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Amplify is the first comprehensive life insurance platform that offers all types of life insurance plans including term, permanent, and cash value life insurance, all at a price that works for you. Leave the commission-driven insurance agents behind, now you can decide what’s best for your family.

Thank you for contacting Amplify Life Insurance. We are a comprehensive life insurance platform offering all types of life insurance plans.

Cash-value life insurance allows you to build wealth with your policy

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When you add a cash value aspect to your life insurance policy, suddenly, the whole dynamic changes. No longer is it just a way to protect your loved ones in the event of your death; now, you can start thinking about building and accessing wealth while you’re still alive. But which products offer cash value life insurance? That’s what we’re here to tell you with this handy guide on all things cash value.

## What is cash value life insurance?

Cash-value life insurance allows you to [build wealth with your policy](https://beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance). You essentially pay into two pots each month for the premium when you get coverage: the death benefit and cash value. The money for the death benefit grows the amount you leave to your beneficiary after you pass away, while the cash value increases and is accessible while you’re still alive.

**The following permanent life insurance policies offer a cash value aspect:**

*   Whole life insurance
*   Universal life insurance
*   Variable universal life insurance
*   Indexed universal life insurance
*   Guaranteed issue life insurance

The cash value element is separate from the death benefit, which means anything left in your policy reverts back to the insurer when you die. How the money builds depends on the type of policy you purchase. And the only policy that [doesn’t provide cash value is term life insurance](https://beamplify.com/blog/why-you-probably-shouldnt-get-a-term-life-insurance-policy).

## Cash-value life insurance plans and options

### Whole life insurance

With whole life insurance, you get a fixed monthly premium and a guaranteed death benefit. The premium payments never change, which means you pay the same monthly amount throughout your life. The cash value accumulates over this time at a minimum guaranteed rate. You can also use your company dividends (if you receive them) with your whole life insurance cash value every year to build up the account faster.

### Universal life insurance

Universal life insurance is more flexible than a whole life insurance policy, with many options allowing you to adjust the death benefit and reduce premiums if need be–as long as there’s enough in the cash value to cover the policy costs. As part of universal life insurance, you can opt for indexed universal life insurance (IUL) and variable universal life insurance (VUL). IUL lets you tie the cash value to an index such as the [S&P 500](https://www.marketwatch.com/investing/index/spx), while VUL allows you to connect it to sub-accounts with a variety of investment types.

### Guaranteed issue life insurance

Generally, a form of whole life insurance, guaranteed life insurance is available in small coverage amounts, such as $20,000. Some guaranteed life insurance policies feature a cash value element, though the potential to build wealth is lower than other options because the amount is so small in comparison. You can’t be rejected for guaranteed issue life insurance, [but your beneficiaries won’t receive the full payout](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary) if you die within a few years after buying the coverage.

## How can you access the cash value?

There are two primary ways to access the [cash value element](https://beamplify.com/product/cash-accumulation) of permanent life insurance: by withdrawing the money directly or taking a loan out against it. If you decide to terminate the policy, you can also access the cash value you’ve built minus the penalty for leaving. This is known as a surrender charge, which is in place if you cancel within the first few years after purchasing your coverage.

## Taking a loan against your policy

One of the most popular ways to withdraw the cash value involves [taking out a loan against your policy](https://www.investopedia.com/ask/answers/111314/how-can-i-borrow-money-my-life-insurance-policy.asp), especially since this method isn’t taxed. When you pass away, the loan amount owed is paid back via the death benefit. However, because the death benefit has also accrued throughout this time, there should still be plenty to leave to your beneficiary–especially if you’ve [had the policy for a long time](https://beamplify.com/blog/should-i-get-life-insurance-in-my-20s). Using a loan for your cash value doesn’t appear on your credit report.

## Withdraw the cash value

There’s also the option of withdrawing the funds directly from your policy. Just bear in mind that there can be drawbacks to this way of getting the money as it could include investment gains (referred to as “above basis”) [that are taxable](https://turbotax.intuit.com/tax-tips/investments-and-taxes/do-you-pay-taxes-on-investments-what-you-need-to-know/L8mOQiKM8). Like taking out a loan, making a direct withdrawal also affects the amount of life insurance left for the death benefit.

## Surrender the policy

If you surrender the policy, it means you’ve canceled the coverage, which could come with a surrender charge. Once you cancel, any cash value in the policy is given to you minus any unpaid premiums, outstanding loan balance, and potential surrender charge.

## Participating policies

It’s not uncommon for whole life insurance policies to be classed as “participating.” This means the policy owner can obtain dividends if they’ve bought through a mutual insurance company.

A mutual insurance company doesn’t have shareholders and is essentially owned by the policyholder. That means the insurer makes more money than is needed to operate the business and pays some of it back to the policy owner via a dividend.

You can take dividends as cash, add them to your cash value, or use it to pay the premiums. They can also be used to buy “paid-up additions” to your life insurance policy, which increases the death benefit amount you leave to beneficiaries. Essentially, owning a participating policy lowers the overall costs of your life insurance.

## Adding riders

Riders play a major role in permanent life insurance policies and offer the chance to customize your coverage. [Popular riders include](https://beamplify.com/blog/life-insurance-riders-explained) an accelerated death benefit, guaranteed insurability rider, and more.

### Accelerated death benefit

An accelerated death benefit rider lets you unlock the death benefit before you pass away. So if you fall seriously ill or are unable to work because of injury, you can tap into the death benefit as you’ll be unable to receive regular income from your work. With an accelerated death benefit rider, you can still receive a stable income even if you’re unable to work.

### Guaranteed insurability rider

Adding a  guaranteed insurability rider allows you to purchase additional coverage without needing to take further medical examinations. This particular rider can come in handy if your circumstances change, such as having a child, getting married, or increasing your income. With a guaranteed insurability rider, you can also apply for extra coverage without having to provide evidence of insurability.

**Some other popular life-insurance riders associated with permanent life insurance include:**

*   Long-term care
*   Waiver of premium
*   Child term
*   Return of premium

While riders aren’t directly linked to the cash-value aspect of a life insurance policy, they are more common with [permanent coverage](https://beamplify.com/blog/current-trends-and-why-you-should-get-permanent-life-insurance-now) and can be helpful if you wish to customize your policy so that it meets your needs.

## Using cash value to pay premiums

Opting for a variable or universal life insurance policy means you can use the cash value to pay the premiums. This comes in handy if you have a large cash value with consistent returns, as you can keep coverage in place for years at little to no cost.

Nonetheless, you need to be aware of the cash value amount to ensure it doesn’t fall too far. If it does drop, you could lose your coverage–which might happen if you start using it to pay the premiums with a cash value pot that is too small or if interest rates are low.

## Tax advantages of cash value life insurance

If you use a loan to withdraw the cash value, you can benefit from building your wealth tax-free. That’s because the loan is against the policy, which you own– and you can’t pay tax to yourself.

The [tax-free aspect](https://beamplify.com/blog/5-modern-ways-to-build-taxfree-savings) sets permanent life insurance apart from [other investment accounts](https://beamplify.com/blog/what-are-the-different-investment-types), as you typically need to pay tax when you grow your wealth through investments. Your beneficiaries also receive the death benefit tax-free, which is particularly helpful as most life insurance payouts are significant.

## Pros and Cons of cash value life insurance

**Pros**

*   Acts as an asset with the cash value element
*   Guaranteed death benefit
*   Tax-free savings
*   A premium that never increases
*   VUL and IUL policies allow you to grow even more wealth
*   Pay dividends

**Cons**

*   Permanent life insurance is more expensive than term options
*   More risk with VUL and IUL policies
*   Surrender charge if you end the policy early

## What can you use the cash value for?

Once you withdraw the cash value, you can spend it on anything you like. Some people use their cash value to supplement their retirement income, making sure they have a nice little nest egg in retirement.

Others may use it to help out their growing children, such as paying for their [college fees and education](https://beamplify.com/blog/should-you-use-life-insurance-for-college-planning). Again, there’s the option of using it to pay off your premiums or moving it to the death benefit. And, of course, you could just use it to buy a new car, decorate your house or go on a luxury holiday.

## In conclusion: Growing wealth through cash value

Cash value changes the entire way you think about life insurance. It becomes an investment account with tax-free benefits and the ability to grow and access wealth while you’re still alive. All the while, the death benefits grow so you can leave money behind to your loved ones when you pass away. Ultimately, permanent life insurance with a cash-value aspect covers you in all areas of life and can be a savvy investment to help build for your and your family’s future.

Which Type of Life Insurance Policy Generates Immediate Cash Value? 

An accelerated death benefit is a life insurance rider that pays a percentage of the death benefit early if certain conditions are met.

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When you take out a life insurance policy, there’s the option to customize it with a rider. There are all sorts of different riders to choose from, but one of the most popular is the accelerated death benefit. Now, your next question might be, “what is an accelerated death benefit?” So allow us to explain everything you need to know about accelerated death benefits (ADB) with this guide.

## What is an accelerated death benefit?

In short, an accelerated death benefit is [a life insurance rider](https://beamplify.com/blog/life-insurance-riders-explained) that pays a percentage of the death benefit early if certain conditions are met. These include getting a terminal illness, critical illness, or chronic illness that prevents you from working.

Sometimes the ADB is included in the life insurance policy as an additional feature. Other times, you will need to pay extra to have it in the coverage. The ADB isn’t considered a form of insurance itself and instead functions as an acceleration to the death benefit should you need it.

An accelerated death benefit is also known as a living benefits rider, accelerated living benefits rider, chronic illness rider, terminal illness rider, critical illness rider, and long-term care rider. So if you see any of these names associated with your life insurance policy, they’re most likely referring to the accelerated death benefit.

## How does an accelerated death benefit work?

With an accelerated death benefit, you can receive a payout while you’re still alive should you develop an eligible condition. Most ADB riders are only available when the policy is issued, though some can be added at a later date.

An ADB typically pays a percentage of the policy’s death benefit, usually ranging from 25% to 100% in one lump sum or as an ongoing monthly payment. Once the ADB rider is exercised, the insurer pays the funds out of the policy’s death benefit.

But what does that mean for your [life insurance beneficiary](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary), who is supposed to receive a payout when you die? They still get the death benefit, but it’s only the amount left over once you’ve received the accelerated death benefit amount.

## What does an accelerated death benefit cover?

Accelerated death benefits may have their limits depending on the insurer. As a rule of thumb, however, you can expect it to cover these four categories:

*   **Chronic illness** – a nonrecoverable chronic illness where you’re unable to perform at least two activities of daily living, such as dressing or feeding yourself
*   **Critical illness** –  a major heart attack, invasive cancer, paralysis, major organ transplant, or end-stage renal failure all fall under the critical illness category
*   **Long-term care** – you may or may not be considered chronically ill in some long-term care cases, but it still covers an inability to perform two activities of daily living
*   **Terminal illness** – being diagnosed with a terminal illness and a life expectancy of six months to two years, though the time frame usually depends on the insurer.

## Are there any tax implications involved?

Unfortunately, there could be some tax-related issues if you receive an ADB. It can impact your eligibility for Medicaid and other public-assistance services. An ADB may also have federal and state tax consequences, though it’s not a given.

Whether or not you’ll need to pay tax depends on factors like your life expectancy, the number of qualified expenses you’ve incurred, and the number of benefits received. It might be worth speaking with a tax advisor before opting for an ADB rider as part of your life insurance.

## How can I get an accelerated death benefit?

A growing number of insurers now include ADB as a standard feature in new life insurance policies. They may discount the acceleration of the death benefit depending on your age, gender, and policy specifics [like the cash value](https://beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) and a service fee if applicable.

ADBs are much more common with [permanent life insurance policies](https://beamplify.com/blog/some-of-the-ways-you-can-use-permanent-life-insurance-benefits) than term coverage. However, they may also be [included in some term options](https://beamplify.com/blog/why-you-probably-shouldnt-get-a-term-life-insurance-policy), and you might be able to purchase them during your coverage even though they’re typically only available at the start of a policy.

## Are there any alternatives to accelerated death benefits?

If for any reason, you decide that an ADB rider isn’t for you, there are other options on the market. These include:

*   **The cash value** – if you’re long enough into your policy, you could instead withdraw the cash value built up throughout the coverage
*   **Long-term care insurance** – getting long-term care insurance can be costly, but it offers benefits that aren’t capped by a percentage of your policy’s death benefit
*   **Life or viatical settlement** – it’s possible to sell your policy in a life or viatical settlement. Doing so ends your coverage but gives you a lump sum amounting to what you sold it for. It may, however, be subject to taxes.

## In conclusion: accelerated death benefit

If you were asking, “what is an accelerated death benefit?”, we hope your question has been answered and you’ve been provided plenty of info on the subject. An accelerated death benefit isn’t for everyone, but it can be a handy life insurance rider offering even more peace of mind and keeping financial stability in the household should you no longer be able to work due to illness. For that reason alone, it’s easy to see why an accelerated death benefit is popular.

What is an Accelerated Death Benefit?

Variable Universal Life (VUL) Insurance is an often misunderstood product, read our guide to find its many benefits and features. 

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Choosing a life insurance policy means picking between term and permanent life options. And if you opt for the latter, there are even more decisions to make, like which type of permanent life insurance is right for you. For many, the answer is variable universal life (ULI) insurance. But just what is VUL, and how can it help you? We've got the answers below in this guide to variable universal life insurance.

## What is variable universal life insurance?

Variable universal life (VUL) insurance is another type of [permanent life insurance](https://beamplify.com/blog/current-trends-and-why-you-should-get-permanent-life-insurance-now). Just like a perm policy, it comes with fixed premiums, a death benefit, and cash value, which allows you to accrue money over time and tap into it while you're still alive.

It's also designed for the long term, with a VUL policy staying intact throughout your life–or as long as you make the payments on the premiums. Consequently, you get long-term stability and the opportunity to grow the cash value and death benefit over time.

There are some key differences from a perm policy, however. These include having investment flexibility with the cash value as well as how the premiums are paid and the level of the death benefit.

You decide on the amount and frequency of premium payments (with limits involved) and have the option of making lump-sum payments or using the [cash value](https://beamplify.com/product/cash-accumulation) towards the premiums (more on that later).

Essentially, a VUL is a separate account with funds tied to the market and a fixed account. In that sense, it's similar to variable life as you can invest in underlying sub-accounts offering a [variety of investment options](https://beamplify.com/blog/investment-concepts-you-should-know-about), including [stocks](https://www.fool.com/investing/stock-market/), bonds, [mutual funds](https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-1), and money market securities.

## Key features and benefits

### Adjustable premiums

With a VUL, you get adjustable premiums and the ability to skip a payment or even stop paying your premiums if the cash value has enough in the pot to cover them. This feature was taken from universal life insurance and added to the variable element to give policyholders more choice and flexibility over their coverage.

### Investment variety

You can potentially earn more with a variable universal life insurance policy as it lets you invest in [underlying sub-accounts](https://www.investopedia.com/terms/s/sub-account.asp) with a breadth of investment options. The investments are tied to financial markets, meaning the value of your policy fluctuates as the investment goes up or down. The reward is higher than other forms of life insurance, but so too is the risk, and your cash value could depreciate in a poor-performing market. It's also possible to lose the death benefit if the policy lapses by policy provisions. There's also the benefit of transferring funds [between investments tax-free](https://beamplify.com/blog/5-modern-ways-to-build-taxfree-savings), meaning there are no tax implications involved.

A VUL policy lets you choose from a number of investment options, such as stocks, bonds, or even a combination of the two. There’s also the option of investing in a fixed account, and doing so provides a guaranteed minimum interest. When the investment is up, your policy is worth more, and when it’s down, so too is your policy.

### Increase the death benefit

One of the key benefits of a variable universal life insurance policy lies in its flexibility. If your insurance needs change over time, you can adapt the policy, opting to increase or decrease coverage as you see fit. You can increase the death benefit or make a lump-sum payment to boost the policy's cash value.

### Withdraw or borrow from it

Much like other forms of permanent life insurance, you can withdraw the funds or take a loan against the cash value with your VUL coverage. Doing so may reduce your death benefit, but if you have a solid number saved against it, you can still decrease the death benefit and have [enough to leave your beneficiaries](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary) after you pass away.

## How does VUL differ from universal life insurance?

Universal life and VUL are similar in many aspects but for a few nuances. VULs offer more investment options, and you can select a number of different funds to create a portfolio of investments. Regular universal policies don’t have this option, though you can select a policy with features designed to suit your needs. For example, there’s an option to go for a fixed interest rate or one that fluctuates with the stock market.

## Who is a good candidate for VUL?

Variable universal insurance is popular with people looking for maximum flexibility with their life insurance policy. It’s highly customizable and allows you to adapt the coverage to your current circumstances, whether that’s changing the death benefit or using the cash value to cover the premiums.

Suppose you view life insurance as a form of protection and an investment opportunity. In that case, you might look favorably on variable universal investment accounts–especially if you understand how things like stocks and bonds work.

You can take a hands-on approach and monitor investment performance, making decisions about where to allocate funds and how to make the most out of the investment. Just remember: investing involves risks that have the potential to lower the policy’s cash value.

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## And who isn’t?

If you're someone who doesn’t like taking risks, then a VUL might not be for you. Many people opt for a more traditional form of permanent life insurance, which comes with increased stability over a VUL policy and doesn’t require you to monitor aspects like the stock market.

## In conclusion: Getting variable with VUL

As long as you’re aware of the risks involved and understand that the cash value could depreciate with a poor-performing market, a VUL can be a handy option for anyone who wants more control over their policy. Getting a variable universal life insurance policy can be a smart move if you want more flexibility and control over the cash value accumulation. With the right investments, you can grow its value more than you can with other forms of life insurance–and that’s an appealing reason for many to get variable universal life insurance.

[Use our handy VUL calculator and see an estimate of how much money you can grow.](https://beamplify.com/embed/vulWidget)

Variable Universal Life Insurance: The Benefits & Who Should Get It

A contingent beneficiary is a secondary person or entity that receives a death benefit if the primary beneficiary is unable to. 

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A life insurance policy requires a beneficiary who receives your death benefit if you pass away while the coverage is active. This person is known as your primary beneficiary. But there’s also a contingent beneficiary. If you’re wondering just who this person is and what role they have to play in your life insurance policy, you’ve come to the right place? That’s the purpose of this guide–to tell you everything there is to know about a contingent beneficiary. Read on to find out more.

## Contingent beneficiary definition

Suppose your [primary life insurance beneficiary](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary) dies before you. In that case, the funds you leave behind when you pass away are given to your estate–unless you name a contingent beneficiary on the policy. A contingent beneficiary takes over from the primary beneficiary and receives your death benefit.

There is even a scenario where the primary beneficiary doesn’t need to die for the contingent beneficiary to receive the death benefit. The primary could refuse the death benefit, which would see the continent become the rightful receiver.

Essentially, the contingent beneficiary is the specified insurance contract holder and gets the death benefit if the primary can’t accept, usually because they’ve passed away. You can also name more than one contingent beneficiary, with each one designated a specific percentage of the death benefit.

## What are the benefits of naming a contingent beneficiary?

A will determines the distribution of assets within your estate, with most of them [going through probate](https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/the_probate_process/). With a life insurance policy, however, funds are given directly to the beneficiaries, and there’s no need for probate.

That could all change if you only have a primary beneficiary and are unable to claim the death benefit.  Without a contingent beneficiary, your insurance payout will [end up going to the estate and through probate](https://beamplify.com/blog/what-is-probate). That means it could be subject to estate taxes and debt collection. A judge will also decide who gets the payout, which could lead to further complications.

The process can also be lengthy, sometimes lasting months on end. It’s a scenario you’ll want your loved ones to avoid, especially as they could end up receiving less by the time everything goes through probate.

If you name a contingent beneficiary and your primary one cannot claim the death benefit, you can steer clear of probate altogether. The death benefit is distributed to the contingent or contingents named on the insurance policy, and you know exactly what is going to where and to whom.

## How to name a contingent beneficiary in your life insurance policy

After deciding on a life insurance policy, be it [term](https://beamplify.com/product/term-life-insurance) or [permanent](https://beamplify.com/product/cash-accumulation), you’ll be asked to name one or more primary beneficiaries. Along with the primary, the form should also include a section asking if you want to name a contingent beneficiary.

**If you decide to add a contingent, you’ll need to enter some basic information about them, including:**

*   Their full name
*   Social security number
*   Contact details

It’s at this point when you can decide to name more than one contingent and designate a percentage of your death benefit to each one much in the same way you can with a primary beneficiary.

The policy could also include an option to name multiple beneficiary tiers, such as tertiary, quaternary, etcetera. To illustrate, a tertiary beneficiary receives the death benefit if both the primary and contingent pass away before you.

When assigning a contingent beneficiary, you should ensure they are specified clearly in all the associated paperwork. Doing so makes the entire process of designating the beneficiary of the death benefit a more seamless process.

It’s also helpful if you give all beneficiaries a copy of your life insurance policy. They should also know how to contact each other and your life insurance company in the event of your death. Whether primary or contingent, beneficiaries must submit a death certificate to the life insurance company to claim the death benefit.

## Updating your beneficiaries

As well as giving beneficiaries a copy of your life insurance policy, it’s important to keep them up to date throughout the policy’s term. Take actions like reviewing your beneficiary designations when you experience major life events, [such as marriage](https://beamplify.com/blog/money-issues-in-marriage-5-ways-to-ruin-your-marriage-with-finance-problems), divorce, childbirth, or the death of a loved one.

You can also change your contingent at any time if you decide to name someone else. Simply call your insurance provider and request a change via the beneficiary designation form. This is helpful as it doesn’t tie you into keeping the same person on the policy should circumstances change for you or the contingent.

## Who can be named as a contingent beneficiary?

Common beneficiaries include spouses, family members, adult children, a trust, your company, a charity, an estate, and parents in some cases. Essentially, anyone can be a beneficiary on your life insurance policy, as long you’re happy with them being named.

## Who should be a contingent beneficiary?

Just because anyone can be named as a contingent beneficiary doesn’t mean they should. Picking a contingent involves naming someone you’d like to financially support after you pass away.

Most policyholders opt for a family member, with the spouse typically the primary beneficiary and perhaps an adult child named as the contingent. Essentially, it’s down to you to decide what works best for everyone involved.

If you’re unsure of who to include as the contingent, it’s worth sitting down with your family and having a discussion about working out a favorable scenario. You should also consult a lawyer if a [minor is named as a beneficiary](https://beamplify.com/blog/heres-how-to-name-a-child-as-a-life-insurance-beneficiary), and you’ll need to name a custodian if the child hasn’t reached legal age at your time of passing.

## Primary beneficiaries vs. contingent beneficiaries

The primary beneficiary will always be the one who receives the death benefit if they're alive at the time of the policyholder's passing and are willing to accept it. Contingent beneficiaries only spring into action when all primary beneficiaries have passed away or can't receive the death benefit.

If there are multiple primaries on the policy, but one of them dies, the insurer splits the death benefit between the remaining primary beneficiaries. For example, if your spouse, sibling, friend, and parent are named as the primary beneficiary, everyone gets 25% of the death benefit.

However, if the parent passes away, the three remaining primaries would receive 33% each. The only scenario where the contingent receives the death benefit is if all the primaries pass away too.

Essentially, the only real difference between a primary and contingent is that the primary is first in line to receive your death benefit. If for any reason they are unable to claim it, the contingent comes in and becomes the rightful receiver.

## Do you need to have a contingent beneficiary?

There’s no mandatory stipulation requiring you to name a contingent beneficiary. And if you have multiple primaries on your policy, you may decide that a contingent isn’t worth it. However, naming a contingent adds extra peace of mind and is especially helpful if you only have one primary.

With a contingent, you can forgo many potential issues that could arise if you die and your primary predeceases you. The last thing you want is to create issues after you pass away, with loved ones potentially going through a lengthy probate period before getting clarity over what receiving what you’ve left behind.

Naming a contingent ensures that your death benefit goes to the right person if the primary beneficiary can't receive it. That gives you and your loved ones greater peace of mind and less hassle, as you'll be safe in the knowledge that everything is well looked after when you pass away.

## In conclusion: putting a contingency plan in place

A life insurance policy is a smart way to safeguard those you love when you die. And naming a contingent beneficiary along with a primary one means you've got all bases covered and can relax knowing the people who mean the most to you will be well looked after when you're not around. Adding a contingent is a straightforward process, and it can stop probate and make everything that little bit easier.

What is a Contingent Beneficiary? 

In this guide, we're taking a deeper dive into probate, so you understand what it is and how it works

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Probate is something many people go through after the death of a loved one. It involves validating the will of a deceased person and identifying their final assets, along with paying any debts owed and the distribution of their estate. In this guide, we're taking a deeper dive into probate, so you understand what it is and how it works.

## What is probate, and how does it work?

Probate validates your will if you have one. It's a court-supervised proceeding that approves the named executor so they can distribute any assets, such as money, belongings, and property. If no executor is named, the probate court appoints an administrator to oversee proceedings.

Named executor or not, the process tends to involve lawyers and takes place in court, with the stipulations of the will read aloud and inheritances handed out. The length of time it takes to get through probate depends on the size of the deceased’s estate.

During probate, all assets are located and assessed. Next, owed taxes and debts are paid, with the estate's remaining value distributed to anyone named in the will. If, however, there is no will, the entire probate process can be more complicated because there won't be any available documentation stating the deceased's final wishes.

At this point, it’s up to the courts to handle proceedings and make a final decision on the assets of the deceased.

## When is probate necessary?

Let’s say you’re the person who passes away (sorry to be a drag). In that case, probate would be necessary to implement the provisions of the will you leave (if you’ve left one). But as previously stated, probate can still happen if you pass away and don’t leave a will.

There could also be a scenario [where you've named a beneficiary](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary), but they've passed away before you. In this scenario, probate law requires your account to go through the court, and funds are passed to the person legally entitled to your assets under state law.

How [probate works can vary from state to state](https://www.findlaw.com/estate/planning-an-estate/state-laws-estates-probate.html), though the basics tend to be similar. In one aspect or another, all 50 states have put in place laws governing most factors related to estate planning and probate, including the legal validity of wills, creation of trusts, and the probate process.

## How to file and validate a will

The majority of state laws ask the executor to file a will with the local probate court as soon as death or shortly after. The executor could also be asked to file the death certificate to open the probate process officially.

A probate court judge then decides if the will is legally valid through a hearing where all the listed beneficiaries have the right to review the documents. At this point, they can either accept or object to their role in the will.

The court will utilize self-proving affidavits to check the will's validity and help create and finalize it. Once all is ok'd, the will grantor and witnesses sign off on the affidavits, with the court beginning the probate proceedings.

Next, the executor receives and signs letters of authority of administration. In layman’s terms, this means that the executor legally enters the probate process and agrees to oversee matters involving the deceased’s estate.

That’s essentially how the will is validated. However, in some states, the executor may be required to post bond. Doing so acts as an insurance policy to protect beneficiaries if the executor accidentally (or on purpose) makes an error during probate.

## Identifying assets for probate

All assets must be identified so they can be assessed for value. This process accounts for everything the deceased owned at the time of passing, including banking and investment account statements, tax documents, and more. More extensive estates could require a larger appraiser, someone who understands the process of collecting and inventorying real estate, personal, and household items.

Some states may require executors to show the court a document detailing the deceased's assets, their total value, and notation on how such a value was concluded. Once completed, you will have the "date of death values."

When it comes to items like fine art and vehicles, the executor may be required to take physical possession. They will also need to ensure that property taxes, insurance, and mortgage payments are covered throughout the process.

Once everything has been tallied up, the total combined value is used to estimate the worth of the estate.

## Contacting creditors and paying off debts of the deceased

It’s safe to say that the executor has a large role on their hands, as they’re also required to track down the deceased’s creditors. Creditors tend to have a limited time to make claims against the decedent’s estate, but the exact timing will vary by state.

The executor also has the power to challenge claims, and they may decide to petition the court to make a final decision. Regardless of challenges, the estate must pay off official debts owed, such as medical bills. Suppose the deceased passed away while owning significant debts. In that case, the estate is liable to pay them, and the amount the beneficiary receives will reduce once those debts are taken into account.

## Filing the decedent’s final taxes

As nice as it would be to have a clean slate, taxes are still owed even in death. Consequently, the executor should file and pay off the deceased's final taxes using the estate funds. The federal estate tax can reach as much as 40%, with states enforcing their own on top. However, the estate tax only applies to estates worth $11.58 million or more at the federal level.

Estate taxes are usually due within a year of the owner’s death, though it’s possible to reduce the size of the estate during the owner’s life so they can transfer the property tax-free to beneficiaries after they pass away.

## Distributing property from an estate

Once the court confirms all debts and taxes are paid, it can distribute the rest of the estate. If the deceased doesn't have a will, the court will divide assets and the property among immediate family members. When someone passes away without a will, the surviving spouse (if any) takes the priority.

During this stage, the executor provides the probate court with documents detailing every transaction they engaged with during the probate process. These filings also contain details of the value of the remaining estate. Some states, however, allow the executor the right to waive the requirement.

## How to avoid probate

Probate isn’t always necessary if you plan carefully. This may be beneficial to some, as it allows them to reduce legal fees and avoid estate tax–something that typically accounts for a significant amount of a wealthy estate. Avoiding probate also protects privacy because some of the records may not be available to the public.

One way of avoiding probate requires you to use a [revocable living trust](https://www.investopedia.com/articles/pf/06/revocablelivingtrust.asp). This is when assets are placed in the trust but can be used by a trust creator during their lifetime. When they pass, the assets in the trust are given to their beneficiaries by operation of the trust document and don't require any probate.

Another option [involves a life insurance policy](https://beamplify.com/blog/some-of-the-ways-you-can-use-permanent-life-insurance-benefits), as they pass property outside of probate. The named beneficiary on your policy receives the death benefit directly with no probate process required.

Retirement accounts may also pass outside of probate, with the account owner naming a beneficiary to receive the balance of the account after the owner's death. A payable on death accounts don't require probate.

You can also convert banking accounts to a “pay-on-death” account. This usually only requires a signature on a form provided by your financial institution and for you to designate a beneficiary.

## Tips on estate planning

Probate can see your assets held for as long as a year, which is far from ideal. With good estate planning, however, you can avoid unnecessary delays.

One way of doing this involves avoiding probate altogether by taking out a life insurance policy. Plus, if you opt for a permanent policy, you can [build wealth while you're still alive](https://beamplify.com/product/cash-accumulation) tax-free and skip probate when the beneficiary receives the death benefit after you pass away.

If you do go through the probate process, a good financial advisor can help plan your state and manage wealth. Having someone who knows the process involved will help you navigate probate faster and provide more clarity over how everything works.

## In conclusion: to probate or not to probate

Regardless of if you go through probate or not, you should understand the process for obtaining the deceased's assets, whether you're the one leaving your belongings and worth behind or are the person receiving the asset from someone who has passed away. Doing so means the process will be much clearer in what is already a tricky scenario to navigate.

What is Probate?

There are some dangerous hobbies that can affect your life insurance policy. Here are 7 common activities that could increase your premiums. 

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Your health plays an instrumental role in the life insurance premiums you can expect to pay, but so too do other factors, [such as your job](https://beamplify.com/blog/life-insurance-for-people-with-a-risky-job) and hobbies. Life insurance providers examine risk and need to take several points into account, like if you just so happen to enjoy a spot of skydiving or skiing. Certain activities enjoyed in your downtime could even stop you from getting a policy altogether. But which hobbies do life insurance providers deem as risky? We’ve put this guide together of dangerous hobbies that insurers frown upon.

## Skydiving

There is no scenario where jumping out of an airplane doesn’t look a tad on the, let’s say, risky side. And it turns out that life insurers don’t take too kindly to people diving out of airplanes for fun. Even though the risk of skydiving is relatively low, with [0.39 fatalities per 100,000 jumps](https://uspa.org/Discover/FAQs/Safety), there’s not a lot of margin for error and a botched skydive usually only ends one way. For that reason, life insurance companies may have more than a few questions if you list skydiving as an activity in your application.

## Mountain climbing

You won’t find any resistance to getting a [permanent life insurance policy](https://beamplify.com/product/cash-accumulation) if you enjoy going on the odd hike or partake in some indoor wall climbing. Mountain climbing, though. Well, that’s a different situation altogether and is often considered a dangerous hobby by life insurance providers. And while you might still be able to get coverage if you climb as part of a group, your chances decrease when you do it solo. In fact, many who participate in extreme forms of mountaineering will find it hard to get life insurance altogether.

## Bungee Jumping

Some people enjoy diving headfirst into the abyss with nothing but a bit of rope attached to their feet. Fair play to you if you’re one of those people. Understandably, bungee jumping is considered a dangerous hobby, though not extreme enough to rule out life insurance coverage completely. If you happen to get your adrenaline kicks from bungee jumping, you can expect to pay higher premiums than if you, let’s say, opted for bird watching as a hobby.

## Piloting

Depending on the insurer, there may not be too much resistance to your life insurance application if you’re a commercial pilot. But if you like to get in a plane or helicopter and fly for fun, then there’s every chance that your premiums will be on the high side. There’s an average of [2.3 fatalities per 100,000 hours flown on private flights](https://www.aviationdisasterlaw.com/private-plane-accidents.shtml) compared to 0.01 fatalities per 100,000 hours flying in the commercial space. With those numbers, it’s understandable why an insurer might raise their eyebrow if you fly privately.

## Scuba diving

You might be in great shape and [ace your life insurance medical exam](https://beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam), but you can still expect higher premiums if you do something like scuba diving for a hobby. A spot of scuba diving might not seem particularly dangerous, yet there’s still a chance of drowning or getting decompression sickness. An insurer is likely to be concerned if you regularly go deep-water diving as opposed to the odd scuba diving lesson here and there. The more you do it, the more dangerous it is–and that can affect your life insurance premiums.

## Motorsports

There’s driving, and then there’s _driving_. Owning a car won’t have any impact on your life insurance premiums as long as you have a clean license. But if you enjoy using your spare time to suit up and race around cars or motorbikes, then you can expect increased premiums but probably won’t find [yourself denied life insurance](https://beamplify.com/blog/what-should-i-do-if-im-denied-life-insurance). There are lots of amateur motor-related activities across the US, and life insurance providers often deem them a dangerous hobby–after all, it’s hard to argue that people racing each other at speeds of 100-plus mph is completely safe.

## Back-country skiing

Recreational skiing and snowboarding are generally fine when it comes to getting life insurance coverage. But anyone involved with back-country skiing is probably going to encounter higher premiums. It often involves remote, secluded locations and being cautious of things like avalanches–especially as the mountains can become unsettled after being disturbed. The remoteness also makes it harder for a speedy rescue if something does go wrong. All these factors combine to make it harder for back-country skiers to get life insurance.

## What happens if I partake in one of these “dangerous” hobbies?

All is not lost if you have regularly enjoyed a hobby deemed dangerous by a life insurance company. Many providers are still willing to give you coverage, but you face paying higher premiums. Each situation will be judged individually, and the insurer will take into account factors like regularity and the level at which you perform the dangerous hobbies. Just make sure that you’re honest on the application. If you lie about your hobbies and the insurer finds out at a later date, your entire policy could become null and void.

## In conclusion: dangerous hobbies

Getting a life insurance policy is still possible even if you enjoy participating in dangerous hobbies. Each one will be reviewed by the insurer and likely [moved onto the underwriting process](https://beamplify.com/blog/everything-you-need-to-know-about-life-insurance-underwriting), with a decision following shortly after. Be prepared to pay higher premiums, but having dangerous hobbies doesn’t mean you won’t be able to get life insurance coverage.

Dangerous Hobbies That Send Iife Insurance Companies Running

Your life insurance policy should not be affected by the covid vaccine but there are some grey areas where it does have an impact. 

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Everything has changed since the outbreak of the pandemic, and we're often left with more questions than answers about Covid. One query that seems to keep springing up is whether or not getting vaccinated impacts your ability to get life insurance. In this guide, we've got the answers and are dispelling the myths to bring you everything there is to know about life insurance and the covid vaccine.

## What impact does the Covid vaccine have on my life insurance?

While a growing number of Americans get vaccinated each day, alerting insurers that you've been jabbed doesn't bring your life insurance policies down, nor does it increase them. Providers aren't required to ask you for vaccine information, so it won't come up during the application.

There were initially some concerns about saying you had been vaccinated, with fears circulating that it could negatively impact your life insurance application in case something drastic happened in terms of side effects.

This is not the case, however, and it was disproved by the [American Council of Life Insurers](https://www.acli.com/Posting/NR21-012). CDC-approved vaccines won't come into play when you apply for life insurance coverage, and there's no reason to worry about them becoming an issue when you get a policy. On the flip side, having the jab doesn't give you access to lower premiums either.

## So that's that, then. Covid vaccines have no impact on your policy?

That’s a bit of a grey area. Ultimately, life insurance providers don’t request information about vaccines before issuing a policy. So if you’re a fit and healthy person applying for life insurance coverage, disclosing whether or not you’ve had the vaccine won’t affect your premiums.

But there are some scenarios where telling your insurer about your vaccination status could help you get a premium. If you have a preexisting condition [related to Covid](https://beamplify.com/blog/life-insurance-during-covid-the-impact-of-the-pandemic) and its impact, your ability to get a policy could be affected.

Some insurers have decided to limit access to policies during Covid due to the comorbidity risk. So if you’re someone at a higher risk of dying from Covid (diabetes, heart disease etcetera), you could find yourself [struggling to get a life insurance policy](https://beamplify.com/blog/what-should-i-do-if-im-denied-life-insurance). That’s where the vaccine can come in handy.

If you find yourself in a position where you have a preexisting condition that increases your chances of dying from Covid, being vaccinated could help reopen the conversation with the insurer about getting a policy. They may see it as a positive because it ultimately reduces your risk of catching Covid and could make you more insurable.

## Does it matter which Covid vaccine you get?

If you decide to disclose your vaccine status because you think it might help get a policy, you may be wondering if there is a preferred option. Truth be told, any CDC-approved Covid vaccine will be just fine, regardless of whether it's Pfizer-BioNTech, Moderna, or Johnson & Johnson.

Essentially, there’s no indication whatsoever about the type of vaccine you get. And the most important factor is that you get whichever one is available in your area, which is the official stance of many public health experts.

## What if I already have life insurance?

Again, there's no need to disclose whether or not you've had the vaccine to your life insurance provider. The majority of life insurance policies are fixed at the time of issue, which means coverage is based on your age, health, and risk status at the time of the application decision.

If you have a term policy that expires, then you may be subject to a higher premium if you renew. But this will be based on your age, health, and risk status when reapplying– not on if you've been vaccinated. Ultimately, you can expect your premiums to remain the same if you've already got a policy but have since received the Covid vaccination.

## Does that mean I don’t need to disclose anything Covid related to my insurer?

If you have a policy in place and contract Covid, there’s no need to contact your insurer–unless the worst happens and you succumb to the virus. In that case, your insurer would need to issue the [death benefit to your beneficiary](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary).

Should you be in the middle of filling out the application and your Covid status changes, then you should inform your life insurance carrier immediately. Life insurance policies are fixed at the time of issue. So if your health status changes between the application and time of issues, it may be considered in the [life insurance underwriting](https://beamplify.com/blog/everything-you-need-to-know-about-life-insurance-underwriting) process.

Of course, that doesn’t just apply to Covid. Any new health diagnoses during the application should be disclosed. Otherwise, it could impact your chance to claim on the policy later down the line.

## In conclusion: life insurance and Covid vaccines

At times, life insurance policies can seem complicated and require plenty of information to fill out. But in reality, it's pretty straightforward: carriers offer policies and set fair and affordable premiums based on quantifiable risk–they need to be sure of all factors before deciding on a policy. Therefore, disclosing if you've had the vaccine can work to your advantage as it essentially shows that your risk of getting Covid reduces, especially if you already have a preexisting condition. But you are under absolutely no legal obligation to do so.

Does Covid Vaccine Affect Your Life Insurance Policy?

Life insurance underwriting can be a complex and confusing process but our guide simplifies what goes into approving and pricing out your policy. 

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Underwriting is a key part of getting a life insurance policy, but many still don’t know what’s involved. Much like getting a mortgage, waiting to get the green light for life insurance can be long and even a little nerve-wracking. But it doesn’t need to be if you understand what goes into underwriting and why many insurers believe it’s necessary. The purpose of this guide is to bring you the lowdown on life insurance underwriting and everything you need to know.

## What is life insurance underwriting?

An underwriter is a person tasked with looking at all the data collected in an application related to finances. Whether you’re getting a mortgage, a loan, or life insurance, there’s a good chance an underwriter will be required. Sometimes companies perform underwriting, but most of the time it’s a person working for the insurer.

In the world of life insurance, the underwriter provides an insurance classification that leads to a decision about insuring an applicant. This usually entails applicants either being accepted or rejected, as well as setting their premium if they get the green light.

The better the classification, the lower the monthly premium on the life insurance policy. Ultimately, and as far as life insurance is concerned, the underwriter is trying to determine how likely it is that you’re going to die while the policy is active. Blunt, yes. But also necessary to determine the premium.

## How does underwriting work?

The classification is the result of looking through the data provided. But first, the underwriter needs to get to the point where they can make a decision. They’ll look at aspects like your age, sex, weight, hobbies, and [profession](https://beamplify.com/blog/life-insurance-for-people-with-a-risky-job). To illustrate, someone who is a pilot and also enjoys skydiving as a hobby will be deemed more of a risk than a person who sits at a desk all day and likes going to the movies for a hobby.

In a nutshell, all of these factors combine to form the underwriting process. It’s a manual part of the applications, something determined by humans looking at the real-world risks of giving someone a life insurance policy.

## What is the underwriting process for life insurance?

The underwriting process collates all of the information provided by the applicant. At this point, the underwriter makes an informed decision about the eligibility of the applicant for the specific policy they’ve applied for. The steps involved include:

### A personal questionnaire

This is usually part of the application process and includes questions about your personal history, such as where you were born, your profession, and your income. It gives the underwriter an idea about your lifestyle.

### The medical examination

Plenty of life insurance products require the applicant to [undertake a medical exam](https://beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam). This is pretty thorough, as it needs to assess your overall health. It’s performed by an individual with a medical background and includes:

*   A medical history questionnaire.
*   Physical measurements (height, weight etc).
*   A sample of bodily fluids like urine and blood.

### Background check

Background checks involve:

*   A motor vehicle report.
*   A prescription drug database check.
*   A review of any previous life insurance applications reported by the [Medical Information Bureau](https://www.mib.com/) (MIB).

### Medical records

Finally, the underwriter will look at your medical records, as well as notes taken by your doctor and ones kept on your medical file. These records hold vital information about your medical history, along with any diagnosis you may have.

## What does a life insurance underwriter look for?

Life insurance underwriters are looking for anything that could shorten your life expectancy. Something like smoking would be considered a potential red flag, as would extreme lifestyles, such as hobbies posing a risk to your livelihood.

If the underwriter places you in a high-risk category, your life insurance premiums will be more expensive. In extreme cases, it may also mean that you’re not eligible for a policy. Again, this is something the underwriter must determine from going through the information they have.

It’s not all about the bad aspects, though. Underwriters also look for signifiers that suggest longer life expectancy. Being within your BMI, having a long-term professional employment rate, and general good health are all indicators that can boost your chances of a good risk assessment.

## How long does the underwriting process take?

The length of time it takes to complete a life insurance policy depends on the underwriter and the information they need to process. All cases are different, and some applications may be more complicated than others.

Saying that, the majority of underwriters often complete applications within 48 hours. This doesn’t mean that you’ll get the results within that time frame, however. Expect it to take several weeks from the moment you complete the application.

It typically takes three to six weeks, and that includes the underwriting process. But even if it takes a little longer, you don’t need to set the alarm bells off. Delays can be caused by pretty much anything, such as application volume.

## Is an underwriter always required?

The short answer is, probably. Some life insurance companies may offer immediately upon submission if they feel confident enough, though this is rare. Most applications need to go through some form of underwriting.

Since [Covid](https://beamplify.com/blog/life-insurance-during-covid-the-impact-of-the-pandemic), however, aspects like medical exams have become less frequent. Even before the pandemic, technological advancements meant medical exams weren’t as routine. As a rule of thumb, it’s a good idea to expect some form of underwriting, either with a thorough medical exam or without one.

## In conclusion: life insurance underwriting

The majority of life insurance applications go through some form of underwriting, so there’s no need to panic. The best thing you can do is fill out all of the information correctly and comply with any questions that may come back to you from the insurer. Do that, and you’ll have the best chance of landing a life insurance policy with a smooth underwriting process.

Everything You Need to Know About Life Insurance Underwriting

10, 20, 30 years, forever? How long you need life insurance is a difficult question to analyze but the answer is simple. You should have life insurance always to protect yourself and your loved ones. 

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The length of time for which you need life insurance is an age-old question. Five, 10, or maybe even 15 years? Longer? How about 25 or 30 years? What about if you just went ahead and got it for your entire life? There are plenty of options on the table when it comes to choosing policy length, but which one is best for you? Here, we're looking at life insurance length and how long you should get it for.

## Term v perm

There are two primary types of life insurance: [term and permanent](https://beamplify.com/blog/term-or-permanent-that-is-the-question). One gives you life insurance for a set amount of time while the other lasts for your entire life. Term coverage is temporary and has a reputation for being inexpensive. Perm policies, on the other hand, are more costly, but they never expire.

## When you might need a term life insurance policy

Term policies are the more well-known of the two, mainly because they're cheaper, but there's also a stereotype here in the US that life insurance is only for a set amount of time. That's certainly true with a term policy–you pick how long your life insurance lasts by choosing a length that suits you.

Options available include pretty much anything between five and 30 years, though it's possible to go up to 40 [depending on your age](https://beamplify.com/blog/should-i-get-life-insurance-in-my-20s) when taking out the policy. Term life insurance is particularly popular with new parents, who get it to protect their new family.

Other people who implement term coverage tend to include homeowners. They use the policy as a safety net should the worst happen to them while they still have an outstanding mortgage to pay.

## 10-year term

The length of time you get with a term policy depends on individual needs. Someone may decide 10 years is good enough because they have a [10-year business loan](https://beamplify.com/blog/thinking-about-starting-your-own-business-heres-what-you-need-to-know) where the lender requires life insurance.

## 20-year term

Others may decide that a 20-year term is more suitable for their needs. Perhaps they're young parents who want to protect their children until they reach adult age, at which point they don't feel a policy is as necessary.

## 30-year term

A 30-year term is usually the highest life insurance policy on term coverage. It’s [popular with newlyweds](https://beamplify.com/blog/the-newlywed-game-how-to-do-finances-when-married) and [young professionals](https://beamplify.com/blog/heres-what-you-need-to-know-about-millennial-life-insurance) who are the primary breadwinner of the family.

## Are they any drawbacks to term coverage?

On paper, term coverage can look like a good idea, especially if you only think you'll get a policy for a limited amount of time. And while term options are cheaper than alternatives, there are a couple of drawbacks–and they're pretty major ones, too.

A term policy offers a death benefit while you're insured, [paying out to your beneficiaries](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary) if you die. But that's all it gives you, and once it's finished, that's it. If you survive the whole term (which is obviously the main goal), your premiums don't offer any returns.

If you wanted to renew the term policy, you would also be charged premiums at the age of renewal. That means you're likely to pay more for a new policy. Let's say you got your first term coverage in your 30s. If that policy lasts 30 years, you'd be 60 when it expires. But if you wanted to renew, you'd be charged as a 60-year-old–and the older you are, the higher your premiums.

When viewed through the prism of only getting a death benefit and higher renewal fees, the initial lower price for a term policy doesn't look quite as appealing. You don't really gain anything (unless you die, as twisted as that sounds) and could spend thousands without seeing any returns.

Therefore, the idea of fixed-term life insurance suddenly doesn't look like the smartest move, with something a little more permanent suddenly looking like a handy alternative option. More below.

## Life insurance for life

### Permanent policies

Unlike a term policy, permanent life insurance doesn't expire. That means you pay higher premiums, but for a good reason. As well as a death benefit, a perm policy allows you to [build wealth](https://beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) while you're still alive.

### Wealth building

The wealth-building aspect of life insurance changes the entire dynamic. It essentially becomes a [form of investment](https://beamplify.com/blog/what-are-the-different-investment-types) where you can accrue money through its cash-value element. With the cash value, you can increase your wealth and withdraw the money saved while you’re still alive.

If you’re paying into a permanent life insurance policy from the ages of 25 to 65, that’s 40 years of wealth building. Even better, permanent life insurance policies tend to grow at an annual rate of between 6%-8%, so you can really hike up the amount of money saved.

A perm policy works by paying into two premiums: the death benefit and cash value. Both of these grow over time, allowing you to build wealth and grow your money to leave to one of your loved ones.

### Tax-free

Not only does a permanent life insurance policy let you build wealth–you can do so tax-free. When it comes to withdrawing the cash value, you have the option of doing it with a 0% loan to yourself. Of course, you can't owe yourself tax, which means the cash value is free of any taxes. When you do pass away, the death benefit pays off the loan, with the rest going to your beneficiary. It's [a modern way to build tax-free savings](https://beamplify.com/blog/5-modern-ways-to-build-taxfree-savings) and can save you a fair few dollars with the IRS.

### One premium

While the [premiums on permanent life insurance](https://beamplify.com/blog/what-is-the-cost-of-permanent-life-insurance) are more expensive, they never increase. That means you’re paying the same at 25 as you would 55. And with the [average American living longer,](https://www.paloaltoonline.com/news/2021/01/08/americans-are-living-30-years-longer-on-average--and-thats-a-big-plus-for-businesses) you could potentially enjoy the same premiums for a significant amount of time.

You can also add [riders](https://beamplify.com/blog/life-insurance-riders-explained) to your life insurance policy, giving you access to benefits like long-term care and accelerated death benefits if you fall ill and are unable to work due to your condition.

## How long do you need life insurance for?

Ahh, yes–that age-old question. It really does come down to your personal circumstances, but a permanent life insurance policy looks like the best option on paper. Once you factor in the ability to build wealth and keep the same premium, it’s fair to say that it offers more than term coverage.

Some people might decide a 10-year policy is right for them; others may opt for 20 years. But choosing a permanent policy lets you build wealth during those same terms (10, 20, 30 years, or however long you decide to keep it), which can set you and your family up for the future.

## In conclusion: The right life insurance length for you

A life insurance length can vary, but with a permanent policy, you're getting value for money with the wealth-building element through the cash value. Factor in the fixed premiums and handy riders, and the answer to 'how long do you need a life insurance policy for?' looks like it could just be forever.

Life Insurance Length: How Long Do I Need it For?

Personal liability coverage is a type of protection often found in umbrella policies to protect you or your family from accidental harm, injury, or damage caused to property or a third party. 

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There are many different insurance types available, but personal liability coverage can be particularly helpful. It covers you if you're involved in an accident–in or out of your home–that leads to injury or property damage brought on by yourself or household family members. In this guide, we've got the lowdown on personal liability coverage so you can make an informed decision about whether it's the right insurance option for you.

## Personal liability coverage definition

Sometimes referred to as "comprehensive personal liability (CPL) insurance," personal liability coverage forms part of homeowners insurance or an umbrella policy (more on that in a bit). It's designed to protect you and members of your household from claims that result in injuries or damage to other people or their property.

When used, it prevents you from being solely and legally responsible and means you won’t have to pay large sums of your own money to cover the damage to a third party. Essentially, it’s all about financial protection and ensuring you aren’t left out of pocket if you’re liable for injury to another person or damage to their belongings.

To illustrate, your children might be playing soccer in the garden, and one of them kicks the ball into the neighbors' yard, smashing the greenhouse in the process. In this scenario, your personal liability coverage would come into effect so that you don't have to pay for the damages.

The majority of homeowners insurance policies offer a minimum of $100,000 in personal liability coverage. This means the insurance company can pay up to that amount in total if need be. Higher limits may be available if you think they’re necessary.

## Understanding your personal liability coverage

Personal liability coverage essentially covers mishaps to other people caused by yourself. There are several ways you can obtain personal liability coverage:

*   Purchasing it as a stand-alone policy (this is popular with people who don’t own or rent property)
*   Added to an existing policy, such as a personal auto or [watercraft policy](https://www.investopedia.com/terms/w/watercraft-insurance.asp)
*   As part of a homeowners insurance policy or renters’ insurance – when purchased like this, it’s not just limited to the insured premise and covers incidents that happen elsewhere.

## What does personal liability insurance cover?

With personal liability coverage under your basic homeowner's insurance or renters insurance, you can expect to be covered under the following:

*   Lawsuits faced as a result of an accident
*   Property damage that occurs as a result of your negligence
*   Bodily injury to another person
*   Bodily injury or property damage caused by your pets
*   Medical bills resulting from a visitor’s injury at your home

## The role of medical payments

Medical payments for others are usually included in your personal liability coverage. A policy provides for the payment of medical expenses for anyone accidentally injured on your property, regardless of if you were legally responsible. Medical payments coverage typically starts at $1,000 per person, with higher amounts available depending on the type of coverage you choose.

## Getting umbrella liability insurance

If you find that your policy's liability isn't sufficient, you can opt for additional coverage, such as [personal umbrella liability insurance](https://www.investopedia.com/articles/personal-finance/040115/how-umbrella-insurance-works.asp). This provides additional personal liability protection and helps cover costs associated with serious injury in an auto accident or accident on your property that exceeds liability coverage limits.

## What is not covered by personal liability insurance?

Personal liability coverage protects you from many potential scenarios, but there might be some claims that aren’t included in the policy. These include:

*   Basic cover is unlikely to protect you for liability involving an automobile accident
*   Injuries or damages sustained by you or family members in your home
*   Business activities or claims related to your profession
*   Intentional bodily injury or property damage caused by you or a member of your family in your home

You’re not covered for injury (or worse) to yourself. You would need to [take out life insurance](https://beamplify.com/blog/when-do-you-need-life-insurance-the-most) to protect you and your family against serious injury or even death.

## Other liability coverage exclusions

Homeowners, renters, or condo policies don't cover every situation of bodily injury or property damage where you or a covered member of the household may be legally responsible. Expect to find some exclusions and exceptions.

Before agreeing to a policy, review it thoroughly to understand the elements included and excluded. If you're unsure about anything, don't be afraid to flag it up, so you have complete clarity before crossing t's and dotting the i's on the policy.

## In conclusion: personal protections

Personal liability coverage comes in handy and can be the difference between peace of mind if you're at fault for other mishaps and find yourself having to pay significant sums from your own pocket. As it typically comes with homeowner's and renters' insurance, you benefit from it as part of a broader policy. Therefore, you can rest assured knowing that you and your family are covered if accidents or damage are caused to other people and their belongings.

What is Personal Liability Coverage?

Compound interest is the 8th wonder of the world and with the rule of 72, you can easily estimate how long it would take to double your investment in a vehicle like permanent life insurance. 

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Ever wanted to know how long it takes to double your investment? With the Rule of 72, you can do just that, using a formula to see the length of time it’ll take to double your initial investment. But how does the Rule of 72 work, and what does it have to do with life insurance? We’ve got all the details in this guide. Here’s your cheat sheet to the Rule of 72 and how to make it work.

## What is the rule of 72?

The Rule of 72 is a formula used to determine how long an investment takes to double, given a fixed annual rate of interest. You simply divide 72 by the annual rate of return, and, hey presto, you’ve got an indication of the length of time it will take to double your investment.

It’s a popular method with investors, as trying to forecast your rate of return can otherwise be tricky. With the Rule of 72, however, you can be more confident about potential returns and how long you can expect to wait before they become tangible assets.

Don’t just take our word for it, though. Here’s Tom Mathews and Steve Siebold from their book, “[How Money Works](https://howmoneyworks.com/)”: “The Rule of 72 can give you an idea of how many doubles you’ll get in your lifetime. With more time, a lower interest rate may give you enough to nail your goals. With less time, you may need a higher interest rate.”

## How does it work?

The calculation for the Rule of 72 is pretty straightforward. Divide 72 by the interest rate to see how many years it’ll take to double your return. For example, an interest rate of 3% used for the Rule of 72 would look a little something like this:

_72/3=24_

That means you can expect to wait 24 years for your investment to double if it’s in an account where the interest rate is 3%. If you’re using something like a standard savings account, where interest rates tend to be around 0.9%, you can expect to wait 800 years. You better start binge-watching Netflix to pass the time.

## The Rule of 72 in action

Relying on a standard savings account might not be the best way to maximize returns. Most people tend to keep their money in high yield savings accounts or a certificate of deposit, both of which offer higher interest rates.

Then there’s the stock market, employer-sponsored 401(k), a traditional Roth IRA, or an individual brokerage account. All of [these investment types](https://beamplify.com/blog/what-are-the-different-investment-types) can help you grow your money, and using the Rule of 72 is a good way to determine how much you can make.

The Rule of 72 also works for credit cards, car debts, loans, and even home mortgages. You can use it to see how many years it’ll take your money to double for someone else. If you’re not a sadomasochist, however, perhaps it’s best to stick to working out the numbers for your own personal gain.

## Life insurance and the Rule of 72

When you take out a [permanent life insurance policy](https://beamplify.com/blog/what-is-the-cost-of-permanent-life-insurance), all of a sudden, you’ve got yourself a savings account. That’s because perm coverage comes with something called “cash value,” which [lets you build wealth](https://beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) while you’re still alive.

Essentially, you pay into two pots: the death benefit and cash value. Both of these accrue with each monthly payment, and you can access the [cash value](https://beamplify.com/product/cash-accumulation) later on in life. Even better, your wealth tends to grow on an average of 6%-8% annually with permanent life insurance.

Let’s be rather more modest and take that 6% figure. Using the Rule of 72 and dividing 72 by 6, we get 12. That means you can double your investment in just 12 years if your cash value grows at a rate of  6%. Bump it up to 8%, and you’re doubling your investment in just 9 years.

So if you took out a permanent life insurance policy in your 20s, you could double your investment every 9 years at an annual growth rate of 8%.  In 40 years, you could more than quadruple your investment. Suddenly, you’ve got yourself a nice little nest egg for retirement.

Getting a permanent life insurance policy allows you to both [look after your family after you pass](https://beamplify.com/blog/heres-what-you-should-know-about-a-life-insurance-beneficiary) and grow wealth while you’re still alive. And with the Rule of 72, you calculate impressive returns for your investment in a perm policy.

## In conclusion: The Rule of 72

Using the Rule of 72 is a smart way to get a better indication of how much you can earn over a specific period of time. While you need to factor in things like changing interest rates, it still provides you with a foundation and pretty solid numbers. You can remove much of the guesswork and feel more confident about your investments.

The Rule of 72: How Long Does it Take to Double Your Investment?

Getting life insurance coverage when you have a risky job can be challenging. Insurers pay close attention to your profession and it can lead to higher premiums. 

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The job you took as a professional paraglider looked good at the time, but then you decided to get life insurance, and that’s where things got sticky. It turns out there are a fair few professions that life insurance providers deem a risky job, and having one could lead to you being turned down for a policy. But which jobs are too hazardous for life insurance–or at least make it tricky to get coverage? We’ve got all the details below.

## What happens if I have a risky job?

If you happen to enjoy a thrilling lifestyle at work, then getting life insurance can prove tricky. If there’s a higher risk of you dying due to your work, providers will be more cautious when providing coverage, as the chances of them paying out significantly increase. If you then times that by all of the dangerous professions out there, you’ve got yourself a ridiculously high level of payouts.

Getting a life insurance policy with a risky job isn’t impossible, though. Life insurance providers will take several factors into account, such as the likelihood of death based on industry statistics as well as your own risk individually.

It’s even possible that employees could have a [group life insurance policy](https://beamplify.com/blog/is-life-insurance-from-your-employer-good-enough) in place, as they are aware of the roadblocks faced for getting individual coverage. But even if you did go down the individual route, there are options (more on that in a bit). For now, let’s look at the jobs that insurers deem as threatening to your health.

## Jobs are deemed hazardous by life insurance companies

### Aircraft pilots

A pilot is a sought-after job that tends to pay handsomely and sees you flying all over the world. From a life insurance perspective, however, it’s deemed high risk because, well, you’re in the air while working–and when things tend to go wrong up there, they go really, really wrong. For that reason, being a pilot can be a risky job. Insurers also look at factors like your instrument rating, how many hours you fly annually, and the countries you fly to. So the level of risk isn’t exactly the same for every pilot.

### Construction workers

From skilled tradespeople to those working on large sites, construction workers are often regarded as risky when it comes to life insurance. Accidents in construction-related jobs are higher than in many other professions, which means insurers cast a keen eye over anyone applying for a policy when they’re a manual laborer.

### Fishermen

A natural resource worker is someone who is in mining, fishing (see above), marine, quarrying, oil and gas industries, and lumber. It’s all well and good working in a natural resource sector, but when you spend months on end on an oil rig or head down into the mines, attaining a life insurance policy can prove more tricky.

### Natural resources workers

A natural resource worker is someone who is in mining, fishing (see above), marine, quarrying, oil and gas industries, and lumber. It’s all well and good working in a natural resource sector, but when you work on an oil rig for months out of the year or head down into the mines, attaining a life insurance policy can prove more tricky.

### Active military

It doesn’t get any nobler than serving your country. Unfortunately, active military members usually don’t qualify for an individual life insurance policy as the risk is just deemed too high. There is good news, though, as military professionals are usually enrolled automatically into a government plan.

### Car-related professions

Whether you’re a driving instructor, delivery driver, or have a profession that requires extensive time on the road, it might be harder to get life insurance. That’s because roads can be dangerous, and driving accidents are more common than, say, incidents sitting at your desk, switching between that excel file you promised to complete three hours ago and your NFL draft team. Driving accidents account for the [most accidental deaths](https://www.cdc.gov/nchs/fastats/accidental-injury.htm) in the United States.

## What life insurance options do I have with a risky job?

First of all, you shouldn’t rule out getting a traditional life insurance policy, such as [term or permanent](https://beamplify.com/blog/term-or-permanent-that-is-the-question). Both of these are still attainable for some riskier professions (though the premiums are likely to be higher), and it really depends on your individual circumstance and the “riskiness” of your role. The final decision on whether to give you coverage ultimately comes down to each insurer, and they tend to differ for what they class as a dangerous job

It may be that you need to go through a more [thorough medical exam](https://beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam) and could be asked in-depth questions about your profession as well as the day-to-day of the job. Insurers could also perform a database report, which involves accessing information about medication you may be on or have previously taken. If the amount of coverage you want is high, you should expect a soft credit check.

You could find yourself subject to limited coverage options, too, and the size of the policy available may be capped even if monthly premium payments are higher. Sometimes it’s known as “impaired risk insurance” when you have a potentially hazardous job.

## In conclusion: Life insurance for risky jobs

Obtaining life insurance can prove more difficult when you have a dangerous job, but it’s not impossible. You may even be offered it through your employer, which is better than having no coverage at all. And it’s always worth asking the question with the insurer to see if you can get an individual policy. You might be left pleasantly surprised and will be able to carry on your risky job while knowing you’re covered with a life insurance policy.

Life Insurance for People With a Risky Job

Your credit score can determine the outcome of major financial decisions (mortgage, new car, business loan, etc.) but how does it affect life insurance premiums? 

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When applying for a life insurance policy, your age and health are usually the main topics of discussion. But your financial status also plays a role in whether or not you can get coverage. Included in that is your credit score, but just how much of an influence does it have on your premiums? Here, we’ve pulled together the details to give you the lowdown of the impact of a credit score for life insurance and your ability to get coverage.

## What role does a credit score play in life insurance?

The good news first: your credit score doesn’t affect how much you pay for life insurance. If you’ve got a lower score, theoretically, it won’t cause your premiums to rise. So if you’ve just moved to the country or [are of a younger age and haven’t had the chance to build your score](https://beamplify.com/blog/should-i-get-life-insurance-in-my-20s), it won’t hinder your chances of getting life insurance.

The contents of your credit report can have a negative impact, however. When a life insurance provider assesses your suitability for a policy, they’ll assign you an insurance score based on your income and debts, insurance history, and driving history. All of these affect your premium and play a role in how much you’ll pay each month.

Factors like past bankruptcies, late payments, and a large amount of unmanaged debt can all lead to you paying a higher premium than someone who has a grip on their finances. So while a credit score alone won’t ruin your chances, when combined with other factors like a poor driving record and previous insurance, it can bring up red flags, which may lead to increased premiums.

## What exactly is a credit score?

A credit score is a number assigned to you by banks and other institutions. It determines how reliable you are with credit and whether or not you’re deemed a financial risk. Generally speaking, the lower your credit score, the harder it is to get things like mortgages, credit cards, and loans.

Your credit score is a way for financial organizations to tell if you can afford to repay any money you’ve borrowed and if you’re responsible with finances. The higher your score, the lower your interest rates–plus, you’ll have better access to financial products.

Most credit agencies score you out of 850, and anything above 700 is considered a good and healthy score. [FICO is the primary data reporting agency](https://www.consumerfinance.gov/ask-cfpb/what-is-a-fico-score-en-1883/) and uses a combination of data to award you a number. The data is then distributed to banks, who can decide whether or not you can borrow money with them.

## How are credit scores calculated?

From payment history to credit age and usage, several factors determine your score. Each one is given a weight of importance and can impact your report negatively if you don’t manage it well. The main factors contributing to your credit score include:

*   Making payments on time
*   Debt usage
*   Credit age (the number of years for which you’ve had an account)
*   Mix of accounts (how many you own)
*   Credit inquiries (how often you apply for credit)

Making payments on time is the most important aspect and counts for a significant portion of your report. Debt usage is the second most vital, with credit age, a mix of accounts, and credit inquiries.

## Red flags to look out for on your credit score

When it [comes to getting life insurance](https://beamplify.com/blog/current-trends-and-why-you-should-get-permanent-life-insurance-now), there are certain red flags that you need to look out for. That’s because, even though your credit score won’t directly affect your application, some details from the report can suggest that you might be a financial risk to the insurer. These include:

*   Bankruptcy
*   Having large credit card balances
*   High percentage of credit card usage
*   Late or missing debt payments

Each provider has its own methods for deciding your eligibility, and some may place more weight on your credit score than others. For example, one insurer could have specific rules relating to bankruptcy while another provider is more lenient if the discrepancy refers to something that happened in the past but has since been fixed.

## How can I access my credit score?

There are three primary credit reporting agencies: [Equifax](https://www.equifax.com/), [TransUnion](https://www.transunion.com/), and [Experian](https://www.experian.com/). They all offer one free report each year–including your credit and FICO score–so you could technically get your score every four months by using all of them.

This way, you can keep up to date with your score and request removals from the report if you find inaccurate information. Regularly reviewing your report can also help you stay on top of things like identity theft and generally ensure that everything runs smoothly.

## How can I improve my credit score?

You can always update your credit score if you believe it needs improvements, whether it’s to feel more confident about getting a [good life insurance premium](https://beamplify.com/blog/a-comprehensive-guide-for-life-insurance) or for borrowing money from banks, etcetera.

Start by ensuring that your credit to debt level is good, aiming for a 25-30% ratio. This is the primary way to improve your score, and it can account for as much as a 40-point rise. Also, try and make all payments on time so that you don’t get any negative marks on your score against late payments. Lastly, don’t open too many accounts, especially in a short period of time. This will ultimately count negatively against your score.

## In conclusion: Credit score for life insurance

The actual score provided by a credit reporting agency won’t directly impact your chances of getting life insurance, but certain factors inside the report might. Therefore, it’s worth keeping on top of your credit score and managing finances, from paying debt on time to keeping a good debt to credit ratio. Do this, and you can expect a swift process from a financial point of view when it comes to getting a life insurance policy.

Credit Score for Life Insurance: Does it Matter?

The 2K rule is a simple calculation to determine how much money you need to have saved for your child's college education at any given age. See why it's important. 

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Once upon a time, Fidelity, an American multinational financial services corporation based in Boston, came along and invented the 2K Rule. But what is it? How does it work? How can you use it for college savings best practices as you plan for your kids' educational future? And where does life insurance come into play?

## What is the 2k Rule?

The 2K Rule is a rule of thumb created for parents. It helps them calculate how much money they should save to help pay for their child’s college education. The goal is to save around $2,000 per year.

No matter when you start the 2K Rule, you should multiply your child’s age by $2,000 to see how much money you need to ensure there is enough to pay half of the cost for the average college education. From then on, continue putting $2,000 aside each year until your kid goes off to college.

For example, multiply $2,000 by 8 ($16,000) for an eight-year-old to get the sum for that particular age group. The answer isn’t the total you need to save to pay for college but the total needed to save to be on track at that specific age in their life.

## Why the 2k Rule?

Financial firm Fidelity found that the average [US family is on track to save only 29%](https://www.cnbc.com/2017/06/16/how-much-the-american-families-have-saved-for-college.html) of the total amount needed to pay for their child's education by the time their kids graduate from high school.

This happens because parents are struggling to understand how much they should save for their children’s college education. Alas, the 2K Rule was born, and moms and dads all over the country suddenly had a way to calculate the costs related to a college education.

## How to use it

The goal is to put aside as much as possible, and the 2K Rule should be just one method to save for your child’s college. Saving under the 2K Rule won’t reduce your child’s access to merit-based grants and scholarships for grades, nor will it affect academic accomplishments and special skills. When used with the 2k Rule for saving, financial aid can account for a significant chunk of college costs. The more methods you use to help pay for college costs, the better the 2K Rule becomes for saving.

## Using a 529 plan to implement it

The 2K Rule only works when you use it in conjunction with a 529 Plan, a state-sponsored scheme with tax advantages designed to increase your college savings. States offer different 529 Plans, so the type you opt for will ultimately depend on your location. A 529 comes with benefits, such as avoiding capital gains tax when used for qualified education expenses like tuition, fees, books, and other educational-related supplies.

You can also use the 529 for other aspects, though you’ll be taxed on anything not related to paying for your kid’s college. It works similar to a [Roth IRA](https://www.beamplify.com/blog/what-are-the-different-investment-types), except it’s designed for the purpose of education rather than retirement. While the 529 Plan can be beneficial working alongside the 2K Rule and helping to pay for your kid’s college, it does have some drawbacks.

Some 529 Plans may affect which college your child ends up at, as well as impacting their chance of receiving financial aid. If a 529 owner rolled over into another state’s plan, income tax deductions and credits claimed might be the subject of recapture by the state.

## Are there any other options?

There are indeed other options when it comes to saving for your child’s college, such as life insurance. Most people think of life insurance as something that provides a death benefit to the loved ones of the policy owner. And while it is indeed that, a permanent life insurance policy is also so much more.

A permanent policy allows you to [grow wealth while you’re still alive](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) by tapping into the [cash value](https://www.beamplify.com/product/cash-accumulation) you accumulate throughout the coverage. This changes the dynamic around life insurance and gives you a form of investment account where you can build for the future.

You pay into two pots: one for the death benefit and the other for the cash value. Both of these grow over time, and you can dip into the cash value later in life and use it for pretty much whatever you want including, you guessed it, your kid's college.

## Life insurance for college planning (amongst other things)

Send your kids to college and enjoy the safety and security that comes with a permanent life insurance policy. It has fewer restrictions on distributions while offering families a place to keep funds from the federal financial aid methodology, which is the formula used by the federal government to determine your Expected Family Contributions.

Using a permanent life insurance policy is a smart way to [save for your kid’s college](https://www.beamplify.com/blog/should-you-use-life-insurance-for-college-planning), as you can utilize the cash value element to build wealth. You also have the bonus of leaving a death benefit to your beneficiaries, just in case the worst was to happen.

On top of that, the money you [withdraw is tax-free](https://www.beamplify.com/blog/5-modern-ways-to-build-taxfree-savings) as it’s taken out as a 0% loan to yourself. When you pass, the death benefit pays the amount borrowed, with the rest going to your loved ones.

Paying for your child’s college with permanent life insurance is more unconventional than going down the 529 route. But it also provides a bonafide way to save for the future and pay for your child’s college education in full.

## In conclusion: College 2K

The 2K Rule is a handy way to understand how much you should save for your child's college fees. But it's not the only game in town, and using permanent life insurance coverage can help you save for their college as well as other things that may be important to you during retirement. Combined with a death benefit, a permanent policy is a smart way to fund your child's college education.

What is the 2K College Savings Rule of Thumb?

Insurance terms tend to be confusing and convoluted but they don't have to be. We defined the most commonly misinterpreted insurance terms for your benefit. 

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Ever find yourself scratching your head and saying “huh” as you comb through the fine print of an insurance document? Or maybe you’re talking to an agent about getting insurance and are left sitting there looking bemused as they unload verbal jargon on you. Worry not, because with this guide you can become a pro in all things insurance terms so you’ll know the important terms like the back of your hand.

## 1\. Permanent life insurance

Most people only know life insurance as a form of coverage that pays out when you die. What they don't grasp, however, is that [permanent life insurance](https://www.beamplify.com/blog/current-trends-and-why-you-should-get-permanent-life-insurance-now) allows you to build wealth while you're still alive. In fact, many don't understand permanent life insurance in general. So the next time you see insurance terms like "permanent policy," know that you can provide a death benefit for your loved ones while also growing the [cash-value](https://www.beamplify.com/product/cash-accumulation) of your coverage and access it later in life to spend on whatever you want.

## 2\. Annuity

Some insurance companies offer instruments that help you save money on a tax-favored basis to create an income for life. These are known as annuities, and you choose one that meets your requirements–eg, you’ll pay for it immediately or over time–while deciding on when you’ll start taking payments and for how long.

## 3\. Underwriting

Underwriting is common in the world of insurance and helps companies decide if they want to offer you a policy and at what rate. An underwriter does the underwriting, and they look at factors like your [age, health, lifestyle](https://www.beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam), and even financial situation to come to a conclusion about insuring you.

## 4\. Accelerated death benefit

Often [used as a rider](https://www.beamplify.com/blog/life-insurance-riders-explained), an accelerated death benefit lets you use some of your life insurance death benefit before you pass away. It usually comes into action if you are terminally ill or can no longer work due to an injury that permanently puts you out of action. It's one of the most popular riders added on to life insurance.

## 5\. Deductible

When you see the insurance term "deductible," it typically relates to the amount you're required to pay out of your own pocket before the insurer covers the remaining costs. It's also sometimes called "excess," and many insurance policies allow you to increase your deductible to save money on the premium you pay.

## 6\. Conversion right

It's not uncommon to find some term life insurance policies where you can convert them into permanent coverage. When you can perform such an action, it's known as a "conversion right" and can help you keep your existing coverage while having the [ability to build wealth](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) with a permanent policy.

## 7\. Long-term care insurance

Another popular rider, long-term care insurance helps if you're no longer fit and able to look after yourself. It will likely cover nursing homes, home health care costs, and adult daycare. A long-term care policy is particularly popular with women, [who are living much longer than men](https://www.bmj.com/content/365/bmj.l1631) and could potentially need care if their spouse passes away first.

## 8\. Grace period

A grace period gives you time to think about whether you want to commit to a policy. Much like credit cards, you usually have a set amount of time before your first payment (usually 14 days to a month) where you can change your mind if you wish. However, once the grace period ends, you’ll commit to the full term of the agreed insurance policy.

## 9\. Waiver

This is a clause that agrees to waive premium payments for a period of disability. It’s another rider that can be added to your life insurance policy and would see the renunciation or surrender of a known right of privilege.

## 10\. Policy

Many people take out a policy without realizing what it actually means. Essentially, it's the contract between you and your insurer and features all the details (terms & conditions) of what you're insured for and how it all works. It also included exclusions that provide total transparency about the coverage you do and do not have. You can ask for a copy of your policy at any time by contacting your insurer.

## 11\. Contestability period

The contestability period is a set amount of time after an insurer offers you life insurance. They can use the time to review your application and ensure that you didn't provide any false information that could affect your policy. The period starts from the moment your policy is issued, and it typically lasts for between 12 months and two years. The goal is to protect life insurance companies from fraud.

## 12\. Insurable interest

With a life insurance policy, you're required to have an insurable interest in the person named on it. The policy states that you would suffer a form of financial harm if the person were to pass away. In insurance law, you're only able to purchase insurance for something or someone where you have an insurable interest.

## In conclusion: The right insurance terms

It's essential that you understand your insurance policy, no matter the type of coverage you're getting. And with our explainers, you can be confident the next time you get coverage while impressing the agent and making sure you get the right policy for your needs.

12 Insurance Terms People Misinterpret and What They Mean

College isn't cheap, but there are many ways to start saving for higher education like permanent life insurance that can help. 

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So your child’s just been accepted into college. Good times. They’re about to embark on quite the journey that will hopefully prepare them for the real world once they’ve graduated. Now, you’ve just got to pay for it. On average, it costs just over $35,000 to go through college, so hopefully, you already have a savings plan in place. But is it tax-deductible? That’s what we’re looking at with this guide, as well as what you need to know about saving for higher education. 

## When should I start saving for my child’s college? 

You should really try and start saving for your kid’s college as early as possible–the earlier, the better. There’s no reason why you can’t even start before they’re born, though it’s probably not necessary to do it that early.

On average, [parents aim to save $57,981](https://educationdata.org/college-savings-statistic) for their child’s college. If you want to reach these kinds of targets, then it’s best to start as soon as you can. Over the last five years, parents have saved $2,118 more on average than they did previously. The average saving per year is $5,143. 

## What college savings plans can I use?

### 529 account

A 529 plan is by far the most popular way to save for your kid’s college, according to the numbers. Around 30% of parents use a 529 plan to save, and they accumulate an average of $28,679 in 529 accounts. A 529 plan is an investment account designed specifically for saving towards your child’s college, with each plan varying depending on the state where you reside. 

### Regular savings account

There is, of course, the option of saving for your child’s college in a regular savings account or even a checking account. Some parents may also use a brokerage account. While these are perfectly viable ways to save, they don’t tend to offer any incentives, especially savings and checking accounts. 

### Roth IRA

While Roth IRAs are more associated with retirement accounts, they have become popular as savings accounts for college. They offer the same basic structure as a 529 plan, and college expenses are an allowed exemption from the IRS’s early withdrawal penalty. 

### Permanent life insurance 

Another unconventional way to save for your kid’s college, [permanent life insurance coverage](https://beamplify.com/blog/current-trends-and-why-you-should-get-permanent-life-insurance-now) features a cash value element that allows you to build wealth over time and access it later in life. You’re free to use the funds accumulated for whatever you wish, with some people putting the money accrued towards paying for their child’s college. 

## Are college savings plans tax deductible?

If you’re saving hard-earned money to send your kids to college, it would be nice to get a few tax breaks while you do it. Fortunately, with a 529 plan you can benefit from tax breaks when the money is used for qualified education expenses, such as tuition, fees, books, and other college supplies. However, should you no longer need to use the plan when your child goes to college, and you would rather use the money somewhere else, you’ll be subject to taxes plus a 10% penalty fee.

Fortunately, with a 529 plan, you can benefit from tax breaks when the money is used for qualified education expenses, such as tuition, fees, books, and other college supplies. However, should you no longer need to use the plan when your child goes to college and you would rather use the money somewhere else, you’ll be subject to taxes plus a 10% penalty fee.

A Roth IRA also offers the same basic tax structure as a 529 plan. This means you can save for your child’s education tax-free with the added bonus of being exempt if you withdraw the money early to pay for your child’s college. 

Another tax-free way to send your kids off to college involves permanent life insurance. You don’t pay tax on the money you accrue via the cash value offered with a permanent policy. Unlike a 529 plan, however, you don’t only [get the tax benefit](https://beamplify.com/blog/5-modern-ways-to-build-taxfree-savings) when you withdraw the money to pay for higher education. Regardless of what you use the cash value for, you can do so completely tax-free.

## Tell me about permanent life insurance

Gladly. With a permanent life insurance policy, you get a death benefit to leave to your loved ones as well as the chance to build wealth while you’re still alive. Therefore, the sooner you start a policy, the more money you can accrue over time. It’s why getting a [life insurance policy in your 20s](https://beamplify.com/blog/should-i-get-life-insurance-in-my-20s) can be a savvy move. 

When you pay into the premium (which stays at the same rate throughout the entirety of your policy), you’ll pay into two separate accounts: the death benefit and [cash value](https://beamplify.com/product/cash-accumulation). Both of these grow over time, and you can opt to withdraw the money from the cash value via a 0% loan to yourself.

Doing this means the money is tax-free, as you can’t pay yourself tax. When you pass away, the accrued death benefit covers the loan, with the rest going to your beneficiary. How you decide to spend the cash value is entirely up to you, but an increasing number of parents are using it to [send their kids off to college](https://beamplify.com/blog/should-you-use-life-insurance-for-college-planning). 

## In conclusion: saving for higher education

Saving for higher education needn’t be a hassle, and there are many ways to do it. Even better, you don’t have to subscribe to just one method and can easily use a combination of a 529 plan, Roth IRA, and permanent life insurance to save up enough money to send your kid to college and enjoy building wealth, especially with a permanent life insurance policy.

Here's What You Need to Know About Saving for Higher Education

People search far and wide for ways to protect their nest egg from inflation. Our latest guide covers 6 surefire ways to do so. 

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Who needs inflation, right? Especially when it comes to accessing your nest egg in retirement. Inflation rising to anything over 5% doesn’t spell good news for, well, most people looking to build a little pot of gold for the future. But there’s no need to hit the panic button just yet, and we’ve got some handy tips for how to protect your retirement nest egg from rising prices.

## Just what is inflation?

When prices of goods and services increase steadily, you’ve got yourself inflation. During times of inflation, your money is worth less and, subsequently, buys a smaller percentage of those goods and services that have increased. It means that you lose some purchasing power.

In general, inflation is fairly steady in the US, and the Fed tries to keep it at a rate of 2% every year. However, inflation is affected by world events, some of which are hard to plan for. In layman’s terms, economic turmoil, like the [Covid pandemic](https://beamplify.com/blog/life-insurance-during-covid-the-impact-of-the-pandemic), often leads to a drop in inflation. While moments of great prosperity usually lead to a rise in inflation.

## How does inflation affect my retirement nest egg?

If you’ve built up your retirement pot over 30 years, the money put in at the beginning won’t be worth the same amount when the time comes to withdraw it. If there’s regular inflation while you’re saving, then you could see your savings account impacted.

For example, a $250,000 retirement nest egg today would devalue by $7,500 in one year with inflation of 3%. That would give it only $175,000 of purchasing power in just 10 years. That’s why it’s important to factor in inflation when saving.

## How to protect your retirement nest egg against inflation

### Manage risk

Nothing is certain when it comes to investing, and it's impossible to predict the rate at which prices rise in the future. As a rule of thumb, however, it's best to assume there will be some type of inflation in the long term. Therefore, you should take the necessary steps to protect yourself from it. Manage the risk by diversifying, as it can help you protect yourself. Look to invest in various asset classes, as doing so can safeguard you against losing money because of rising inflation.

### Examine the stock market

Share prices tend to outpace inflation by a significant margin, which makes investing in stocks appealing. Inflation averages just over 3% long-term, with the average annual returns in the stock market getting much closer to 10%. That would see you enjoying a purchasing power return of around 7%. Stocks and bonds [can be a savvy investment type](https://beamplify.com/blog/investment-concepts-you-should-know-about) as long as you’re prepared the market volatility.

### Buy gold

You read that right. This isn’t the 1800s, and gold is a viable alternative for trying to combat inflation. It typically rises in value in the most extreme economic conditions, with the pandemic being a good indicator of gold prices shooting through the roof. The spot price of gold achieved its all-time peak in August 2020, reaching a value of $2m-plus as a result of investors worrying about the economic fallout from Covid. Like stocks, it’s also somewhat volatile, which is why experts suggest you only keep a maximum of 5% of your wealth invested in gold.

### Focus on inflation-protected annuities

With an annuity, you can purchase a future stream of payments from an insurance company. It's popular with [life insurance riders](https://beamplify.com/blog/life-insurance-riders-explained) and sees you using a single cash payment or making a monthly payment into the contract over a period of time. The contract details things like the rate of return and size of income payments, giving you a better indication of what you could earn from it. Going down the annuity route can be more complicated than other methods, but it can be a viable way to protect your nest egg retirement from dipping in value.

### Avoid unnecessary taxes

Taxes can further impact your money when the time comes to withdraw it, [so look to investment types](https://beamplify.com/blog/what-are-the-different-investment-types) that don’t charge you [capital gains tax](https://beamplify.com/blog/breaking-down-the-capital-gains-tax-and-how-you-can-avoid-it), such as a permanent life insurance policy. You grow your funds (more on that in a bit) in a tax-free environment, which means you can have a buy and hold option instead of actively purchasing and trading stocks. But that’s not the only way a [permanent life insurance policy](https://beamplify.com/blog/should-i-convert-to-permanent-life-insurance) can help your retirement nest egg. We’ve got more about why this coverage can combat inflation below.

### Safeguarding against inflation with permanent life insurance

There are several ways to protect yourself against inflation, including getting a [permanent life insurance policy](https://beamplify.com/blog/are-permanent-life-insurance-policies-worth-it). With perm life insurance, you can build wealth while you’re still alive, growing both your death benefit and your money at the same time.

If you took out an indexed universal life insurance policy, you could grow your savings at an average return of 6-8% with a cap and a 0% floor. It works with part of your premium covering the death benefit and the rest going to an account that grows anywhere between 0-12% annually.

So if the [S&P 500](https://www.spglobal.com/ratings/en/) rises above 12%, you’ll only get 12%. But let's say the market drops instead. It also means you won’t lose money, and you’re growing off of a higher amount each year because you don’t suffer any losses. As a result, you’re protected against inflation and can look forward to cash accumulation in the long term and a secure nest egg.

## In conclusion: A retirement nest egg you can count on

Inflation can have an adverse effect on your retirement nest egg, but there are ways to protect your savings. You do have options, and if you make the right moves you can build up a nest egg to live off while looking forward to the future.

How to Protect Your Retirement Nest Egg from Rising Prices

Life insurance new grads is probably not the first thing they think of at such a pivotal moment, but it can be worthwhile to get. 

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Finishing your studies is a time for excitement as you head out into the big wide world to begin your career. Surely that means a life insurance policy isn't something worth thinking about just yet, right? After all, isn't it for older people? Well, young friend, that's where you’re very wrong. New grad life insurance could just be the smart move as you enter the stage as an adult. Here's why.

## Don’t leave personal debts behind

Hopefully you won't leave university owing too much money, other than your student debt. Plus, if the worst was to happen, federal student loans are typically discharged after the required proof of death is submitted. Not that we want to start things off on the subject of death, of course. But it's nice to know that your family won't be loaded with extra bills if you were to pass.

The average [US student leaves university with $29k of debt](https://studentloanhero.com/student-loan-debt-statistics/), which is both federal and personal. Other debts would need repaying, and that could mean family members like your mom and dad suddenly find themselves required to cover the debt you leave behind. With a life insurance policy, however, nobody needs to shoulder the burden of debt. The death benefit associated with your policy would cover money owed, allowing your family members to, at the very least, be free of needing to cover your debts.

## A different type of savings account

Ok, so now that the morbid bit is out of the way, let's get onto the good stuff. There are two primary types of life insurance, term and permanent. A term policy gives you coverage for a set amount of time and pays out a death benefit to your beneficiary, but it does little else. Plus, if you’d like to renew, you'll be required to pay premiums at your renewal age rather than the age when you took out the policy.

With a permanent life insurance policy, however, the game changes. You can [accumulate wealth while](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) you're still alive, thanks to the [cash-value element](https://www.beamplify.com/product/cash-accumulation). This means your policy essentially becomes an [investment account](https://www.beamplify.com/blog/what-are-the-different-investment-types) where you can save for the future.

It works by paying into two pots: the death benefit and cash value. Over time, both of these grow, with the cash value accessible later in life. Think of it as a form of retirement income– and if you're paying in from your 20s, you can expect to build up a significant amount and acquire a nice little nest egg. It's one of the safest ways to grow wealth and protect your future as you get older. Permanent life insurance sees an average yearly return of 6-8%.

## Tax-free savings

Not only can you build wealth while you're still alive with a permanent policy, but the money earned is also completely tax-free. When you withdraw the cash value accrued, you can do so in the form of a loan to yourself, which doesn’t require any tax to pay–it's impossible to pay yourself tax.

The death benefit pays for the loan when you do pass away, and the remaining amount is left to your beneficiary. Using permanent life insurance is a smart way to save without accumulating a hefty tax bill when the time comes to withdraw your money.

You'll probably also use something like a 401(k) or form of a savings account when you start work. And a permanent policy alongside a 401(k) is a great way to protect your family while building tax-free wealth over the long term.

## Lower premiums

One of the best things about new grad life insurance is the premiums. The younger and [healthier you are](https://www.beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam), the cheaper your monthly life insurance payments. If you decide to get a permanent policy, you'll lock the premium in for life and will pay the [same amount in your 20s](https://www.beamplify.com/blog/should-i-get-life-insurance-in-my-20s) as you would in your older years.

When you look at life insurance through this lens, it becomes a precious investment. Over the long term, you stand to save thousands by taking out a policy when you're a new grad as opposed to doing it in your 30s or 40s when you may decide to start a family.

Other than the ability to build wealth, the premiums on a permanent policy are one of the beneficiary drivers when compared to term coverage. Yes, a term policy is cheaper in the short term. But it doesn't provide any bonuses outside of the death benefit, and we've already mentioned the rising premiums if you wish to renew when term coverage expires.

When you look at a permanent policy from every angle-the death benefit, one premium, cash accumulation, and tax-free savings–it more than proves its value as a savvy way to invest in your future while protecting the people you love.

## In conclusion: new grad life insurance

Sure, a gap year visiting Europe or the Serenghetti looks appealing after you graduate, and there's plenty to be excited about as you enter real adulthood. But no doubt, getting a permanent life insurance policy can start you off on the right foot as you look to [achieve your money goals](https://www.beamplify.com/blog/10-financial-strategies-to-reach-your-money-goals). It will be an assuring constant in your life as you progress your career and gain more experience, all the while the policy is accumulating wealth in the background to help you build for the future as soon as you've finished university. Now, that's what we call smart financial planning.

New Grad Life Insurance: Should You Get It?

There are many life insurance myths in the United States that prevent people from investing and protecting their future. This guide debunks the top 7. 

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Think you know everything about life insurance? Then you might need to think again. There are many life insurance myths in the United States, and it's time to put them all to bed. So read on because we're in a myth-busting mood with this guide to debunking the misconceptions about life insurance.

## Life insurance is only for when you die

Yes, life insurance coverage offers a death benefit to your loved one when you pass away, and that's great! But it's so much more when you get a permanent policy, which lets you [build wealth](https://beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) completely tax-free. Oh, and did we mention the wealth-building component happens when you're alive, and you can access the cash while still breathing that sweet, sweet air? You know what that means, right? Life insurance suddenly becomes a good investment. More below.

## It’s not a good investment

With a [permanent policy](https://beamplify.com/blog/who-needs-permanent-life-insurance-the-answer-might-surprise-you), you get to build wealth with something called "cash value." Using the cash-value element of your permanent life insurance coverage, you can grow your money over time. It works by paying into two pots for your premium: the death benefit and [cash value](https://beamplify.com/product/cash-accumulation). Both of these accrue with each monthly payment, growing to the point where you have a significant death benefit and build a nice little nest egg. You can then use that money in retirement to do pretty much whatever you want, from paying for the [kid's college](https://beamplify.com/blog/should-you-use-life-insurance-for-college-planning) to buying that Porsche you've always had your eyes on.

## It’s expensive

Life insurance has a reputation for being quite expensive. It probably doesn’t cost as much as you think, however. You can get policies for less than $100 per month, but even when it is on the high end, there’s the investment aspect to consider. For example, a permanent policy is more expensive than [term coverage](https://beamplify.com/blog/term-or-permanent-that-is-the-question), but the premiums never increase. That means you pay the same amount throughout the entire policy with the same payments each month. And if you lock yourself in [nice and early in age](https://beamplify.com/blog/should-i-get-life-insurance-in-my-20s), you’ll get the cheapest premiums available throughout your whole life.

## Life insurance is for older people

That brings us nicely onto our next life insurance myth: age. Most people think life insurance is something you get in your older years when you’ve got a mortgage and kids. And while it’s definitely worth considering at that stage of your life, you can also get it during your younger years. Again, premiums are cheaper for younger people, who tend to be in their best shape health-wise. Plus, you’ll grow the cash value from an early age and will have more to tap into later in life. [Money goals](https://beamplify.com/blog/10-financial-strategies-to-reach-your-money-goals) 101, if you ask us.

## But you also can’t get covered if you’re too old

You shouldn’t get life insurance if you’re too young but also can’t get it if you’re too old–just another weird life insurance myth. \*_Mind explodes\*_. The truth is that you can get life insurance at pretty much any age, whether you’re a new grad or a [senior citizen](https://beamplify.com/blog/permanent-life-insurance-for-seniors-it-makes-sense-we-promise). Premiums will likely be a little higher if you’re retired, but a life insurance policy can help with aspects like long-term care, clearing debts, or even saving a little for your retirement if you’re in your 60s. Expectancy [life rates have doubled in America over the last 160 years](https://spendmenot.com/blog/life-insurance-statistics/), which means an increasing number of people are getting life insurance coverage as seniors.

## You can’t get life insurance with a pre-existing condition

Most people think that it's game over when it comes to getting life insurance with a [pre-existing condition](https://beamplify.com/blog/can-i-get-life-insurance-with-a-preexisting-condition). That doesn't need to be the case, however. In fact, many people can still get coverage even if they have a medical condition. Your premiums may be higher, but you can still get insured. The provider will factor in things like the length of time since your diagnosis, risk of complications, and age and lifestyle. It's best to speak to insurers and see if you qualify with a pre-existing medical issue. But it's by no means a foregone conclusion that you won't get coverage.

## Your work-life insurance policy is enough

Many places of employment offer [group life insurance](https://beamplify.com/blog/is-life-insurance-from-your-employer-good-enough) to their employees. You typically don't need a medical exam, and it's a perk of the job, so there's nothing to pay. This is all great, but group life insurance doesn't tend to cover all the bases, and you should still explore getting individual coverage. Group life insurance is typically capped at $50,000 or a percentage of your income, you can only use the employer's preferred insurance company, and you'll lose coverage if you move jobs. So while group life insurance is nice to have, it's probably not going to cut it by itself.

## In conclusion: Debunking life insurance myths

After reading this guide, we hope you have a clearer picture of life insurance and that any misconceptions have been laid to rest. Getting a permanent life insurance policy is a great way to protect your family and build for your future while you're still alive. There are no myths about that. Just a great investment that looks after you in both life and death.

Debunking Life Insurance Myths

Inside you'll find everything you need to know about life insurance for dual-income families and if it’s worth getting coverage. 

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Many dual-income families often ask if they need life insurance. While the [benefits for single-income households](https://www.beamplify.com/blog/single-parent-life-insurance-heres-what-you-need-to-know) might be more obvious, do you really need a policy if both you and your spouse bring home the bacon? In this guide we’ve got everything you need to know about life insurance for dual-income families and if it’s worth getting coverage.

## Why do dual-income families need life insurance?

Life insurance works for plenty of different households, including dual-income families. Initially, you might feel that it’s not as pressing–if one person passes away, the income from the surviving spouse is still available.

But looking at it through that specific lens probably isn't the best way to go about things. After all, dual-income households are accustomed to living with both spouses' earnings. One of those income streams disappearing could altogether remove your financial stability.

Mortgages, debts, and other living expenses would all take a hit, increasing the burden on the surviving spouse in the process. Then there are the funeral costs to think about, not to mention the grieving process.

It might all sound a bit morbid, and in an ideal world, the situation is something you'll never need to face. Still, there's nothing wrong with having a financial plan like life insurance in place, and it can even help you build wealth while you're still alive (more on that shortly).

## Do I still need it if we’re both on high incomes?

We salute you if both you and your partner have high-earning jobs, but it's still worth getting a life insurance policy. Even the highest earners still crave financial stability, and suddenly losing half of your income can significantly impact the family's way of life.

It's the quality of life that is particularly important. It's hard enough moving on if a loved one is no longer around – but circumstances become even more testing if you're faced with changing your living circumstances.

Costs such as childcare and home maintenance quickly add up and become harder to maintain if half of the household’s income disappears, no matter how much money you might make.

With a life insurance policy, you can, at the very least, maintain your way of life, with the death benefit acting as additional income. It will help with day-to-day costs as well as larger outgoings like mortgages, school fees, and debts.

## What type of life insurance should we get?

### Individual or joint life insurance?

The natural assumption is to get a [joint life insurance policy](https://www.beamplify.com/blog/everything-you-need-to-know-about-joint-life-insurance) if you and your partner both have an income. There are two primary types of joint policies: first-to-die and second-to-die. With the former, the surviving partner would need to take out a brand new policy should their spouse pass away, meaning you would be charged at your renewal age (the older you are, the higher the premiums).

A second-to-die policy doesn’t have the same concerns, but it still leaves you needing to burden the earnings left by your spouse, as this particular form of life insurance doesn’t kick in until both partners are no longer around.

On paper, a joint policy might make sense. But life insurance is one of the only times a couple might decide to do something separately. This way, you avoid the complication of needing to renew your policy if one spouse dies. You also don’t need to wait for both of you to pass away before your family can access the death benefit.

### Term

Assuming you decide to get two single life insurance policies, all that's left to do is decide on the type. A [term policy](https://www.beamplify.com/blog/term-or-permanent-that-is-the-question) gives you coverage for a specific amount of time, usually between 5-30 years. If you pass away during this period, your beneficiary will receive the death benefit.

However, if you don't die (good times), the policy expires, and you'll be charged at your renewal age should you wish to carry on with the coverage. Term life insurance is usually the cheapest option, but it has the fewest benefits, with the only real one kicking in when you die. Which, you know, isn't exactly a win if it happens.

### Permanent

As the lesser-known life insurance, a permanent policy has all the benefits of term coverage as well as providing contributions while you're still alive. That's because a permanent policy allows you to [build wealth and access it later in life](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance). This happens via the [cash value](https://www.beamplify.com/product/cash-accumulation), which you pay alongside the death benefit. As a result, both of them grow over time, and you can withdraw the cash value a little further down the line.

If you opt for the index universal life insurance (IUL) option in a perm policy, you can see impressive growth of 6%-8%, with returns calculated on an index much like the S&P 500. However, it also features a cap and a floor, allowing you to make returns of up to 12% while benefiting from not losing any money if the market goes down.

Lastly, a [permanent life insurance policy is tax-free](https://www.beamplify.com/blog/5-modern-ways-to-build-taxfree-savings). When you withdraw the money, you can do so via a 0% loan to yourself. And because you can’t pay yourself tax, it’s all entirely tax-free. The loan is paid back via the death benefit when you pass, with the rest going to your beneficiaries. All of a sudden, a permanent life insurance policy becomes a [form of investment](https://www.beamplify.com/blog/what-are-the-different-investment-types) and allows you to build for the future while covering the family if anything goes wrong.

## In conclusion: life insurance for dual-income families

If you’re a dual-income family, then life insurance should be a high priority. It allows you to maintain the same lifestyle if the worst were to happen and ensures there’s still some flexibility from a financial perspective. Life insurance for dual-income families is just as important as it is for any other type of household, and it can even let you build wealth while you’re alive by acting as a form of savings account.

What You Need to Know About Life Insurance for Dual-Income Families

While term policies can work for some people, they have serious limitations and could essentially see you spending your money without getting anything in return.

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Term policies are often sold as the cheaper life insurance option, but saving a dollar here and there isn’t always the best move. While term policies can work for some people, they have serious limitations and could essentially see you spending your money without getting anything in return. Here, we look at term life insurance policies, why they might not be a good match for you, and the alternatives available.

## What is a term life insurance policy?

A term policy is the oldest form of life insurance on the market and was created all the way back in 1759. And before 1940, when permanent policies became a thing, it was also the only option available.

It gives you coverage for a set amount of time and pays out a death benefit to your named beneficiary should you pass away during the term. So it’s good news that your loved one gets a payout if you die, and you can rest assured that those most important to you are protected.

If you don’t die during the term policy (good times), then the coverage expires, and you no longer have life insurance. Because of this, term life insurance is more straightforward and cheaper than permanent options. That’s not necessarily a good thing, however.

## What benefits does it come with?

Term life insurance might be the cheapest option, but it doesn’t feature any bells and whistles attached.  If you die during the policy, your beneficiary gets a payout. Once the policy ends, however, that’s it. Finished. Done. Over.

Let’s say you bought a [term policy](https://www.beamplify.com/blog/term-or-permanent-that-is-the-question) and paid $50 into the premium every month for 25 years. Once it’s finished, and assuming that you’re still alive, you would have contributed $15,000 and received nothing in return.

It’s a lot of money to relinquish. And while it’s important to protect your family against unforeseen circumstances, there will always be that nagging thought in the back of your mind relating to the fact that you don’t get anything else other than basic coverage.

## But the premiums are cheaper than other policies, right?

They are indeed cheaper, but even that isn’t straightforward. Your premiums are locked for the duration of the coverage. But if you decide to renew once it expires, you’ll be charged a new rate at your current age and health status.

What does that look like in practice? If you buy a term policy at 25-years-old for 25 years, you’ll pay the same rate each year. But if you wish to renew when you reach 50, you’ll need to pay premiums based on that of a 50-year-old.

Term life insurance might be cheaper, but it rarely works out that way in the long term and isn’t a particularly good investment if nothing bad happens to you. And obviously, the last thing you or your family wants is for something bad to happen.

## Is there ever a time when term life insurance is a good idea?

For some people, a term policy works because they only want it for a set time and don’t plan to renew once it expires. This may be someone who recently had kids and wants to cover the family while they’re growing up. Then, when the children are adults and have flown the nest, the need for a life insurance policy isn’t as pressing.

But you could argue that even this approach is short-sighted. For starters, most kids go off to college when they leave home, and sending your children onto higher education certainly isn’t cheap.

On top of that, the premiums you pay equates to a lot of money over the duration if you don’t receive anything back. And that’s why, even with the best intentions, a term life insurance policy probably isn’t worth getting–especially if you’re also interested in saving for retirement.

## Does that mean I shouldn’t get life insurance?

Hold on there. While a term policy might not totally stack up on paper, it doesn’t mean you shouldn’t get life insurance altogether. It’s just that you’re probably better off exploring alternative options, like a [permanent life insurance](https://www.beamplify.com/blog/should-i-convert-to-permanent-life-insurance) policy.

Life insurance is important for Americans, as it gives your family financial protection should you pass away. It’s just that it would be nice if it did a bit more. And that’s exactly what a perm policy does, as it [allows you to build wealth](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) while you’re still alive.

Having the ability to accrue cash while you’re still alive changes the entire dynamic of life insurance and essentially gives you a form of [investment account](https://www.beamplify.com/blog/what-are-the-different-investment-types) where you can set yourself up financially later in life. But just how does permanent life insurance work?

## Getting permanent life insurance

### Cost of permanent life insurance

Let’s get the price out of the way first. A permanent life insurance policy is more expensive than term coverage. Where you might pay $30-$50 per month for a term, you’ll probably pay somewhere in the region of $80-$100 for permanent (of course, all life insurance premiums are dependent on how much coverage you get).

### One premium

With a permanent life insurance policy, however, your premiums never increase. As a result, you pay the same amount each month throughout the entirety of the policy. Therefore, you can expect to pay the [same at 65-years-old](https://www.beamplify.com/blog/permanent-life-insurance-for-seniors-it-makes-sense-we-promise) as [you would at 25](https://www.beamplify.com/blog/should-i-get-life-insurance-in-my-20s) if that’s the age when you got coverage.

### Cash accumulation

Permanent life insurance lets you build wealth through its [cash value](https://www.beamplify.com/product/cash-accumulation). How does that work? Your monthly premiums cover two pots: the death benefit and cash value. Over the years, both of these increase (while your premium stays the same, remember?), and you can access the money you’ve accrued while you’re still alive.

You might decide to use it as a form of retirement income, or maybe you’ll use it to [send the kids to college](https://www.beamplify.com/blog/should-you-use-life-insurance-for-college-planning). The most important thing is that you have options and can make sound financial decisions while having the safety net of the death benefit in case you pass.

### Tax-free

If one premium that never changes and the ability to build wealth wasn’t enough to get you excited, how about the fact that permanent life insurance is [tax-free](https://www.beamplify.com/blog/5-modern-ways-to-build-taxfree-savings)? When you withdraw the money accrued, you can do so in the form of a 0% loan to yourself.

And because you can’t give yourself tax, there’s no need to pay anything to the IRA. This separates permanent life insurance from other [savings accounts](https://www.beamplify.com/blog/life-insurance-vs-savings-what-you-need-to-know-now) like a [401(k)](https://www.beamplify.com/blog/are-401ks-worth-it-anymore) or brokerage account. When it comes to paying back the loan, your death benefit has it covered, with the remaining amount going to your beneficiary.

## In conclusion: say goodbye to term and hello to perm

A term life insurance policy might be cheaper, but it’s not designed to let you maximize your money. When you get a perm policy, everything changes, and you can build wealth tax-free, enjoy a premium that never goes up and get a death benefit to protect your family.

Why You Probably Shouldn't Get a Term Life Insurance Policy

Ever wondered when you need life insurance the most? There's never a wrong time to be covered by a policy but there are moments where life insurance makes more sense. 

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When do you need life insurance the most? Is it when you start your first job, get married, or the birth of your child? Maybe it's all three? And those aren't the only times. There are many scenarios when life insurance coverage becomes a high priority, whether your primary reason for getting it is to [build wealth with a permanent policy](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) or protect your family with a death benefit. In this guide, we've pulled together all the times when a life insurance policy should be right at the top of your to-do list.

## When you start your first job

Most people think of life insurance as something you get later in life. But when it comes to a [permanent policy](https://www.beamplify.com/blog/who-needs-permanent-life-insurance-the-answer-might-surprise-you), the earlier you start, the better. That’s because premiums are always lower when you’re younger. It tends to be when you’re at your healthiest, which means you can enjoy lower monthly payments.

The premiums are locked in with a permanent policy, too, and you’ll pay the same amount when you're 65 as you did when you first got the [policy in your 20s](https://www.beamplify.com/blog/should-i-get-life-insurance-in-my-20s). Your first job also tends to be when you start earning decent money, so it’s a good time to start saving for retirement. And with the [cash-value aspect](https://www.beamplify.com/product/cash-accumulation), a permanent life insurance policy will allow you to do just that.

## When you’re self-employed

Many organizations offer [group life insurance](https://www.beamplify.com/blog/is-life-insurance-from-your-employer-good-enough) as part of their employee benefits. And while it’s not quite as good as an individual policy, it does offer your family some protection with its death benefit. When you’re self-employed, however, there are no employee benefits.

Getting [life insurance when you’re self-employed](https://www.beamplify.com/blog/selfemployed-life-insurance-why-its-so-important) is a smart move as it allows you to build cash while protecting your loved ones and even your business partner should something happen to you. A  life insurance policy can give you added security in a field that typically offers little in the way of financial reliability.

## When you have debt

Nobody wants debt, but it's something we all accept is a necessity at certain stages in life. Sometimes it's necessary to take on a little debt to advance your prospects. That might involve getting a loan for your business, a mortgage, or private student borrowing.

Whatever your reasons for having debt, it's a good idea to protect them–especially if you have people who depend on you financially. [Life insurance can help with debt](https://www.beamplify.com/blog/life-insurance-for-debt-can-it-help) as it provides a death benefit that would allow your beneficiary to pay off any money owed should you pass away. That means you don't need to leave loved ones scraping the barrel to try and keep up with mortgage payments, credit cards, and loans.

## When you get married

Marriage is a big step in life. One might even say it’s time to [start acting like an adult](https://www.beamplify.com/blog/how-to-adult-like-the-rich) and think about life insurance. Most importantly, it’s probably the first time in your life when someone else really depends on you. Whether it’s financially, emotionally, or both, all of a sudden you need to think about people other than yourself.

With a permanent life insurance policy, you can save for the future while protecting your spouse if the worst was to happen. It's likely that you have [a joint mortgage, as well as other combined outgoings](https://www.beamplify.com/blog/the-newlywed-game-how-to-do-finances-when-married). If one of you were no longer around, the burden would fall on the surviving partner. And without any extra financial protection, they could find themselves struggling to keep up with payments. The death benefit aspect of life insurance ensures that your spouse is looked after financially. It's one less thing for them to worry about.

## When you have your first child

Children usually come after marriage (though not always). No matter when you have your first little one, it’s a good idea to give them financial protection at the very least. Setting your kids up in the event of your death is [vital to ensure they are protected financially](https://www.beamplify.com/blog/why-is-life-insurance-so-important). But don’t just look at it from the point of view of you not being around anymore.

With perm coverage, you can build for their future and even [pay for things like college](https://www.beamplify.com/blog/should-you-use-life-insurance-for-college-planning) with the money you've accrued. A perm policy helps you protect your children financially and cover all bases, both in life and death (though hopefully, it's only the first one).

## When you need to support aging parents

As your parents get older, you may find that they increasingly rely on you to help them out. This could involve emotional dependence, with [68% of people over 65](https://www.pewresearch.org/social-trends/2013/01/30/emotional-ties/#:~:text=Overall%2C%2068%25%20of%20all%20adults,the%20same%20of%20their%20children.) stating they rely on their children. However, it could also mean financial reliance.

If for any reason, you were no longer able to protect your older parents financially, they could find themselves struggling further. With a life insurance policy, they would still be protected if you were no longer around as the death benefit would cover them financially. That’s why you should really think about getting coverage if you have older parents who rely on your financial assistance.

## In conclusion: when you need life insurance the most

It’s always a good time to get permanent life insurance, as it gives you much more than just a death benefit. However, if you’re looking for specific indicators throughout your life for when you need life insurance, then the milestones on our list are certainly moments when you should explore getting coverage. It will give your loved ones extra financial protection if you’re no longer around but also set you up financially in the future while you’re still alive.

When do You Need Life Insurance the Most?

If you're denied life insurance, there are several steps you can take to ensure coverage. Our guide walks you through a few of them. 

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A permanent life insurance policy is a great way to build wealth while you’re still alive and protect your family should the worst happen. For most people, getting life insurance is a case of deciding how much coverage they need. But what happens if you’re denied life insurance and are faced with not being able to get coverage? We’ve got the lowdown with this guide.

## I’ve been denied life insurance

Getting denied for anything kind of sucks, doesn't it? Fortunately, according to the [American Council of Life Insurers (ACLI)](https://www.acli.com/), fewer than one in 200 claims are denied, so it's unlikely your application will get a big fat rejection sign on it. But if you are one of the unlucky ones, there's no need to admit defeat–you have options.

First of all, you should ask for more information and find out why you were denied. Contact your insurance agent or company and ask them why, especially if the rejection letter or email is light on details. Most insurers look at your medical and non-medical risks when assessing if they should give you a policy, and you could have been denied for either one.

A serious medical condition or poor results from your [life insurance medical exam](https://www.beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam) tend to be the most common reasons why people are rejected. Or it might even be non-medical related, with factors like bankruptcy, a criminal record, a positive drug test, or a dangerous hobby all having an impact. All of a sudden, monthly paragliding doesn't look like such a good idea.

## You’ve got more info. Now it’s time to review your case

Ok, so now you know the reasons why you were denied life insurance. Whether you're happy with the explanation or not, it's time to review your case. Most importantly, check that the details are correct. It doesn't happen often, but, on occasion, insurers may have made a mistake.

No one knows your situation better than you, so fine comb over everything. If you find that any of the information is incorrect, your next move should involve making an appeal to the insurer.

Ask your doctor to provide the insurance company with up-to-date information from your medical file. You can also appeal nonmedical reasons, such as an out-of-date financial record or incorrect details about your job and hobbies.

## It’s good to talk, so speak to an expert

Try speaking to an expert who can give you more information about getting a policy. Life insurance agents know the ins and outs of the underwriting process and how everything works, which means they might be best placed to advise.

They can help you with your next move, whether it's going for a term policy instead or trying for a lower amount of coverage with [permanent life insurance](https://www.beamplify.com/blog/current-trends-and-why-you-should-get-permanent-life-insurance-now). They can look at red flags around your application and perhaps point you in the direction of an insurer that will give you coverage.

Most of the time, it’s fine to go online and [get a quote for life insurance](https://quotes.beamplify.com/basic)–in fact, it’s usually the best way to do it as it’ll save you time and money. But if your policy has been rejected, talking to an expert could help you find options available that are specific to your circumstances.

## Consider another policy

Even if you don’t speak to someone, it’s worth exploring other forms of coverage. Permanent life insurance is the best option because it [allows you to build wealth](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) tax-free while you're still alive and leave a death benefit to your loved one. Plus, your [premiums stay the same](https://www.beamplify.com/blog/what-is-the-cost-of-permanent-life-insurance) throughout the entire policy.

It’s not the only type of life insurance on the table, though. [Term life insurance](https://www.beamplify.com/blog/term-or-permanent-that-is-the-question) might not give you the same great benefits as a perm policy, but you’ll still get a death benefit for a set duration, and your premiums will stay the same throughout the term (though they increase should you wish to renew when your initial policy expires).

You may even be able to get a perm policy, just for less coverage or with a different insurer. Essentially, having some form of policy is better than having none at all, which brings us on nicely to our next section.

## Workin’ 9-5

All is not lost if your individual life insurance application sees you running into a brick wall. You could check with your employer to see if coverage comes bundled with your workplace benefits. Many professional organizations offer [group life insurance](https://www.beamplify.com/blog/is-life-insurance-from-your-employer-good-enough) to their employees.

Even better, most of these policies don't require medical exams and are automatically included from the minute you start your job. That means you'll have a form of life insurance coverage for you and your family.

It's unlikely to cost anything extra, as group life insurance plans are typically bundled with work-related benefits. However, it's not all good news: the amount you're covered for can vary, though it's usually capped at $50,000 or a percentage of your income. You will only be able to use the employer's preferred insurance company and, if you leave your job, you'll no longer be covered for life insurance.

## When all else fails, just wait

If you’ve really exhausted all the available avenues to get a life insurance policy, it may be that time is the best healer. What does that look like? It could involve waiting for a health issue to clear up or sorting out your finances.

You may need to wait between three to six months before being eligible for a policy. Use the time to create a better diet for yourself, lower your blood pressure or cholesterol–whatever you need to do to qualify for coverage.

Keeping up healthy habits like good eating or quitting smoking can make a significant difference the next time you apply. Or, if it's a financial issue, use the time to build your credit or sort out any potential money issues that led to your policy being rejected.

We live in an on-demand economy where consumers want everything right now. But sometimes, playing the waiting game is a smart option that can help you be successful in the future, especially if it comes to getting a permanent life insurance policy that helps you build wealth.

## In conclusion: Turn that frown upside down

Being denied life insurance can be frustrating and even cause anger. But it doesn’t need to be the end of your search for a policy. By taking the right actions, you can still set yourself and your family up with protection and even the chance to build wealth while you’re still alive with a life insurance policy.

What Should I do if I'm Denied Life Insurance?

Everyday things can cost more than life insurance including these 5 commonly used products/services. 

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Determining the average cost of life insurance is no easy feat, given all the variables involved. Age, sex, and health all play a role. Therefore, it’s safe to say that life insurance coverage costs vary–it can be as little as [$15 per month](https://www.investopedia.com/most-affordable-life-insurance-5092439) for a term policy or around $80 if you’re opting for permanent coverage. With these figures in mind, here are five things that cost the same or more as a monthly life insurance policy.

5 Things That Cost the Same or More Than Life Insurance?

## 1\. Checking account

Pretty much everyone has a checking account.  And yes, it’s possible to get one without paying a dime, but there are options charging a monthly fee too. On average, checking accounts cost between absolutely nothing and $25 per month. If you currently pay for your checking account–and especially if it’s on the higher end of the spectrum–it could cost more than life insurance. So why not that money to alternative use with a life insurance policy that protects your loved ones should the worst happen to you?

## 2\. 401K

With a [401(k) account](https://www.beamplify.com/blog/are-401ks-worth-it-anymore), you don’t necessarily “spend” any of your money as you’re saving it for the future. Yet most 401(k)s charge a 1% fee that can accumulate over time. So if you end up saving $625 per month for 30 years, you’ll end up spending $105,306.66 in fees with no return in your 401(k)–and that doesn’t even include the taxes you’ll need to pay. Therefore, a life insurance policy can cost significantly less each month as you don’t pay any fees on top of the monthly premium.

## 3\. Research and data subscriptions on a brokerage account

The stock market is still the most popular way for Americans to invest, but the taxes and dividends you pay over time can really leave a hole in your pocket. Many investors focus on the market performance when they should be thinking about the after-tax return. And when you factor dividends into account, a brokerage account can cost significantly more than a life insurance policy, which allows you to [access cash tax-free](https://www.beamplify.com/blog/tax-planning-heres-the-smart-way-to-keep-your-savings-safe) and gives you a death benefit.

## 4\. Gym subscription

Pumping that iron and making sure you attend the latest spinning class is all well and good, but it ain’t cheap. The average US gym subscription is $50, so you’ll need to pay the cost to have that flat stomach. Add in fees for a personal trainer, and you’re looking at spending hundreds per month. Of course, [your health is essential,](https://www.beamplify.com/blog/how-to-prepare-for-a-life-insurance-medical-exam) especially if you want a low-costing life insurance policy. But life insurance coverage can cost just as much (and if not less) than a gym subscription.

## 5\. Subscription-based services

Eighteen dollars a month for Netflix might not seem like much in isolation. But when you add all the typical subscription services that Americans subscribe to, it can cost just as much as the average permanent life insurance policy. Netflix, combined with Spotify, Amazon Prime, Blue Apron, Birchbox, Dollar Shave Club, GoDaddy, Playstation Now, iCloud, Fitbit, certainly adds up. The average subscription spend of Americans is around $80 each month. For that same price, you could get a perm life insurance policy that lets you build wealth you could build instead.

## Choosing a life insurance policy

### Term

The amount you pay for a life insurance policy depends on the type of coverage you get and how much you insure yourself for. A [term policy](https://www.beamplify.com/blog/term-or-permanent-that-is-the-question) is the cheapest on the market and provides a death benefit to your beneficiaries should you pass away during the time you’re covered. Term policies usually last anywhere between 5 and 30 years, though once they expire, you’ll need to renew the policy if you wish to continue.

Just bear in mind that renewal rates are charged at your age when you renew and not when you got your first term coverage. So if you were 25 when you took out a policy and 55 when renewing, you’d pay considerably more (sometimes up to three times the amount) as you’d be older and life insurance premiums increase with age.

Therefore, a term policy is the cheapest in the short term–and can cost as little as $15 per month–but the price will add up considerably if you plan on keeping it throughout the duration of your life. You only get a death benefit with a term policy, too. There are no extras.

### Permanent

The premiums associated with [permanent life insurance](https://www.beamplify.com/blog/is-permanent-life-insurance-a-good-investment) cost more than a term policy, and you can expect to pay higher payments than $15 per month. However, the premiums stay the same throughout the policy. That means you’ll [pay the same each month](https://www.beamplify.com/blog/what-is-the-cost-of-permanent-life-insurance) at 60 as you did at 30. This makes a perm policy better value for money in the long term, plus it comes with other benefits.

With a permanent policy, you can [build wealth while you’re still alive](https://www.beamplify.com/blog/how-to-build-wealth-with-permanent-life-insurance) and use the coverage as a form of savings account. This is possible thanks to the cash-value element, which grows your wealth while you pay into your premiums.

Cash value is a game-changer, and it won’t cost you anything in tax when you withdraw the money accrued. Accessing the cash value sees you taking out a personal loan at 0% to yourself. And because you can’t pay yourself tax, the money you make is entirely tax-free. Then, when you pass away, the death benefit repays the loan, with the leftover amount going to your beneficiary.

## In conclusion: life insurance isn’t as expensive as you think

You probably thought that life insurance was costly outgoing, and the only benefit comes when you die. It turns out that life insurance isn’t as expensive as you think and costs the same or less than other financial products and even your favorite monthly subscriptions. Even when it does cost a little more, you get benefits like wealth accumulation while you’re still alive. Add all of these components together, and you’ve got yourself a smart wealth-building tool that doesn’t cost an arm and a leg and is a savvy form of investment.

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