Life Insurance basics, easy to understand information about life insurance

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:

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.

Five to one, baby one in five… No one here gets out aliveJim Morrison
 

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.

Unilateral contract

n. an agreement to pay in exchange for performance, if the potential performer chooses to actLaw.com - Legal Dictionary

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 a great 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.

If you need a different type of insurance-like disability or mortgage protection-visit our trusted partners.

Life insurance has two broad types: Term and Permanent.

  • 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.

Using a simple income multiplier–such as 10x or 20x your annual income–might be a good place to start. However, get free advice from one of our underwriting experts before you sign the dotted line:

You may be buying too much life insurance, or worse:

Not nearly enough.

Which Company is the Best for You?

 

The last time we counted was in 2015, there are over 814 life insurance companies in the U.S. Furthermore, each one of those companies have 10 – 20 different programs or policies, and you start to see how big this industry is. There is a lot to choose from.

So which company or plan is best for you and your family?

The answer to that question is just as unique as you are. Every single company will view different circumstances differently, especially when it comes to your age and health. Some companies are great for smokers, where others are great for diabetics.

One company might be great for a life insurance after a heart stent, while another completely different company will be the best for after a mild heart attack.

Our friend Chris Huntley’s nifty company comparison tool is a great resource for many applicants. Even Mr. Huntley will tell you, “Best equals ‘best fit.'”

Here’s a Hint – The best company for you may be a company you have never heard of. Sometimes the best companies for you do not buy Superb Owl ads!

Here’s another Hint – You don’t have to sort through 814 companies and thousands of options alone. Let our underwriting experts help you find the “best” company today.

Whole Life Insurance is a Big Money Maker for the Industry

As you pay premiums into a life insurance policy, the insurance company combines those premiums with millions of other policyholders into massive pools.  The life insurance company then pays out claims when the policy holders die.

The difference between the money taken in and the death claims paid out is the insurance company’s profit.  This is a simple explanation of the “business of life insurance”, however there are additional levers to pull with whole life.

Many people stop paying premiums or cancel their high-price policies. The money they paid in, where does it go? It  turns into profit for the company.

There are surrender fees that eat into the cash value of the policy, sometimes lasting for ten years or more! That equals more cha-ching for the life insurance company.

On top of all this, whole life insurance premiums are higher than term life insurance premiums, sometimes as much as ten times higher!

Listen – whole life certainly has its place and we are not bashing it for the right cases.

Now that you know the secret, it’s important that you look at the options you have for your policy before you buy it.

Make sure you can actually afford the policy that you buy, because these companies have plenty of money already. No need to make a further donation. We don’t need to give them another dime unless we are getting real, tangible benefits from these policies.

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.

Does your family really need to wait any longer for this protection? What does Tuesday look like for your family if you die on Monday?

We make the process simple and easy. Get a free quote today and protect your family with confidence.