As a life insurance agent, I meet and speak with people in all sorts of unique situations. Each one strives to protect their family and it is my job to assist them in finding the right plan with the right features. Some of the most beneficial features I help people analyze are the available insurance riders.

Although regularly overlooked, riders on life insurance plans are often the best way to adjust and customize an insurance plan. They allow the client to protect their family in the most efficient way. Riders are benefits that may be purchased to supplement the core plan. Below are some of the best riders to take into account when purchasing life insurance:

• Accidental Death Benefit (ACD): An accidental death benefit is a rider which adds an additional death benefit to the original face amount. The plan pays that additional amount if the insures dies within 90 days of an accident that caused injuries resulting in death.
  • When I like to suggest this rider: This is a great rider for younger clients because it is very inexpensive and covers the risk of their most likely cause of death. In most cases, this rider is able to double or substantially increase the face amount for a fraction of the initial premium. Life insurance is all about the risk and if the most threatening cause of death for a younger person is an accident, it makes sense for younger individuals to utilize this option.

• Waiver of Premium (WP): This rider waives all future premium payments in the event that an insured becomes totally and permanently disabled. As for most families that I have spoken with, disability due to a disease or bodily injury would cause immense financial stress. This benefit can ease that stress by relieving the family of continued premium payments while still ensuring the family has coverage.
  • When I like to suggest this rider: This rider is one I often suggest to families that rely on one individual to provide the main source of income. If they would happen to pass away, their death and the lack of a steady income might bring a family to a financial ruin. People often don’t consider that the same could happen if the household breadwinner is unable to work. The chances of becoming disabled are much higher than death in most instances, so providing another layer of financial protection is beneficial to these families.
    
• Guaranteed Insurability Rider (GIO): With this rider, the insured has the option to purchase additional Whole Life insurance on specific future dates, without further underwriting. As we age, our health deteriorates and insurance needs may change. It can be very difficult to imagine yourself in a poor enough health that further insurance is no longer an option. This rider ensures that no matter what your health is like, there is always the choice to protect what you care about most.
  • When I like to suggest this rider: I like this rider for families expecting a future need for more coverage. A great example of this is a young married couple I spoke to. They wanted to have children in the future, but did not necessarily want to outright commit to getting a bigger policy before children were in the picture. This rider allowed them to have the option of purchasing more coverage without going through the underwriting process when their insurance needs increased.

Having the opportunity to speak with clients to help them understand life insurance has always something I enjoy. Life insurance is composed of many flexible elements, such as riders. When combined appropriately, these elements greatly contribute to making your life insurance decision the most customizable and beneficial for your family. For over 140 years, the PRCUA has been devoted to positively contributing to that decision. Call us today at (800) 782-2600 and let our PRCUA family protect yours.

By Rafal Ciolkosz

When looking into purchasing Life Insurance, it is important to have an idea of what premium amount would comfortably fit into your budget. This will help you decide between Term Insurance and Whole Life Insurance and will also help you make sure the premiums will not stress your finances. One of the best ways to figure out what money you could safely spend on Life Insurance is to work out a personal Cash Flow Statement.

A Cash Flow Statement is a financial accounting tool used to track and balance income and expenses on a monthly basis. This is a tool that is not difficult to use and is incredibly helpful when making financial decisions. See the example below.

Click HERE to download a free, basic Cash Flow Statement worksheet from the PRCUA.

In order to complete a statement, you will need last month’s pay stubs and bank and credit card statements. This information will be needed to complete the three main sections of the statement – Income, Fixed Expenses, and Variable Expenses.

• Under the Income section, you will list your monthly salary, bonuses or commissions, child support payments, rental income, and Social Security or Welfare payments. Basically any money, even monetary gifts for holidays, would be listed in this section.
• Fixed Expenses would be listed next. These expenses include any bills that remain the same from month to month. Your rent/mortgage, daycare expenses, and insurance premiums are great examples of this type of expense. This section of the Cash Flow Statement will not typically change if the spreadsheet is completed on a monthly basis.
• Variable Expenses are ones that fluctuate from month to month. The amount of money spent on groceries, electricity, entertainment, and clothing will almost always shift each month. This part of the statement may require a little bit of time to complete, this is time well spent in order to construct and protect financial health.

To help save you some time and make the process easier, click HERE to download a free, basic Cash Flow Statement worksheet from the PRCUA. Each section can be altered to include the income and expenses that are applicable to you.

Once you’ve completed the Cash Flow Statement, look at the left over funds available and decide how much of that amount could comfortably go towards a Life Insurance premium. It should still leave cash left over to be saved and invested. With that number in mind, call us today at (800) 773-8632 and ask for a quote that works with your budget.

What if you are retired or nearing retirement and you do not have life insurance? You may think that you will no longer qualify, due to age or health. However, this is not necessarily the case. Final expense insurance is a form of life insurance that requires little or no underwriting, which means almost anyone can qualify. Policies are available in face amounts typically ranging from several thousand dollars up to a maximum of $25,000-$50,000—much less than a standard life insurance policy. This is because these policies are only intended to cover final expenses and small legacy wishes; they are not meant to address longer-range expenses like ongoing living costs or college and retirement funding.

Final expense insurance typically comes in two varieties. The first type is the immediate full benefit policy, which is generally available to people with no serious health concerns. This type of policy pays the full face value to the beneficiaries immediately upon the insured’s death, even if the policy has only just been bought. The second type of final expense insurance is the graded benefit policy, which is available to people with serious health concerns. This type of policy provides the insured with limited or no benefits during the first few years, but will pay 100% of the death benefit after the policy has been in place for a specified number of years. If the insured dies before the time has elapsed, then the beneficiary will still receive a return of premiums.

These policies can provide the peace of mind, knowing that your survivors will not be left struggling to pay for your funeral or with outstanding medical bills or debts. To find out more about these life insurance products and to inquire about coverage, call your local PRCUA agent or the home office.

The topic of life insurance doesn’t have much going for it. First, it’s about insurance, which many find boring and complicated. Second, it can involve paying money for something you may or may not use depending on whether its Term insurance or Whole/Universal life.

And, it’s about death.

Those are difficult hurdles and probably among reasons why many surveys show many of us are vastly underinsured when it comes to life insurance, which might better be called “income insurance” because its primary purpose is to replace income from the family breadwinner.

“Selling life insurance is an uphill battle,” said Byron Udell, CEO of online life insurance broker AccuQuote.com. “It’s not a product that’s fun to buy.”

But life insurance should be a fundamental part of financial planning for those who have others relying on their income like children and a spouse.

Yet 2013 statistics show ownership of individual life insurance policies is at the lowest level in 50 years, with only 44 percent of households owning them, according to the insurance industry group LIMRA. And 86 percent of people say they haven’t bought life insurance because it’s too expensive, yet they overestimate its cost by more than two times, the group found.

A national survey commissioned by New York Life Insurance Co. recently found that Americans’ gap in protection worsened considerably since the Great Recession. Americans say they want enough life insurance, on average, to cover expenses for at least 14 years after the loss of a breadwinner. But they have only three years of protection in place.

“It’s no surprise that Americans are underinsured. What did surprise us was the magnitude of the gap and the fact that it has grown so dramatically since 2008,” Chris Blunt, co-president of the Insurance and Agency Group of New York Life, said in releasing the results.

Also concerning is what the survey found about Americans’ perception of what life insurance is for. A majority said the top reason for buying it was to cover funeral expenses, but paycheck replacement is far more important.

The good news for consumers is, the basics of life insurance continue to apply. “The beauty of life insurance is that it’s not a fast-moving industry,” said Amy Danise, editorial director for Insure.com. “Unlike health insurance, where what you know one month is wrong the next month, life insurance advice is consistent.”

Contact your PRCUA insurance agent to first find out how much you need then you can work your way into a solution that will help address this need. PRCUA has a variety of plans to help you achieve your goal.

TERM
Advantages:

• Initially premiums are lower than those for permanent insurance
• It allows a person to buy higher amounts of coverage, especially at a younger age
• This is a great product for young families that often have a limited budget, but a significant need for protection
• It can cover specific needs that will disappear in time, such as a mortgage or other types of loans
• Certificates are renewable

Disadvantages:

• Once term ends, if you purchase a new certificate the premium increases due to age
• Certificate premiums increase based on age of applicant
• Coverage terminates at the end of the specified term
• You may not be able to convert to permanent insurance because of health
• Does not accumulate cash values or dividends

WHOLE/PERMANENT

Advantages:

• Guarantees lifelong protection as long as premiums are paid
• Generally, premium costs are fixed
• Develops cash values, which can be borrowed against; loans must be paid back, otherwise death benefit will be reduced by the amount of the loan at time of death
• Cash values can be surrendered, in total, or in part, for cash or to convert to an annuity
• Cash values can be used to pay future premiums or provide paid-up insurance
• Generally dividend participating – can be used to reduce the amount of future premiums needed or purchase additional paid-up insurance

Disadvantages:

• High initial premium levels may make it hard to buy enough protection
  May be more costly than term, especially if you do not keep it long enough

In most cases, a permanent plan may be the best type of life insurance to purchase. If the prospects are a young family with a home, cars, loans etc., and appear to need high amounts of coverage or if they wish to insure for a specific period of time, then term insurance may be the right plan.

3 questions to answer: Do you need insurance? How much? What type?

Contact your local PRCUA Sales Representative and complete a Needs Analysis to determine which plan will accomplish your goals.

1.  Over a lifetime, whole life insurance generally provides a greater rate of return of premium to death benefit and also the best cost arrangement as measured by present value of premiums relative to cash values.
2. The average mortality rate has increased in recent years due to medical technology advances, greater access to healthcare, and wellness living and eating. How many commercials have you seen in the last week, which speaks about health club memberships or healthier food choices, its everywhere. Whole life guarantees the death benefit coverage as a person ages without increasing premiums on existing coverage as long as premiums are paid.
3. The current low interest rate environment, which yield small returns on bank and fixed income instruments, whole life’s cash value growth is now seen as a stronger-yielding product with similar risk profiles. The cash value element is often considered as a bond or CD alternative.
4. The cash value growth component in whole life is an attractive way to create a fund source that can be used to support college education planning or to use as a rainy day fund mechanism. It is not only meant for the beneficiary but cash value funds can be utilized by the owner while the insured is alive.
5. For business planning purposes, a whole life policy can be used to fund buy-sell agreements or to provide executive benefits to help retain key employees. When the need is long term and strong guarantees are required, permanent life insurance should always be considered, premiums never increase and the death benefit is guaranteed as long as premiums are paid.

Effective immediately we offer a Five (5) Year Limited Pay Whole Life Certificate and choice of four annual premium options: $300, $600, $900 and $1,200.

Each premium option has a pre-determined face amount based on age, gender and underwriting class.

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