Inbetween jobs the first time (part 3)

During late January or early February, I started to take the life insurance classes. It lasted one week and during the sessions, we learned about how different types of life insurance work. Term life insurance was recommended for young starting families that didn’t have a lot of money to start out with while permanent policies were recommended for more established families. Over the course of several decades, different types of policies were created for different needs. The most basic of permanent life policies is whole life which typically insures the policyholder until the age of 100. However, a unique situation occurs when the policyholder hits the age of 100. Upon reaching age 100, the policy ends and the life insurance company will send a check in the amount of the death benefit to either the policyholder or the beneficiary of the policy. Whole Life is a good product however the flaw is that the cash value of the policy will disappear upon the death of the policyholder. When the policyholder dies, the beneficiary only gets the death benefit. This problem led to the creation of the Universal Life product which would let the cash value of the policy also pass on to the beneficiary upon the death of the policyholder.

Along with learning about different products, we learned about when policies take effect, lapse, and what duties and responsibilities come along with being an insurance agent. We spent a good amount of time learning about ethics and how to avoid fraud. One necessary thing that insurance agents had to do was purchase errors and omissions insurance. This is an insurance policy that protects business professionals from being liable for losses due to filling out paperwork incorrectly or missing some forms. In other words, it is protection from being sued by your customers.

A major point of life insurance is determining the risk class of the policyholder before issuing a policy. The longer the life expectancy of the policyholder and the healthier the policyholder is, the cheaper the premiums will be. With a longer life expectancy, the insurance companies can collect more money in premiums from the policyholder before paying out a death benefit upon his or her expiration. In order to get assessed for a policy, the man or woman must first be examined by a nurse. This assessment has to be done before any policy. So if a man took term life for one year periods for 10 consecutive years, he would have to get a health assessment before each policy. The biggest strategy for getting a permanent life insurance policy is to make sure to get the policy at a young age. The younger a man is, the more healthier he is and the more likely he is to be placed in the lowest risk category (preferred elite). The lowest risk category entitles the man to the cheapest premiums. Since the life insurance policy is a PERMANENT policy, the man only has to get assessed at the beginning. After the man gets a policy in place, he can smoke like a chimney, collect venereal diseases, becoming a raging alcoholic, and become morbidly obese if he wanted to. He will not be reassessed for his life insurance policy and still retain the lowest risk category of preferred elite. The only thing he could do at that point to mess up everything is let his policy lapse and have to sign up for a new policy. He would then have to be reassessed and most likely fall into the higher risk category.