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Life Insurance
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Life insurance can provide those who depend on you with a lifetime of financial security.
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| Life Insurance |
 Who Needs Life Insurance?
What Are The Different Types Of Life Insurance?
How Much Life Insurance Do I Need?
What To Know When Buying Life Insurance?
Get A Life Insurance Quote
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Who Needs Life Insurance?
If someone depends on you financially then you need life insurance. Life insurance reduces uncertainty, giving
a greater peace of mind while replacing the possibility of a large loss of income with a known smaller loss
which is the premium.
The main reason from life insurance is to provide cash to your family after your death. This replaces your
income and can help your family meet the day to day financial expenses. Many financial experts consider life
insurance to be the cornerstone of great financial planning. It is a cost-effective way to provide for your
loved ones after you are gone. To figure out if you need life insurance, you need to think through the worst
case scenario. If I die tomorrow, would your loved ones be financially taken care of? Its always difficult
emotionally when someone looses a loved one, you don’t want to add to the difficulties by not providing
for them financially.
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What are The Different Types Of Life Insurance?
Life insurance comes in several variations. Selecting the right policy, whether it be term life, whole life, or
something else, doesn’t need to be as confusing as it sounds. The insurance professionals at Secure A Quote
will explain the many different options that are available and help you choose the type of insurance that suits
your lifestyle now and into the future. Here are brief explanations of the types of life insurance
we offer:
Term Life Insurance
Term life insurance provides coverage for a specific period of time, and is therefore temporary. Typical policy
terms are 5, 10, 15, 20, 25 and even 30 years. The premium is designed to stay level during that term period.
This is the most popular form of insurance used today.
Whole Life Insurance
Whole life insurance is permanent insurance, which is designed to stay in effect until death. Generally, the
annual premiums are constructed to remain constant throughout the life of the policy, but are typically more
expensive in the first few years as compared to term life insurance premiums. Whole life policies accrue cash
value the longer you own them, and are often referred as a forced savings account.
Universal Life Insurance
Universal life policies are a form of whole life, but offer greater flexibility. You can select the amount of
premium you would like to pay (within limits established by the insurance company) and your policy benefits are
adjusted accordingly. This allows you to change the amount of your premium or coverage in response to changes in
your life situation.
Age 100 Level Guaranteed
Usually a type of Universal Life, these plans feature set premiums and death benefits to age 100. Many plans
allow you to maintain the insurance without paying additional premiums if you live past 100.
Return of Premium (ROP)
Insurance ROP combines the benefits of term life insurance and whole life insurance. ROP offers lower premiums
and a guaranteed refund of premiums paid during the term of the policy, provided the insured doesn’t die
prior to the end of the term period. ROP policies are available in several variations, including 15, 20, and
30-year terms.
Survivorship or Second-to-Die
A type of Universal or Whole Life coverage, these policies pay a death benefit upon the death of the second of
two insured people. It is particularly useful to individuals whose heirs will face substantial estate tax
liabilities. The insurance company delays paying the death benefit until the second person dies, this then
provides money to pay estate taxes when they are needed.
One of the most common questions people have about life insurance is, term or permanent? The answer is: it
depends - on a number of factors, including how long you need the coverage, how much you can afford, how much
risk you can tolerate and how much flexibility you need. To help you gain a better understanding of which type of insurance might be right for you, we've found a decision guide that walks you through the selection process. This guide is published by The Life and Health Insurance Foundation for Education (LIFE) which is a non-profit organization. While this interactive guide is not meant to be a substitute for working with an insurance agent, it's a great way to familiarize yourself with some of the issues you'll need to think through in making this important decision. Access the Term vs. Perm Decision Guide.
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How Much Life Insurance Do I Need?
Most people are grossly underinsured when it comes to life insurance. The average person purchases about 4 to 5
times their annual income in life insurance, shoves the policy in a drawer and feels good about it. I am not
here to judge that decision. However, you need to ask yourself whether or not you feel comfortable knowing that
in 4 to 5 years, your family will be hurting for money. If you purchased 10 times your income (which few people
do), this would only replace your income for about 13 years when factoring in inflation. Fact is, in order to
replace your income indefinitely without ever having to touch the principal amount invested, you would need
about 15 to 18 times your income. This is what the life insurance industry economists calls your “Human
Life Value”. If you died as a result of a plane crash, etc, the “Human Life Value” is what is
universally accepted as the amount needed to replace that person’s economic value to the person’s
family and dependants. This is what the lawyers would be asking for. We should all have this much insurance,
but very few do.
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What To Know When Buying Life insurance:
1. Don’t wait till you REALLY NEED the coverage!
By that time you’ll be that much older, you’ll be sick or you will have encountered a health issue that
will cause your premiums to be significantly more than you anticipated. That is of course if you can even
qualify for the coverage!
2. The highest financial rating doesn’t necessarily mean better coverage.
The important thing is to at least be looking at an “A” rated company. There is little, if any
difference between one companies term policy and another, so basing a decision solely on ratings won’t
always get you best deal. The highest rated companies tend to be more conservative in their underwriting and
attaining the “best available” with them will be a bit more difficult.
3. Shop online first before you meet individually with an agent!
Many online life insurance brokerage companies can be a useful source of information and can save you up to 75%
on your premiums. The reason is of course because they are impartial and are not driven to sell you only one
company’s product.
4. Pay annually if you can afford it.
Paying annually can save you up to 20% with some companies versus monthly, quarterly or semi-annually.
5. Don’t smoke.
If you are trying to save money than being a smoker won’t help your cause. However, if you do smoke, most
companies will let you re-apply for nonsmoker rates if it has been at least 1 full year from your last usage.
6. If you have cholesterol or blood pressure issues get it controlled with medication.
Insurance companies don’t like to see health issues go unattended. If you are doing something to control
it they will likely look at that favorably and give you the benefit of the doubt when it comes to approval time.
7. If you are considering buying $90,000 of coverage, buy $100,000 instead.
Many times it will cost less, the same or just a tad more for additional coverage. Insurance companies give
breakpoints at $100,000, $250,000, $500,000, $750,000 and $1,000,000.
8. Read the “Prepare for the Medical Exam” section before completing your exam.
Eating a few Twinkies or calling your stockbroker a half hour before your exam will surely turn your lab
results sour and cost you big time!
9. Obtaining coverage through your company’s plan may be a good alternative…in the short-run.
Many employer’s plans however are not portable and won’t let you continue your coverage if you leave.
If you need coverage then, you’ll have to apply for an individual policy anyway. Don’t leave it to
your employer to take care of you! 10. If you’re 30 � years old, you’re as old as 31 in the eyes of
the insurance company. Most insurance companies round up when determining your age and because premiums increase
with age that can make a big difference. So, if you’re approaching 30 � and you have thoughts of applying,
don’t wait!
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