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How is life insurance sold?


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you can buy life insurance either as an “individual” or as part of a “group” plan.

Individual Policy

When you purchase an individual insurance, you select the provider, plan, and benefits and features that are most appropriate for you and your family. You might be able to purchase the coverage from the same agent or company representative who offers you house, vehicle, or business property and liability insurance. Although purchasing your life insurance and other insurance from the same agent will not qualify you for any discounts, dealing with a single adviser for all of your insurance requirements can make your financial life easier.

Insurance agents or brokers are often the ones who sell individual policies. A fee, commonly known as a “load,” is added into the premium rate if you buy a policy via an agent or broker. The commission reimburses the agent or broker for the time spent advising you on how much and what sort of life insurance to buy, for simplifying the application procedure, and for any further work required in subsequent years to keep the policy current (such as changing beneficiary designations, arranging policy loans or coordinating your financial plans with your lawyer and accountant).

Individual life insurance can also be purchased in two different ways. You may get it from a savings bank in Connecticut, Massachusetts, and New York. Alternatively, you can purchase a “no load” or “low load” coverage directly from an insurance provider or a fee-only financial counselor. Despite the absence of a sales commission on these plans, the business will include charges in the premium to cover marketing costs, application processing costs, and following services. It’s not simple to find an insurance company that will offer you a no-load policy; in many situations, searching for “no load life insurance” on the Internet will take you to an agent or broker.

Group Policy

Your company may provide you with life insurance as a benefit; many major corporations do so. Your company may also give you the option of purchasing supplementary life insurance through a group policy. You may also be able to get life insurance through a union, trade organization, or other organisation to which you belong (such as a college alumni association or an automobile club). There are various advantages to purchasing life insurance through a group policy over purchasing individual life insurance:

  • Because the premium is subsidized by the employer or another group sponsor, or because the rates are averages weighted by persons younger than you, group buy might occasionally offer you a lower rate for a particular death benefit.
  • There are almost no health requirements to qualify for group coverage.
  • Premium payments are often made through payroll deduction (for employer-sponsored group coverage) or are connected to other payments (such as credit card bills) to reduce the risk of missing a payment.

Most employer group plans are term insurance, but your state may require you to be able to convert the policy to a kind of whole life insurance with the same insurance company that offers the group life insurance if you quit that workplace. You would then pay premiums directly to the insurance company to keep the policy active. If you’re older or have declining health, this might be advantageous since it allows you to qualify for whole life insurance without having to have a medical test.

Credit Life Insurance

In the case of your death, credit cards and lending institutions may offer life insurance to pay off your outstanding obligations. This is usually provided in one of two ways:

1. At no additional cost as part of the financing. In this instance, the lender bears the cost of the life insurance and includes it in its interest rate or other finance costs. You won’t need separate life insurance to pay off that loan if you have this form of credit life insurance.

2. As an add-on option for a fee. If you have alternative life insurance (group or individual) that may be allocated to pay off the loan if you die, you should normally refuse the extra coverage in this scenario. If you’re under 50 and don’t have any other insurance that may help you pay off this loan, consider purchasing individual life insurance for this purpose because the rates will likely be lower. If you’re 50 or older (or younger with health difficulties) and don’t have any other life insurance, credit life insurance is likely to be less expensive than individual life insurance.

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