How to Buy Life Insurance Online, Free Instant Life Insurance Quote Comparison Rates

Term insurance is usually the least expensive form of insurance to get for a maximum of five years.
The choices:
Yearly renewable term. The rates start low and rise annually as your age (which increases the risk) goes up. Choose this policy if you're in a short-term venture (a construction project or a short-term contract).
Yearly renewable term policy with a reversion to lower premiums on evidence of insurability. This is a recent development. At a specified time (usually after four or five years), if you pass a medical exam, the premiums can be reduced by perhaps 35% of what they might have been. Example: If your insurance premium starts at $1,000 a year and climbs $200 annually, you must pass an exam during the fifth year to get the premium lowered to $1,300. Potential problem: Bad health at the time of the examination will negate the possibility of lowering the premium.
Failure to pass the physical will result in higher than normal term rates after the first five year cycle. Also, the decision to "re-enter" rests exclusively with the insurance company. If you wish to keep the insurance going for some period of time, reversionary term is generally considered a bad bargain.
Avoid term insurance even for the short haul if you are almost 70 years old. Since the risk at that age is so high, the point at which the term and straight-premium rate would cross would be attained within five years. At that point, a permanent life policy is best.

Adequate life insurance is a concern of every executive. But during heavy spending years when an executive most needs insurance, he has the least money available to buy it. Furthermore, insurance premiums are not deductible to the individual and, hence, have to be paid with after-tax dollars. This is where "split-dollar" comes to the rescue. It provides a way for a corporation to assist executives with their personal insurance programs by "splitting" the premiums with them. Additionally, it is one of the few compensation benefits that can be awarded on a discriminating basis to selected individuals.

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Split-dollar in practice: Every permanent life insurance policy has two aspects: The cash value and the death benefit. With split-dollar, the corporation pays that portion of each annual premium that represents the increase in cash value of the policy. The favored executive pays the remainder of the premium. With respect to the death benefit, two beneficiaries are designated - the corporation for an amount equal to the cash value of the policy at the time of death and the executive's beneficiary for the remainder.

A look at the numbers: Let's look at the numbers for a typical plan (summarized in the table). Consider the case of a $100,000 split dollar policy on a 36-year-old executive. The first year, the policy has a cash value of $225, which the employer pays, and the executive pays the remaining premium of $1,940. The second year, the executive's payment drops to $275, and the company pays $1,825. By the fifth year, the cash value increases as much as the premium, so the company pays the entire premium thereafter for the life of the policy.

Death benefit: At all times, the death benefit stands at $100,000 and eventually goes to the two beneficiaries-the company for an amount equal to the cash value (ranging from $225 in the first year to $37,000 by the twentieth) and the executive's widow or family for the remainder.

In other words, with split-dollar, the executive receives far more insurance than he could normally afford if he bought it himself, and the employer is absolutely sure of getting back whatever was spent on the policy, whether the executive lives, dies, quits, or retires.

Source: Consumer Information Center

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