Reputation

One of the most important things you need to consider when choosing between life insurance companies is reputation. You should only work with companies that have outstanding reputations. There are far too many scams in the world to fall for, so be sure to stick with companies that look and feel legitimate. This does not mean you should always go with the largest company out there, just be sure that the insurance company you choose to work with is professional and will be around when you need them to be.

Competitive Prices

Just like auto insurance, you need to shop around for life insurance rates. Depending on your age, different companies will be able to offer you different prices. You may pay more on one policy, but get better benefits. Look at three to five quotes from life insurance companies before you make a commitment. Once you sign up with one company, you probably will never want to change because you may lose some benefits you have earned. So, making the right decision the first time is important. Remember to use your instinct and only work with those who are professional and legitimate.

CASH VALUE LIFE INSURANCE POLICIES
Cash value life insurance, such as universal and whole life, combine a death benefit and a tax deferred saving element. Occasionally referred to as permanent life insurance, these types of policies are intended to cover you for your lifetime.

Annual premiums for cash value policies generally are higher than those of term life policies as part of each premium pays for insurance and the remainder is invested. Cash value is what you can borrow from the policy or receive by surrendering it. These funds are ideal for retirement planning and college funding, among other goals, because they accumulate tax deferred until you withdraw them and then may be partially taxable. Loans and withdrawals will reduce the policies cash value and death benefit.

LIFE INSURANCE MADE EASY

Term life insurance is the most fundamental type of life insurance. You purchase coverage for a designated period, from one to many years and the policy will provide a death benefit if you die during that period. Many polices let you renew your coverage for repeated terms until age 65 or even 100.

Term life insurance is popular with younger people because it provides the maximum amount of coverage for the lowest cost. Early premiums are low and increase as you become older. For example, a $250,000 death benefit will cost less in your 30s than it will in your 50s. For this reason, term life insurance is usually a better value for shorter term or finite life insurance needs.

If they believe that the applicant will live long and will therefore make a substantial number of insurance premium payments during his/her life, then life insurance companies see the applicant as low risk to their business. However, if life insurance companies believe that an applicant could die soon, and therefore make relatively few insurance premium payments while they are alive, that candidate will be seen as a higher risk by the insurance companies.

How life insurance premiums are calculated

When calculating life insurance premiums two factors are considered by life insurance companies. The first factor involves an evaluation of the general likelihood of death occurring at a particular age, and involves the scaling of applicants against normal life expectancy. This sets the ‘average’ risk level that different age ranges attract; needless to say that the closer you are to your average life expectancy then the higher the risk level that you’ll be measured against.

The second factor is based on whether the applicant is above or below their average risk level for their age. Someone who has an unhealthy lifestyle, suffers from pre-existing health conditions and is in a stressful job is likely to be classified as ‘above average’. On the flip side, someone who goes to the gym regularly, does not smoke and eats a balanced diet is likely to be seen as ‘below average’. Naturally, those who are below average risk will see keener insurance premiums on their life insurance policy for their age than people who are classified as ‘above average’.

Cheaper life insurance?

While there is often little we can do about pre-existing health conditions, there are ways in which to tip the scales in our favour of cheaper life insurance. This we can do by altering our lifestyle and striking a better work-life balance in a stress-free environment. Changing lifestyle habits though can be more effective for some than it can for others.

For instance, a person in their 20s living out an unhealthy existence is likely to be seen as less of an insurance threat for their age to life companies than someone in their 50s with the same unhealthy lifestyle. This is because the body of a 20-year-old will respond more efficiently to improvements in lifestyle than will the body of a 50-year-old. In essence therefore, there are different degrees of being above average and below average, making the calculation of life insurance premiums for each individual definitely a job for the experts at the life companies!

Almost all professions and skills are represented, with the possible exception of ministers. In addition to employing specialists in all phases of business administration, the insurance industry employs graduates from schools of engineering, law, medicine, agriculture, and journalism.

From liberal arts colleges, companies employ mathematicians and psychologists. The multitudinous functions performed in a life insurance company are organized into divisions, departments, and sections, toward the end of assuring that every operation essential to the business will be performed in an efficient manner.

The principles of administration of an insurance company are no different from those in any other business organization. There must be a clear definition of responsibilities and a delegation of authority. As in any other company, four types of organizational patterns are available; line, line and staff, functional, and committee.

Usually, the structure in actual use in a given company is a hybrid combining several of these four basic types. This results from the fact that business seldom consciously selects any one type of organizational structure. Instead, organizational patterns develop as a matter of evolution. There is no standardized organization chart adaptable to all types of life insurance. There are, nevertheless, a few basic departments which are common to most companies. These will be discussed later.

In an insurance company, as in any type of business organization, authority moves downward, while responsibility moves upward. The primary source of authority is the stockholders in a stock company and the policyholders in a mutual company. They have the final official say on all matters relating to the administration of the company.

This authority, however, is usually delegated to the board of directors, who will in turn retain some of it and delegate the rest of it to a number of executive officers. These officers, appointed by the board, actually run the everyday operations of the company. They, of course, will delegate authority. The number of levels of authority varies from company to company, depending a great deal on the size and scope of company operations.

Stockholders in some companies, policyholders in others, elect the board of directors. The board is usually organized into committees designed to formulate policies on certain phases of company operations. The board meets periodically to hear the reports of these committees.

The most common committees are the Executive Committee, which occupies itself with general questions concerning lines of life insurance rates, territories, public relations, and employee relations, and which assumes full powers of the board during the periods between meetings; the Finance Committee, which determines the over-all investment policy of the company; the Auditing Committee, which audits the company accounts (the actual auditing is done by a firm of public accountants which reports to the committee); and the Underwriting Committee, which studies matters relating to risk selection and determines the underwriting policy of the company.

Additional committees may be found among the companies, their nature depending upon the special needs of the company or, often, upon the special interests of certain members of the board. Board committees must not be confused with administrative committees of the executive officers.

As a general rule, the president is subordinate to the board of directors; but it is not particularly uncommon for the directors actually to be under the control of the president. Companies are often organized and built mainly through the impetus of one or two people who naturally assume control. If one of these individuals prefers to be president, he will exercise control of term life insurance rates, even though he is technically subordinate to the board of directors.

Often, in cases of domination of the company by one man, the primary qualification of a candidate for the board of directors is amenability to the wishes of the president or controlling management bloc. A secondary consideration will then usually be the prominence of the candidate and, hence, his publicity or public-relations value.

The job of the president is chiefly one of co-ordination: he must see that his staff is functioning efficiently. To do this, he organizes his staff into committees and then spends a good deal of his time in committee work. He busies himself with inter-company relations and with public relations generally. He spends time reading reports and keeping abreast of economic and legislative trends in order for the rates to be affordable life insurance.

In most insurance companies, vice-presidents exercise active supervision over departments. In a small company a vice-president may have to “double in brass” and serve as the head of more than one department. In line of authority, one of the vice-presidents acts in the absence of the president. In larger companies the functions of the vice-presidents are usually coordinated by an executive vice-president, the “vice-president in charge of vice-presidents.”

Now and again, a life insurance company will be found in which the executive vice-president actually performs the functions of president, the position of presidency in that particular company at that particular time being more honorary than active. However, such an appointment is sometimes made to capitalize on the figure’s organizational ability, which can be utilized effectively even if he is not trained in insurance technicalities.

In cases of joint or interlocking management, the president of one of a group of companies may also be the president of the others. Some or all of the companies in the group, however, may actually be run by executive vice-presidents- the president being at the head of one or more of them in name only.

Responsibilities delegated to a company secretary by the bylaws of the company are usually responsibility for correspondence (in the sense of the directing authority and of responsibility for official correspondence); for the issuance of life insurance policies, which are usually signed by the secretary; and for the records of meetings of the board of directors and committees. Almost all these duties are either theoretical or wholly supervisory.

Policies are actually issued by a policy issue or similar department, with the secretary’s signature printed on the form; the transcript of the business of the meeting of the board of directors or of a committee is usually made by a professional stenographer.

As a result, the truly functional duties of a company secretary vary widely, ranging anywhere from active charge of a department in no way concerned with his bylaw duties to the function of general manager or even executive vice-president. Moreover, as an outgrowth of this wide variation in the active duties of a company secretary, “assistant secretaries” will be found to be numerous, especially among larger companies; and their duties vary as widely as can be imagined within one company.

The officers named so far are the executive officers common to most companies. The charter or bylaws of any given company may add one or a few more executive officers. For instance, the offices of treasurer, general counsel, actuary, or controller are often executive offices.

In addition to executive officers in a company, there are “functional officers” who are usually department heads that perform responsible functions in the operation of the company. They are not officers of the corporation and consequently do not have power to bind the company to contracts or other obligations.