Insurance Frequently Asked Questions
Do I need Life Insurance?
people have different reasons for buying life insurance.
people purchase life insurance in order to provide for their
families in the event they pass on. If you are the primary
wage earner in the family, it is a good way to help provide
your family with a stable financial future. Life insurance
may be important even for those who are not the primary wage
earner in the family, to help cover the financial burden of
childcare, funeral expenses, or any other unforeseen costs
that can arise.
people buy Life Insurance to cover specific larger costs that
will arise should they pass on, such as to cover the balance
on their mortgage or if they are a partner in a business the
business may carry Life Insurance to cover the cost of paying
out their partnership interest to their estate.
planning is another reason to buy Life Insurance. A compete
discussion of Estate Planning is beyond the scope of these
pages and you should discuss this with your trusted financial
professional however Survivorship Life and other structured
Life Insurance policies can form an important part of good
Estate and Tax planning.
reasons may change over time. Early in your family life the
reason may be to protect a young family financially while
latter in life the focus may change to accumulating cash value
and/or to focus on Estate Planning purposes.
your purpose and whatever Life Insurance vehicle you choose,
we are here to help you find the lowest possible rate!
should I buy Life Insurance?
this is determined by why you are purchasing Life Insurance.
you find yourself at a time in your life where you are responsible
to more people than just yourself, purchasing Life Insurance
is usually a financially responsible thing to do. If you have
started a family, you may want to protect them financially
if something should happen to you. In other words, now may
be a good time.
Life Insurance premiums tend to rise as your age rises, so
entering a policy early in your life can have financial advantages.
If you choose Whole Life or another for of Life Insurance
that accumulates a cash value over time, then the earlier
you begin the more time there is for the power of compounding
investment returns to increase the value of your policy. The
difference of even a few years can have a incredibly significant
impact on the eventual cash value of your policy.
would be nice to be able to say "its never too late"
but in the case of Life Insurance that is not always the case,
especially if premium cost remains an issue. The later you
leave it the more it will cost, and in some cases it may be
simply too late to be financially viable, particularily if
you should encounter poorer health later on.
said that, it is defintely never too late to find out what
it would cost, and that is what we are here for!
I buy Term or Whole Life?
is more to "Life" (Insurance) than just Term and
Whole Life Insurance but they are the basic choices and most
other forms are a derivative of one or the other. We recommend
that you take the time to read the individual pages on our
site, dedicated to each type of available Life Insurance,
as well as consulting a trusted financial professional.
this space though, here are some basics about "Term"
and "whole" and some things to consider.
Life provides financial protection for a limited, specified
period of time, paying a single lump sum (or death benefit)
to a beneficiary if the policyholder dies during the policy
term. The face value of the policy determines the amount paid
to the beneficiary. No benefits are paid if the insured person
is alive at the end of the policy term. As a result generally
speaking Term Life is less expensive that Whole Life.
Life provides insurance coverage for your "whole life"
, until the time you die. Coverage continues as long as you,
the policyholder, continue to pay premiums. Like term life,
whole life also pays a lump sum to your listed beneficiary
upon your death but the insurance company also invests part
of your paid premiums in long-term bonds and mortgages, and
other assets, and as a result Whole Life accumulates a "Cash
Value" over and above the value of the death benefit.
Typically that Cash value can be borrowed against or can be
left to accumulate and paid out to your Estate. As a result
a whole life policy tends to cost more than a similar term
either case if you stop paying your premiums, the life insurance
policy will lapse and your beneficiary will no longer be protected.
And, unless you've owned a whole life policy for a substantial
period of time, the cash value of the account may be worth
type is right for you comes down to your needs, desires and
circumstances. The policy that best fits your needs is the
right type of policy to buy. Life Insurance should form a
part of your overall Financial Plan and you should consider
your needs not only now but in the future. The primary consideration
in purchasing Term Insurance is very often cost however do
remember its limitations.
do I choose a policy term length?
term life policies will cost more because they are extended
over a longer period of time, and because buying a policy
later in life would cost more due to health and age factors.
some cases, even though you may have a policy with a term
of a given number of years (say 15) the rates may increase
during the term of the policy however the advantage to longer
term plocieis is that most often even though rates may go
up, you do lock in a rate schedule based on your health earlier
in life, and don't have to go through the process of another
physical at that point as you would with an entirely new policy.
may only wish to purchase term life insurance for the amount
of time you need to financially protect your family. You may
wish to choose a term length that only extends until your
children graduate from college, at which time they can earn
income for themselves. Or, you may wish to match the term
to the time at which you mortgage will be paid off.
In the end, you are the only person that can determine the
right term length for yourself and your family, with assistance
from you your financial advisor.
are Life Insurance Policy Premiums Calculated?
companies consider many things when setting your premium,
mainly focused around what the likelihood is that your life
will end at a certain point in time - that includes your gender,
age, health condition, activities, and lifestyle.
may pay a lower premium than men of the same age because women
generally outlive men. The younger you are and the healthier
your lifestyle (e.g., not smoking) the lower your premium,
this the physical exam most insurance companies require when
you apply for life insurance coverage. This is a real and
financially significant argument for purchasing your life
insurance coverage as early as possible in your life.
Insurance companies have more stringent requirements and so
have more favorable claims experience, which means better
rates for accepted applicants. The cost structure of the insurance
company is another factor - if their cost of doing business
is lower, the lower they can set your premium.
is one reason you will normally find several carriers quoted
when you use our Life Insurance Quote forms, we want to present
you with the best options possible.
much life insurance do I need?
you are providing financial support for people who are depending
on you, you need life insurance. To determine how much you
need to replace your lost income, deduct the total income
that would be lost upon your death from the sum required for
your family's ongoing financial stability.
Beyond that, it depends on your particular circumstances (e.g.,
whether you have considerable net worth or few backup resources)
and whether you want insurance for other purposes, such as
educational funds. The solution to your particular needs may
entail a combination of several policies, and the combination
may be changed as your situation evolves.
do variable and fixed annuities work?
are long-term vehicles used to provide retirement income to
individuals without pensions, to supplement a pensioner's
income, or to build assets over a more limited period. With
variable annuities, the value varies according to the worth
of the insured's investment options chosen.
can be fixed or variable. Under a fixed annuity (also called
a fixed-dollar annuity), money is invested in assets with
fixed rates of return. Because annuities are designed to be
held for many years, the interest in an annuity builds up
on a tax-deferred basis, and purchasers are generally not
taxed until regular payments begin after retirement.
withdrawals, however, result in substantial penalties in addition
to income taxes.
medical tests to eliminate applicants who are likely to develop
a serious health condition?
Medical tests provide accurate and current
information about an applicant's health, thus enabling insurers
to charge premiums that reflect the level of risk an applicant
Because some health conditions are easily managed through
proper medication, therapy or lifestyle changes, medical information
makes it possible for insurers to cover applicants with certain
health conditions. More serious or incurable conditions present
an enormous risk that an insurer simply cannot assume.
should I consider in naming life insurance beneficiaries?
(a) Always name a "contingent," or secondary, beneficiary,
just in case you outlive your first beneficiary.
Select a specific beneficiary, rather than having the proceeds
of your life insurance paid to your estate. One of the great
advantages of life insurance is that it can be paid to your
family immediately. If it is payable to your estate, however,
it will have to go through probate with the rest of your assets.
Be very specific in wording beneficiary designations. Saying
"wife of the insured" could result in an ex-spouse getting
the proceeds. Naming specific children may exclude those born
later. If your child dies before you, do you want the proceeds
to go to that child's children? Changing the beneficiary designation
is easy, but you have to remember to do it.
to the various issues involved, an agent can be an excellent
source of information to help you properly set up your beneficiary
it make sense to replace a policy?
twice before you do, because in many situations it may not
be to your advantage. Before dropping any in-force policy,
If your health status has changed over the years, you may
no longer be insurable at standard rates.
Your present policy may have a lower premium rate than is
required on a new policy of the same type (if, for no other
reason, that you have grown older).
(c) If you replace one cash-value policy with another, the
cash value of the new policy may be relatively small for several
years and may never be as large as that of the original one.
You will be subject to a new contestability period. You should
ask insurance agents for a detailed listing of cost breakdowns
of both policies,
including premiums, cash surrender value, and death benefits.
Compare these as well as the features offered by both policies.
If you decide to surrender or reduce the value of the policy
you now own and replace it with other insurance, be sure that:
(a) the agent making the proposal puts it in writing;
(b) you pass any required medical examination; and
(c) your new policy is in force before you cancel the old
a single person, do I need insurance?
answer almost definitely is yes. You may want to consider
Disability income insurance - especially important for self-supporting
singles without sizable assets, this can replace a good part
of the income you would lose if you were unable to work because
of accident or illness. If you don't have long-term disability
coverage at work, ask your life insurance agent about an individual
policy designed to replace at least 60 percent of your income.
Health insurance - if you don't have on-the-job coverage,
an individual policy is your first line of defense against
ever-escalating medical and hospital costs. You can keep premium
costs down by electing a large deductible, thereby "self-insuring"
as much as you can afford.
(c) Life insurance - even if you have no dependents now, you
may later. If you buy now when you are younger and healthier,
you can "lock in" term coverage at a reasonable rate, including
happens if I fail to make the required premium payments?
you miss a premium payment, you typically have a 30- or 31-day
grace period during which you can pay the premium with no
interest charged. After that, the company with your authorization
can draw from a permanent policy's cash value to keep that
policy in force.
some flexible-premium policies, premiums may be reduced or
skipped as long as sufficient cash values remain in the policy.
However, this will result in lower cash values and a shortened
if I become disabled and can't pay the premiums?
or riders that provide additional benefits can be added to
a policy. One such rider is a waiver of premium for disability.
With this rider, if you become totally disabled for a specified
period of time, you don't have to pay premiums for the duration
of the disability
other riders available?
An accidental death benefit, for example, pays an additional
benefit in case of death resulting from an accident. Some
companies provide accelerated benefits, also known as living
benefits. This rider allows you, under certain circumstances,
to receive the proceeds of your life insurance policy before
you die. Such circumstances include terminal or catastrophic
illness, the need for long-term care, or confinement to a
Ask your agent for information about these and other policy