Standard Life Insurance Company Review

Standard Life Insurance has been providing coverage and focusing on seniors for fifty years. As of the end of 2009, the company maintains over a half Billion dollars of assets under management and a surplus of more than $200 Million.

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Financial Ratings and Strength

AM Best has ranked Standard Life third among sixteen companies rated for financial strength and ability to meet obligations to policy holders. The received an ‘excellent’ rating of ‘A’ after the agencies extensive analysis. Standard & Poor’s also gives Standard Life a strong review. They have awarded an ‘A’ rating which translates to a ‘strong’ financial stability and capitalization. The rating was given after the third quarter of 2008.

Focus on Seniors

Standard Life Insurance has focused their marketing and product lines on senior citizens. The insurance products they currently offer are geared toward the concerns and goals of that demographic.

With a focus on seniors, the company offers a product line with insurance policies that focus on covering wealth transfer, protecting the family, and final expense planning. These topics weigh on the minds of many seniors and the whole life line up offered by Standard Life will address them in addition to being familiar.

Final Expense Whole Life Insurance

Standard life offers this traditional whole life policy designed to cover the final expenses of life. Funeral, burial, and other final expenses can be significant. Additionally, it is the most difficult time for the family members of the deceased.

This policy is a permanent policy with a death benefit or face value up to $75,000. As long as premiums are paid in a timely manner, the policy cannot be cancelled and will remain in force to help beneficiaries. Currently Social Security pays $255 toward the final expenses of qualified individuals, falling well short of the likely cost of any funeral expenses. In fact, many seniors have purchased small whole life policies with final expenses in mind. This policy simply puts a formal title to that goal, though excess proceeds can be used for other purposes.

Juvenile Modified Whole Life

Standard Life offers the Future Executive II policy, which is designed to provide coverage for children and grandchildren of seniors. The policy can cover qualifying youths from age zero to twenty five and face values from $10,000 to $20,000. The death benefit is in place from the inception of the policy; however these whole life policies will not begin accumulating cash value until the insured reaches age thirty. Premiums increase after age thirty.

The benefits of insuring young children are twofold. First, the death benefit can help cover final expenses in the event of a child passing unexpectedly. Second, having permanent insurance preserves some level of insurability for the individual. Insurability simply refers to the individual’s ability to get insurance coverage.

For example, a diagnosis of illness during childhood may prevent the individual from ever qualifying for life insurance. However, a policy in place before the diagnosis cannot be cancelled. This demonstrates the importance of establishing some level of insurability for an individual.

Single Premium Whole Life Insurance

Single premium life insurance is very simply a wealth transfer vehicle, designed to pass assets to beneficiaries. This is a whole life policy with which the policy owner will make a single deposit and establish a death benefit.

The single deposit will earn a fixed interest rate over time, eventually maturing to the face value of the insurance unless the insured passes away. In the event of a death, the face value is paid to beneficiaries and in most cases is tax free. The cash value of the policy is available to the policy owner. Loans against the cash value are an option for access. The amount of the loans can either be repaid into the cash value over time or will be deducted from the death benefit when paid.

An Alternative to Annuities and Certificates

In many cases, seniors feel compelled to keep their money invested conservatively and in accounts that are accessible for health reasons or emergencies. However, in many instances the money is intended to be passed to children, charities, or other family members.

There are two significant benefits to using life insurance as opposed to annuities or certificates of deposit. The first is the death benefit or insurance itself, making a payment in addition to the cash value of the account. In other words, the beneficiaries will get more money than the cash value of the account.

The second benefit, also substantial, is the tax free nature of life insurance proceeds. In most cases, the death benefit passes to family or institutions tax free. This ultimately means that they get more money or wealth transfer from the same dollars when compared to other financial accounts.

Consider this example: Doris wants to pass her $100,000 to her two children in the event that she doesn’t need the funds for long term care for herself. She invests the money into a fixed annuity, which earns $30,000 in interest before her passing many years later. She had access to the funds, though never needed to withdraw any money.

In this case her estate will pay the taxes on the $30,000 in earned interest. Let’s assume that ultimately the policy passes $118,000 to the two children after probate and estate attorney fees. Now consider that Doris invested in a single premium life policy that offered a $130,000 death benefit for a woman her age. The proceeds will pass tax free and not pass through probate. Additionally, she retained access to the funds in the account and could have made withdrawals without penalty or taxes on interest, unlike the annuity or any CD at her bank. Ultimately, her beneficiaries receive an extra $12,000 and don’t have to wait for lawyers or probate courts.

Summary for Standard Life

The simplified product line will be familiar and comfortable for seniors. However, the product line is very limited and other companies can offer the same types of coverage with added flexibility and benefits. The company is financially sound, though the limited choices of coverage would only make sense in the event that the quoted rates were attractive.

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