Life insurance is important for your family. When you are shopping for your next policy, or your first policy, make sure you know your stuff. Once equipped with with the some knowledge about the life insurance universe, you can make better financial decisions about your family’s future and save yourself some money to boot. It’s easy, just read on!
You might be asking yourself the following questions:
- Should I be shopping for term life insurance? Whole life? Guaranteed universal life insurance (or GUL)? Cash value life insurance? What exactly do I need?
- Do I even need life insurance at all?
- How is life insurance treated for taxes?
- Just how much life insurance is enough?
- How do I know I’m getting the best deal and not overpaying my premiums?
- Should I buy life insurance in my 50’s?
- What if I’m in my 60’s? Do I still need life insurance?
- Do I need a medical exam for life insurance?
- How can I ace my medical exam for life insurance if I need it?
Seems like it can get confusing very quickly and all of the vocabulary can make your head spin. Fear not! We can help you (for FREE) discover all of your options. You do not have to do this by yourself.
Death is universal folks. We all have to experience it at some time or another. Like Jim Morrison from The Doors said before tragically dying himself, “No one here gets out alive.”
Despite the fact that life insurance has universal applicability and everyone could use it, more than half of American households have NOTHING to protect their family upon their death. What gives? Why not?
One reason is there is still a great deal of confusion with regards to shopping for life insurance. Some people are in denial about the reality of their own death, and some people are confused about the subject and what steps to take.
There are also people who are put off by the traditional insurance salesman and would rather visit a proctologist than talk about life insurance with anyone.
For instance, everybody remembers the annoying agent from the movie “Groundhog Day,” Ned Ryerson:
Now more than ever, people like you are turning to the internet for help with securing their family’s financial future. When armed with the right information, you can simplify the process of decision making and you will arrive at the right choice both for you and your family.
Ten considerations before buying life insurance
YES, you need life insurance if anyone relies on you financially.
The first question I’m always asked is “Do I even need life insurance?” The short answer is YES, if anyone anywhere depends on your ability to bring home the bacon. It is that simple.
Coverage is obligatory once you say “I-DO” to your true love or if you are a parent with dependent children at home.
This is common knowledge and is a responsible thing to do, however you might also need life insurance if you are an ex-spouse, sibling of a dependent adult, child of a dependent adult, or a partner in a business.
Are you comfortably retired, or financially independent with oodles of money in the bank? Would no one suffer financially if you died tomorrow?
Then maybe you do not need life insurance. Even in these cases, consider the use of life insurance as a strategic financial tool (i.e. for estate tax purposes)
There are four primary role players within a life insurance policy.
And these roles are:
- Insurer – the company who issued the contract, or the ones accountable for paying out a lump sum after death. These companies have been around for hundreds of years, and they are rated based on financial strength.
- Insured – the person, or persons whose lifespan the policy is based on.
- Owner – the person paying the monthly premiums to the life insurance company. This could also be the insured, a relative of the insured, or some other entity that would be in financial trouble if the insured died tomorrow.
- Beneficiary – The person, trust or other entity that will receive the money at the death of the insured. This doesn’t have to be a family member, though it often is.
Life insurance doesn’t just tag a life with a dollar figure.
Rather, it helps to compensate for the financial consequences which accompany the loss of someone’s life.
Life itself is precious. Your life is invaluable and it is impossible to put a price on it.
Life insurance deals with the loss of your life, and more importantly what a financial hail storm losing your income would mean to your family. Plain and simple, life insurance helps those who are left behind eliminate monetary burdens.
While you are alive, it provides piece of mind and a good night’s sleep. After you die, life insurance provides so much more.
Life insurance is a one-way contract, guaranteed.
A life policy is a unilateral contract in-between an insurance company and the owner of the policy.
In this case, the life insurance company is the one making all of the promises and guarantees. The insured only has to fill out an application truthfully and die. During the application the insured is making assumptions, as in “I assume I will pay these premiums,” and “I assume I will not have any health issues in the future.” The legally enforceable burden of paying the death claim is all on the insurance company’s shoulders.
The insured is under no obligation to hold up their end of the deal-they could quit paying tomorrow or have a stroke the day after. However, the life insurance company is legally responsible for upholding their end of the deal-and in fact, it’s guaranteed.
Life insurance is not an investment.
Many financial gurus do not consider life insurance as an optimal investment. Some whole life insurance policies include an investment feature that offers a degree of tax relief. In most cases though, there are better and more efficient tools for investments.
- Term life insurance is the simplest, the most widely applicable and usually the least expensive. In term life insurance, policy premiums are based on the probability wherein the insured might die within a stated term. Twenty years is the most common term, though an infinite number of possibilities are available.
- Permanent life insurance comes in many names… “whole life”, “cash value life”, and “guaranteed universal life” among others. It uses the same probability of death, but includes a savings mechanism (cash value) designed to help the policy to exist for life. Permanent insurance is usually more expensive, however once it is structured correctly it could last up to 121 years.
How much life insurance do you need? Simple question, many answers.
Every life is different, and every family’s different needs for life insurance reflects that diversity. Life insurance shoppers use an “income multiplier” as way to determine how much life insurance they need, however that’s an outdated way to look at a complex problem. Explore the topic here and use this calculator to get a better, more reliable answer.
Don’t leave money on the table; know your options before you cancel an existing policy.
Once you have a policy that is not appropriate for you then it is important that you proceed carefully before cancelling. You might have found a better policy. However, since you still need life insurance, you must not cancel the wrong policy until the right policy is in place.
It’s important to consider the cash balance of your insurance (if applicable) and what to do with it… Cash it out? Roll it over? Furthermore, many term policies come with convertibility options that would save you money over comparable policies.
Term Insurance is a big moneymaker for the industry
As you pay premiums into a life insurance policy, the insurance company pools those premiums with millions of other policyholders into massive pools. Then the life insurance company pays out claims in the event of a death.
The difference between the premiums taken in and the death claims paid out is the insurance company’s profit. Many people leave their term policies behind, stop paying premiums or let them lapse somehow.
For that reason, term life insurance is a big moneymaker for the life insurance companies. Now that you know the secret, it’s important that you look at the options you will have at the end of your term policy before you buy it, and do not let it lapse.
You need expert independent advice when shopping for life insurance.
There are many online tools to help you decide how much money you must pay for a policy. However, once you get to that certain point, it would be best that you contact a live person who can walk you through the process of application. This is crucial if you have a heart condition. You will pay more for your life insurance than you have to by working with a novice who doesn’t understand heart problems.
Not to toot my own horn here, but we have saved our clients thousands of dollars on life insurance in the past, our services are FREE, and there are no high pressure sales tactics.
See, insurance companies file rates with the state, and these rates are all the same no matter what channel you buy it through. Whether you buy it from the company itself direct, or from an agent, the rates are the same. The rates will differ slightly among the various companies, but the most important distinction will be your health class.
The difference between one health class and another is huge! Often 50% or more, and that’s where an independent underwriting expert can help you.
A dedicated and knowledgeable underwriting expert will save you money by choosing the best carrier based on your anticipated health class. It’s that simple. Plus it is free help on one of the most important decisions for your family.
Did I mention free?
The above information will definitely help you in terms of understanding what life insurance is. The idea here is to make the process of buying life insurance much easier. With the great benefits that life insurance provides, you must consider it! Don’t be one of the millions of families that put this decision off for one reason or another.
Get a free quote today using the form on the right. Do it for your family, and give us a call if we can help.