old age.

Using Life Insurance Wisely

Every family should have a life insurance policy on at least one of the financial providers. A policy should always be in place in case one of the primary breadwinners passes away so that the family will be able to support itself if no other source of income is available after the breadwinner dies.

Estate or Death taxes can be as high as 55% when the insurance policyholder dies. Many families cannot afford to pay these steep taxes and still maintain the lifestyle that they are accustomed to. Therefore, we have compiled a few tips to help ensure that your family can maximize the benefits they receive from your life insurance policy – and avoid giving so much of it to the government.

First of all, you should know that a portion of your estate will be given to your beneficiaries with a tax exclusion. The number of dollars covered by the exclusion each year varies, but heres a brief overview: in 2004 and 2005, the exclusion was $1.5 million per person. From 2006 through 2008, the exclusion is $2 million, and, in 2009, the exclusion is $3.5 million. The estate tax is repealed for the year 2010, but the tax returns with an exclusion of $1 million in the year 2011. Now, that can get confusing!

Because the government can take so much of your estate for taxes, its important to shield as much as possible with the use of a variety of Trusts. One such Trust is the Irrevocable Life Insurance Trust, otherwise known as the ILIT.

When you establish an ILIT, you will name a trustee to manage that trust. Your trustee can be your financial advisor or a beneficiary. Your trustee will purchase a life insurance contract on your life. Upon your death, the policys death benefit will provide liquidity of the assets in your Trust.

With your ILIT, you can control how the estate is divided and spent. Having the ability to control your own estate, post-mortem, may prove to be especially helpful if you have young adults who are going to receive a sizeable sum of money. You can, for example, enumerate which funds will be spent for education, which for costs of living, and which for other activities. Thus, you can allocate portions of your estate for any activities you wish.

You can also transfer ownership of the life insurance policy you already own. However, there are complications that may arise from the transfer. You will want to consult a qualified attorney to ensure that you fully understand how the system works. For example, if you die within three (3) years of transferring ownership of your existing policy, the life insurance policy will be taxed as part of your estate.

With the right help, figuring out how to handle life insurance (and your estate in general) doesnt have to be difficult or complicated. Consult a qualified attorney for more information on how to set up your ILIT or other Trusts so that your beneficiaries can receive the most benefit from your assets.

Life Insurance Companies

Insurance is all about the evaluation of risk and it is something that life insurance companies know a lot about. Every time life insurance companies receive an application for a life insurance policy, the companies decide how much of a risk that applicant poses to their business. This is to say that the insurance companies make an educated estimation of how long the applicant is likely to live versus how many insurance premium payments they are likely to make before death occurs.

If they believe that the applicant will live long and will therefore make a substantial number of insurance premium payments during his/her life, then life insurance companies see the applicant as low risk to their business. However, if life insurance companies believe that an applicant could die soon, and therefore make relatively few insurance premium payments while they are alive, that candidate will be seen as a higher risk by the insurance companies.

How life insurance premiums are calculated

When calculating life insurance premiums two factors are considered by life insurance companies. The first factor involves an evaluation of the general likelihood of death occurring at a particular age, and involves the scaling of applicants against normal life expectancy. This sets the ‘average’ risk level that different age ranges attract needless to say that the closer you are to your average life expectancy then the higher the risk level that you’ll be measured against.

The second factor is based on whether the applicant is above or below their average risk level for their age. Someone who has an unhealthy lifestyle, suffers from pre-existing health conditions and is in a stressful job is likely to be classified as ‘above average’. On the flip side, someone who goes to the gym regularly, does not smoke and eats a balanced diet is likely to be seen as ‘below average’. Naturally, those who are below average risk will see keener insurance premiums on their life insurance policy for their age than people who are classified as ‘above average’.

Cheaper life insurance?

While there is often little we can do about pre-existing health conditions, there are ways in which to tip the scales in our favour of cheaper life insurance. This we can do by altering our lifestyle and striking a better work-life balance in a stress-free environment. Changing lifestyle habits though can be more effective for some than it can for others.

For instance, a person in their 20s living out an unhealthy existence is likely to be seen as less of an insurance threat for their age to life companies than someone in their 50s with the same unhealthy lifestyle. This is because the body of a 20-year-old will respond more efficiently to improvements in lifestyle than will the body of a 50-year-old. In essence therefore, there are different degrees of being above average and below average, making the calculation of life insurance premiums for each individual definitely a job for the experts at the life companies!