No Load Life Insurance: A cost saving option when available

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What is no load life insurance? Also referred to as "low load," it is simply insurance that is not commission based. This means you could purchase the insurance through an agent, or you could purchase it through a telephone or mail order application. Don't assume, however, that just because you didn't see an agent, the insurance must be "no load." A company insurer that rely's primarily on telephone or mail order sales are paying big bucks for those colorful mailings and are often paying for costly commercial advertising as well. The insurance will have to be priced to absorb these expenses. If you want to purchase this type of insurance, you will have to ask.

No Load Life DiscussionIf you purchase No Load Insurance through an insurance "advisor," he or she will still be a licensed insurance agent in most states. However, the company will not pay him a commission based on the amount of your premium as is usually the case. Instead, when the agent writes your policy and/or provides service, you will pay a fee set by the company for such work. Your first payment will thus include your premium and the advisory fee, but the policy fees which help the company pay its agents, conduct marketing campaigns and manage your account will be much lower.

One advantage is that your money begins to build cash value immediately if you have a whole life or universal life policy. In a No Load Term Life Insurance, you have no cash value, but you do have a lower premium. Since the fees are so much less, you may be able to get a higher face value than you could have purchased with traditional insurance.

Application Process
No Load policies are not sold in all states. Also whether you work with an agent or decipher the application yourself, you will still have to answer medical questions, and you may have to submit to a physical by a paramedic and/or sign a permission form for the ordering of doctor's reports. You should still have all the options and riders available that would be included in a traditional policy. Basically, the only difference you will see is a lower premium.

The downside to this type of policy is that you are basically "on your own" when it comes to asking questions, converting policies and filing claims. If you do actually have an advisor who stays in touch with you and represents you to the company, you can assume that you will be expected to pay a fee for any services rendered. In most cases, there is no agent beyond the first contact. Thus, it is important to keep track of dates for conversions and other important events. For example, if you miss the conversion of a child rider to individual whole life, no one will call to remind you. A good agent who makes a career of insurance knows his clients and will be there to make sure important insurance events are not missed. Nevertheless, if you are a well organized person accustomed to tracking such details yourself, the cost savings may be worth a no load policy.

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