Life Insurance. Like your automobile and home insurance, it’s to cover financial losses in the event of the unexpected. Unlike automobile and home insurance, you’ll never see the benefit of the coverage you pay for.

Life insurance is not for you. It’s for those you care about, to ensure financial flexibility, security, and that you’re not a financial burden on those you care most about.

Not convinced? We’ll answer some of the most common questions about life insurance to help you determine if you should have life insurance.

Do I need Life Insurance?

Not everyone needs life insurance, but everyone can benefit from having life insurance. You may be looking at your life… perhaps you don’t have any dependents, little to no debt, no mortgage or your estate would sell your home and pay the mortgage upon your death. You may have investments that can be liquidated to leave legacy gifts to your loved ones, community, and to pay for your final expenses (funeral, professional and executor fees, probate fees, etc). Bear in mind that your estate takes time to be liquidated, and your funeral costs are required when your funeral happens. Having a small life insurance policy to cover those final expenses allow for quick payment for incontestable death claims — sometimes in as little as 2 weeks from the time of claim.

The more complicated your estate, however, the more likely life insurance is required. The amount of assets you have doesn’t dictate your need (or lack of) for life insurance. Many high net worth individuals use life insurance to cover off tax liabilities, secure businesses, and as investments.

If you’re a young family, have young children, and want to ensure that their financial future is secured, life insurance is a no-brainer. To purchase life insurance when you’re young and healthy is the most cost-efficient financial decision you can ever make in your life for those you love.

 

What kind of Life Insurance do I need?

Basically, there are two types of life insurance — term insurance and whole life insurance.

Term insurance is low-cost, basic coverage that allows cost-efficient and often purposeful coverage. This is ideal for expenses such as a mortgage, where you can match the term and amount of coverage to your debt. There are no “bells and whistles”, it does not build cash value in the coverage, but is best for budget-conscious individuals who need a large amount of insurance. It can be renewed or converted to a whole life insurance policy, so your insurability is never compromised. It’s the dependable Toyota that’ll get you where you need to go safely, and protect those you love.

Whole Life insurance is more a Mercedes of the life insurance world. It’s complex with a lot of options. It can provide you with long-term solutions, tax-efficient investment, and so much more…  but comes at an associated cost. It can be costly for someone middle-aged needing a substantial amount of coverage, but for complicated estates can be a valuable tool in the financial plan.

A hybrid insurance plan is called Universal Life, where you can buy a term insurance-like policy that allows for in-policy tax-strategic investing. Another excellent component to a complex estate, this can allow for both individual and corporate insurance flexbility.

Working with an insurance professional, and having your insurance plan integrate with your overall financial goals is key to determining the right insurance solutions, for the right amount and price.

How much Life Insurance do I need?

Everyone’s situation is different. There are common amounts used to calculate the life insurance need, such as your mortgage and debts, and income replacement. Then there are personal amounts you may want to include, such as an education fund for your children, charitable gift, or other needs. Sitting down for a thorough conversation about your insurance goals will help to determine the amount of coverage you need.

What do I need to qualify for Life Insurance?

Applying for life insurance isn’t always complicated. Medical underwriting guidelines may differ slightly between insurance providers, but are based on the applicant’s age, and the amount of coverage being applied for. At the minimum, a medical history questionnaire will need to be completed. The underwriter reserves the right to order more medical information, including fluids and doctor’s reports to ensure that they will take you on as a client. Working with an insurance professional can ensure that you’re in the best position to qualify by discussing any pre-existing medical conditions or history, and ensuring that all information is provided for the best consideration of your application. Even if you have pre-existing medical conditions, it doesn’t mean that you won’t qualify. And just because you’re without pre-existing medical conditions, doesn’t mean you’ll qualify at a standard insurance rate if there are other lifestyle concerns (think hazardous sports, alcohol, and drug consumption factors).

But I’ve already got coverage with my employer group plan…

You may think that having your income covered by your employer group plan is sufficient. And it may be. However, you need to consider the following factors:

• You don’t own your group coverage, your employer does, and can make changes at any time
• You’ll likely not spend your entire career with the same employer, and your health may disqualify you from personal coverage later in life
• While many group plans offer additional coverage that you can add-on for yourself and your spouse and your own expense, weigh the differences in price and compare. Do your homework.

 

 

If you or someone you know doesn’t currently have life insurance, or are interested in an insurance review, I can help!

 

Life Insurance: it’s better to be 5 years too early, than 5 minutes too late.