Frequently asked questions.
What affects the cost of Life Insurance?
Six Things:
The amount of insurance coverage you want ($1 Mil in coverage will cost more than $100K)
How long you want it to last. (A permanent policy that never expires will cost more than one that covers you for 20 years.)
Your age. (Someone at 40 will pay less than someone at 50 but more than someone at 30.)
Your biological sex. (Women are cheaper. Every. Time.)
Your health. (Healthy people cost less to insure than people with medical issues)
Your lifestyle. (Smoking, speeding tickets, felonies - all increase the price)
What if I have Life Insurance from my employer?
Most people have some life insurance from work. But there are usually two imprtant things to know about that policy:
It’s not enough coverage.
It isn’t owned by you.
Check out the box “How much is enough?'“ for info on the first issue.
On the second issue - because YOUR EMPLOYER owns the policy, you’re only covered while you work there. The minute you no longer are employed by them, you no longer have life insurance.
Real Life Scenario: Guy gets diagnosed with cancer and has to quit his job to literally fight for his life. He loses the fight. He also lost his life insurance, so now his family must ask for help just to bury him on top of grieving.
Real Life Scenario 2: At 45 guy leaves his job to start his own business, he now needs life insurance and it’s simply MUCH MORE expensive at 45 than it is at 30.
How much Life Insurance Should I have?
This is simple to answer with another question:
How many years do you want your family to continue their current lifestyle before they have to consider what’s next?
Let’s say you make $75K/year, you provide the health benefits (Which would have to be purchased if you died). You also fix some stuff around the house and maintain the lawn and cars (Which would have to get hired out if you’re not around.)
So, we’ll say your total financial contribution to the family is about $90k/year.
A $450k life insurance policy would cover your family for 5 years. A $900k policy would cover them for 10 years.
What if I outlive my policy?
A TERM LIFE policy is designed to cover you for a period of time - usually 20 to 30 years. The idea is to protect your family during the years of prime earning and huge liabilities: You have young kids that are dependent, a mortgage, years of future income…
By the end of a 20 or 30 year policy - the house is paid off, the kids are grown and independent, and your obligations are much much less.
In most cases - people DO outlive their term policies and are left with nothing to show for it.
The tradeoff was that the policy was cheap during the period of coverage.
There are two alternatives that both cost more:
You buy a TERM POLICY with RETURN OF PREMIUM (ROP): this gives you back 75-100% of all the money you paid in over the course of those years.
You opt for a PERMANENT POLICY (Whole Life or IUL) as these last forever.
Is the Death Benefit paid out over time?
Nope. It’s a lump sum in most cases, AND it’s TAX FREE in most cases!
I already have a policy in place, I don’t need anything else.
It’s great that you have already taken steps to protect your family! It has been our experience that sometimes, policy holders don’t fully understand what type of policy they have, the benefits that are included and may also be under (or over) insured. We are happy to offer a FREE Policy Review to go over what you have and ensure there are no gaps.
Do I really need to insure my children?
Insuring your children is one of the best gifts you can give them! Putting a whole life policy in place is a plan for their future as, generally, these policies can be converted to adult policies without an increase in premium even and they are guaranteed coverage even if they get a major health diagnosis.