There are more and more affordable life insurance options with all the companies vying for the business.   On top of that we are seeing people live longer than ever before.    With competition and different product lines that are designed for different lengths and flexibility,  it creates a lot of affordable life insurance options for consumers.   Term life insurance is almost a straight commodity if you have no interest in converting to a permanent plan ever.   Term rates have gone down so much it is pretty staggering.  A couple things to keep in mind is just because a company is saying that a policy could cost X doesn’t mean you could qualify for that rate.   The company who is actually showing up as the second, third, or fourth best quote may actually underwrite more favorably and end up being a better rate.

Other very affordable options are return of premium term,  which will return all premiums paid if you outlive the term.    This will cost more money than regular term, but few people ever die during the term of the policy.  It is especially affordable if you live through the term and get all your money back.   Guaranteed universal life is also considered to be  very good affordable option  and the most affordable for plans that are permanent (guaranteed to 100 or 105).  This type of plan is almost like a permanent term and lasts to 100 or so, but the premium never goes up and little if no cash value is built.

Life insurance is something that is often times not kept during retirement years.   With the opportunity to presumably self insure at that point, many people will drop their term or let it expire.   While this is a strategy of many, it is not always the best one to pursue.   You may assume you don’t need or want life insurance after retirement, but how do you truly know how you will feel when you reach that age.

We speak to clients everyday that are looking to qualify for coverage that are 60 years old and over.   They consistently say that they wish they had bought when they were younger or planned for some coverage into retirement.  With that being said, it is certainly very possible to still qualify for coverage and the premiums will be determined by health.  Premiums have become more and more affordable due to life expectancy increasing.

The amount of coverage and reason for coverage may be totally different than when the client was 35.  At 35, they might have had a primary focus of replacing income if a premature death occurred.   At 65, income replacement might be less important and it might be about estate planning, mortgage protection, and final expenses.    When you are looking at your financial plan it is important to consider changing items of importance in your life.   It is always a good idea to look at your plan every year or two, to make sure nothing has changed.  If something has changed it may be something to address, or it may simply be something to keep in mind going forward.

The best time to have life insurance is when you die or when you need access to money for opportunities and purchases.     The reason I say the best time to have life insurance is when you die, is so your family gets a death benefit.   It does you little good other than protect your income years, if you pass away with no insurance.   If you paid for term for 20 0r 30 years and now you die with no coverage, that is quite unfortunate.   Most assume that once you get to a point and you have accumulated enough money, you can self insure with your existing assets.  This is a strategy that the life insurance carriers certainly like as they don’t have to ever pay a death benefit.   All of the premiums paid during those years were pure profit to the company.   Only about two percent of term life policies ever actually pay a death benefit.

The other time it is great to have life insurance is when you need capital for whatever reason.  The reason could be  for investing or buying a new property or a car.  If you have a cash value policy, you can have access to the cash value that you have accumulated and you can borrow against it, to buy whatever you want.   I promise you will be happy when you want to make a down payment on a new home and there is enough money you can access in  your policy.   The other beautiful thing about a cash value policy is that it is permanent and your family will eventually get a tax free death benefit.

Often times the service that is provided by a life insurance agent is underestimated.   You might think that the only thing the agent does is sell you the policy and then moves on.   We focus on providing great service to our customers during the underwriting process and after they are officially a policyholder.   I have heard many customers, say that they didn’t know who to call and had to call someone at a call center for a basic policy question in the past.   We are available to our customers at anytime to answer whatever questions they have and whatever adjustments they might need to make.   For example, if they need a change of beneficiary form or need to adjust their address, we help them with that.  If they have a claim, then we are there to help them through the process.

Another aspect of what we do from a service perspective is keeping them informed of any changes, updates, improvements in the industry.    It is important to know what is going on as changes can effect them.  On top of that, we stay in touch about their conversion options.   If they don’t already have a permanent life policy, such as whole life or universal life, it is important to keep them posted on options.   With most carriers there is the option to convert all or part of your policy to a permanent plan with no proof of insurance.   Clients are often not aware of this option and it can be of great benefit.   Service is an important component of what we offer our clients.

Since term life insurance is basically a commodity the life insurance carriers have had to make it very affordable to compete.   The ability to keep it cheap is centered around a few factors.   One is that the insurance companies rarely ever pay a death claim on a term policy.   Typically, less than two percent of people with term policies ever make a claim.    Since so few people actually die, it is a big money maker for the life insurance company.    It is a win for the consumer because they were able to get a good amount of coverage for a very reasonable price.

The other big factor in keeping the premiums down is that fact that life expectancy has increased.   People are living longer and that contributes to being able to offer reasonable rates to an aging population.   Over the last few years rates have come down to the lowest they have ever been.  In the last couple years, we have seen some companies have modest price increases due to their overall portfolio taking a hit financially.  To make up for their losses elsewhere they had to charge a little bit more for life coverage.

Another main reason, that rates are so cheap is the amount of competition.   With so many carriers offering life insurance at competitive rates, it is imperative to be in that ballpark to be successful selling term.  Some carriers are not trying to compete with their term products as their focus might be on high quality permanent plans.

Life Insurance is one of the best risk management tools that are available to businesses and individuals.   The loss of a key executive or key person for a company can be devastating in multiple ways to the company.  Not only do you lose someone who is integral in what you do as a company, but you have a need to find a replacement.   There is no telling whether you will be able to find a suitable replacement quickly or if you will even be able to find a comparable replacement.   The loss of this key person can affect sales, productivity, and overall morale.  Since the business will have all these obstacles with the passing of this person, it makes sense to have life insurance on that person.   If that person happened to pass away, it would provide a windfall of money that could go towards hiring a new employee and help offset losses in productivity and sales.

On the individual side, life insurance is a very powerful risk management tool as well.   It will guarantee that certain things will happen, even if you are no longer in the picture.   For example, that your income will continue, debts will be paid off,  and the kids will still go to college.   It is possible to get a very inexpensive term policy, that will guarantee the money will be there when your family needs it.   When you are building a financial plan for yourself, it is important to manage the risks that exist out there.   Make sure you take a look at your life insurance program and consider whether it is adequate to manage your risk.

Many of the clients that we speak with don’t know the exact amount of  life insurance coverage that they want.   In many cases the amount of coverage they want is dictated about the cost of policy.  To determine the cost on the policy it requires them to go through the process of underwriting.  At the end of underwriting they will get an insurance rating, such as preferred elite, preferred, standard, etc. and that will actually determine the rate.     With the rate established, we will truly be able to tell them the cost of the various face amounts.   If they are up in the air then we will suggest that they underwrite and get approved for the maximum amount of coverage that they might want.    During the underwriting process, which takes about 6 weeks, they can think about what they truly want for face amount.

It makes sense to underwrite for the max, as it is easy to go to the carrier to cut down the face amount to a lower number.  The only thing that they can’t do is go up.   In other words, if you try and go up in coverage amount it may require new underwriting.   If you have to re-underwrite that can present a hassle for the client and really makes little sense to do it that way.   When you  apply with a carrier for coverage, you have no obligation to the face amount or even to accept the policy, so why not just underwrite for the most you might actually want in coverage.

Term vs. whole life insurance is one of the oldest debates around.   We find that people are on polar opposite sides of this debate and often times for reasons that don’t make sense.  I have heard, “I will only buy this type of life insurance because that is what my brother had and its the best”.   Another popular one is, “Suzie Orman and Clark Howard said to only buy term insurance”.

The answer to which type wins is that it is impossible to say.  Both types serve great purposes and can be used as very effective tools.   Term life is just like renting your insurance and is less expensive initially than whole life.  With term you will select a term period of 10, 15, 20, or 30 years and the premium will be level for that period of time.   Term is a great product that you can get a lot of in your greatest time of need.   For example, if you have just started a family you will want to maximize the amount of life insurance while your kids are growing up.   Term is so affordable it will allow you to buy a big amount during that time.

On the other end of the spectrum is whole life insurance.   When the term life’s level term is ending, the premium will start going up briskly.  The whole life premium starts off being more than the term, but remains level for the life of the contract.   By year 21 of a 20 year level term, you will probably be paying more for the term than the whole life at that point.   Whole life is a permanent solution unlike term.  Whole life is designed to build equity like owning a home and to last for your whole life.   The cash value that is accumulated inside the policy can be borrowed against like a home equity line of credit.

Which type is better?  The answer is neither and often time it makes sense to have some of both to meet different needs.

When looking at what type of life insurance to buy, it is important to marry affordable life insurance with the product that makes sense for your situation.  For example, if you have a child that is 1 years old and you decide you need coverage for 20 years, don’t buy a 10 year term.  The temptation to do that might be there, to save cost, but in the end it may hurt you.   If you go and apply for a new 10 year term at the end of the first 10 year term, you may not be insurable and certainly the premium will be a lot higher.

The first thing we want to look at is how long will you want and need the coverage.   You may want to have permanent insurance, but your budget will not allow for that.   Maybe you can do a combination of term and permanent to meet your budget and your permanent need and want.  It is important to buy the right amount of death benefit above all else.   One case recently, the client wanted to buy 100,000 dollars of whole life, when the need for death benefit was closer to 500,000.   We suggested supplementing the whole life with a 400,000 term rider to cover the additional exposure and the client agreed to that strategy.   Very often we will see a client with a plan that is not budget friendly and the plan type makes no sense.   As an independent brokerage we can shop all the carriers and all the different products.   If a consumer is dealing with a captive agent, they may get stuck with one of the products in the agents limited repertoire.

There are a million reasons not to buy life insurance today or next week or even this year.   Typically, it is not something that you are going to be excited to purchase.     While I completely understand this rationale, it is important to consider why you may want to buy sooner rather than later.

First of all, you will never be healthier than you are today.   It is possible that you could be sick or unhealthy now, and in the future your health will improve.   That is a possible scenario, but it is true in only rare circumstances.   The longer you live the more apt you are to have additional health problems or take additional medications.   If your health gets worse in the future, it is a matter of time before you may not qualify for a policy at all.  If you need coverage and you can qualify, you should go ahead and secure the coverage.

You will never be younger than you are today.  This is always true and your premiums will only go up from here.  The earlier you lock into a rate and the mortality, will benefit you in the pocket book.

Another reason people wait is that they are shopping carriers and plans.  The answer to this is simple, let us shop the rates for you and we will have the best rate on the market for you in 5 minutes.   The process to get applied, complete the underwriting, and get you approved takes about 4-8 weeks.  This process doesn’t obligate you in anyway, but it gets a formal offer from the carrier if you are insurable.