Life insurance helps you safeguard your family’s future. It’s not something you buy for yourself. It’s something you buy so your family is protected after you pass away. It keeps them from having to struggle to pay the bills, or pay for funeral and burial expenses. If you’re the primary breadwinner for your home, it can also help your family stay afloat financially.
Let’s get more specific. When you buy a life insurance policy, you’re agreeing to make payments to an insurer. In return, they agree to pay a specific amount if you pass away while the policy is in effect.
As the insured, you get to choose who receives that money—this person is called your “beneficiary.” You can choose how many people are covered under the policy. It might be just you, or it might be you and a spouse, or you and your children. You have lots of options in terms of the amount of coverage, who is covered, for how long, and who receives the payout.
FACT: 3 in 10 American households are uninsured. That’s 35 million people!
How Much Does It Cost?
Life insurance isn’t a one-size-fits-all kind of product. Everyone will pay a slightly different rate based on how much risk the insurance company thinks you represent, as well as how big a policy you want.
Your health and car insurance policies work this way, too. Bad drivers, for example, cost the insurer money by getting in more accidents. To cover the amount of risk they’re taking by insuring that driver, the company will charge a driver with accidents more than they’ll charge a person with a clean driving record.
Let’s apply the same logic to life insurance. If you’re a healthy person in your 30s, for example, you represent minimal risk to the insurer. But if you’re a smoker whose favorite hobby is skydiving, you represent a greater amount of risk to the insurer, and you’re likely to have higher monthly payments as a result.
The good news is that we specialize in finding policies for hard-to-insure folks. If you have health issues or a dangerous occupation, we’ll work hard to find you an affordable policy that provides the coverage you need. We’ve done it for people with heart conditions, people with weight challenges, and smokers!
What Can It Do for Me?
In most cases, people buy life insurance to help their families replace lost income and take care of funeral and burial costs.
According to the Life Insurance Marketing Research Association (LIMRA), the average American household with life insurance has enough coverage to replace 3.5 years of income. That’s a great cushion to have should something happen to a family’s primary wage-earner! But life insurance can also be used for these reasons:
- To pay for childcare if a stay-at-home-mom or stay-at-home-dad has to go back to work
- For estate protection
- For mortgage protection
- To fund a retirement
- To protect a business against the loss of a key employee
- As an employment benefit
How Do I Choose the Right Policy?
Let’s start by asking three key questions. Your answers will help narrow down the choices.
- How big of a death benefit do I need? Most people need a death benefit 8 to 12 times their annual income.
- How long do I need coverage? If you’re the family wage earner, you’ll want to be covered for at least as long as you expect to be employed. Stay-at-home moms and dads need coverage for as long as there are people who need their care (children under 18, aging parents, etc.). Terms can be short (5 years), long (30 years), or lifelong (permanent life insurance). A longer term usually means a higher payment.
- What kind of policy best meets my financial needs? That depends on your specific financial and family situation. Who depends on you, and how long will they need your support? The best way to get a quick answer is to call us. Tell us a little about yourself, and we’ll help create a customized life insurance solution that fits your needs! Reach us at 1-800-823-4852.
What’s the Buying Process Like?
It’s easy. We’ve broken it down into five simple steps:
- Compare rates. Different carriers offer different rates—it pays to shop around! Our online quoter is a great place to start. Once you find a rate and policy you like, it’s time to apply.
- Apply for a policy. We’ll do this part for you! We can fill out the entire application for you based on a quick phone conversation. We’ll even email you a link to the electric paperwork to review and sign.
- Get a free check-up. The insurance company sends a medical examiner to your home or office, free of charge! (Note: You can skip this part if you’re applying for no exam life insurance.)
- Wait for underwriting. The insurer usually needs a couple of weeks to collect data, such as your medical records, and establish a rate for you. (Note: You can skip this step if you’re applying for guaranteed issue life insurance.)
- Sign the paperwork. If the insurer accepts your application, they’ll send you a contract. When you sign it and send it back with your first payment, your policy will be in effect. Until you take this step, there is no obligation to buy.
That’s it! Remember, we’re here to help and answer questions at every stage of the process.
Terms of the Trade: Key Definitions
There are a few key definitions you’ll hear when you talk to any agent about life insurance. We also use these definitions on our website as we explain the different policy types. To get you up to speed, here are a few terms of the trade:
Beneficiary indicates the person or people who will receive the cash payout, should the insured pass away during the term of the policy.
Cash value is an interest-bearing savings account that contains actual money. It’s a component of several types of life insurance policies. If you’re the policy owner, you can surrender the policy and walk away with that cash value. If you need access to the money but don’t want to surrender your policy, you can also borrow against the account or withdraw a portion of it (in the case of universal life insurance). You can also use it as collateral for a loan or sell it outright to a new owner. The two main types of cash value life insurance policies are whole life insurance and universal life insurance.
Cost of insurance refers to the expenses associated with creating and maintaining a policy. These include maintenance charges, premium taxes, the actual cost the insurer will face to cover its mortality expenses (the money it pays out in death benefits). Everyone’s cost of insurance is a little different. It’s calculated based on the value of your policy and the risk you represent to the insurer. If you’re trying to make a policy more affordable, for example, you can change the type of insurance, the expiration date of your coverage, or the value of your policy. You might have a little more trouble changing the level of risk you represent. Insurers will evaluate your mortality risk based on your age, sex, substance abuse, measurements, and health class (see definition below).
Death benefit is the payment (or series of payments) made to a life insurance policy’s beneficiaries upon the death of the person or people insured by the policy. In most cases, this is also the face value of the policy; this will be different if the policy owner has taken money from the policy’s cash value, for example. To learn more about death benefits, watch this video.
Health class is a component of your cost of insurance. It’s an insurer’s evaluation of your health, which is a big part of estimating their risk in insuring you. In most cases, a medical examiner will need to pay you a visit before your life insurance policy is finalized. Some kinds of policies can skip this step (called “no medical exam life insurance”), but you’re likely to pay much more as a result.
Premium is another word for your monthly payment. This is the amount you’ll pay each month to your insurer.
Quotes are price estimates made before the application process. “Estimate” is the key word here. For example, if you click our “Get a Quote” button, we’ll give you quotes from nationwide carriers. These are estimates of what that insurer would charge you based on the information you give us. This is just a starting point. Your actual monthly payment amount won’t be finalized until you’ve completed the application process and, if required by your policy, had a medical exam.
Riders are additions to your policy that add extra features. If we compare your policy to the Constitution, for example, riders are your amendments. A rider can modify your coverage in any way you see fit, so long as both you and the insurer agree to put the rider in your policy. Keep in mind that riders typically extend coverage or exclusions, making a policy more expensive. If you want to add riders to your policy, it also makes the buying process a bit more complicated. Standard quoting forms, for example, don’t take riders into account. Common riders include spouse riders, child riders, accidental death riders, and guaranteed death benefit riders.
If you have any questions, call us at 1-800-823-4852.