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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