It makes sense for cost to be a determining factor in determining your life insurance plan. The price of something is a determinant of nearly every purchase decision that we make. This is especially true when weighing the benefits of your options – which typically leads to the realization that higher price equals higher benefits.
This doesn’t necessarily ring true for life insurance policies. So why is it still so difficult to differentiate between the specific aspects of your options? This might be in part due to such a high level of responsibility that insurance carries. It must protect against a wide variety of risks all while complying with state regulations.
Oftentimes when an agent explains hypotheticals to a client, they can become dangerously broad in their descriptions. When it comes to life insurance policies, the devil is in the details. It may seem more appealing to simply go with the cheaper option, but there are many other elements to consider.
The reason most people balk at a whole life insurance policy is because of the common generalized comparison made about the two life insurance options: whole life is overly expensive and only for the rich, while term life insurance policies are painted as the sensible, cost-effective choice. These are sweeping generalizations and can’t be taken at face value. This is where basic definitions become crucial. The true difference between the two is that whole life insurance covers the risk of a person dying for the entirety of his or her life, while term life insurance only offers this protection during the years when the insured is a significant wage earner in the household.
That being said, whole life insurance does more than protect beneficiaries from the loss of the insured. The benefit paid will never decline during the insured’s lifetime, and the policy may additionally build cash value. This is why whole life policies tend to have higher premiums. For this reason, younger prospects typically find themselves leaning toward the less expensive option, or term.
Term life insurance protects for a specific period. Usually there is an age at which the term life insurance policy cuts off – often around 70. The idea is that by this point, hopefully, your family is fully self-sufficient without your income. At this age, term life insurance becomes more expensive because of such a large increase in risk factors.
Although whole life insurance does cost more over the years, in provides coverage past the age of 70 and oftentimes until the insured’s death. The point is here is that there is no right or wrong answer when it comes to life insurance. With the help of a licensed insurance agent, you can easily come to determine which is right for you and your family. Do research and seek the guidance of professionals. Insurance exists to protect from risk, so you never want to increase it by oversimplifying things.
Here are 4 life insurance myths debunked.
1)Your employer-provided life insurance is all you need.
Your employer may provide you with life insurance equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. However your “salary” doesn’t typically include commissions, bonuses, and second incomes. This means that the policy may not be enough to cover your family’s needs. Even if you do have enough insurance through your job, you may lose it when you leave. You may be able to convert your optional insurance to an individual policy or purchase one on your own but either way, it may be much more expensive than purchasing a policy today, especially if your health deteriorates.
2) Only the breadwinner needs life insurance.
Imagine if something were to happen to the stay-at-home spouse in your family. The breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, you may need life insurance on both spouses. Life Happens. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss.
3) My health disqualifies me from life insurance.
There are a lot of policies that cover a range of health conditions and some even specialize in high-risk cases. You can also purchase a policy that is not medically underwritten at all. Just be aware that they tend to be more expensive and have lower coverage limits.
4)You get a better deal purchasing life insurance online.
The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through a human being. What you don’t get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean. A web site may not realize that you need coverage for your whole life due to a child with special needs or that your health won’t qualify you for the rates offered by the lowest price company.
You may find it difficult to believe that there were times in history when the American economy soared, and we didn’t necessarily worry about every financial detail. A lot has changed, especially in the last decade.
Many of today’s consumers are keenly focused on how they spend their money, manage their careers, and plan for the future. At times, it seems overwhelming to keep a family budget, save for retirement and coordinate estate planning. Enter Eagle Group Associates, Inc.! We will spend time with you and personally recommend steps you should take during retirement.
However, there are some general guidelines. We’d call them “rules,” but in our business, there are always exceptions and unique circumstances. Nonetheless, here goes. These are reasons you may want to retain your life insurance during retirement:
Providing a safety net for a spouse and a new family — or one on its way — is a traditional scenario that warrants appropriate life insurance protection. Generally speaking, if you or your family have been avid savers, you’ve probably built a nest egg that will create the retirement income stream you’ll need. But that is not always the case. You may need to maintain life insurance if your spouse, a child or family member, or a friend counts on regular inflows of cash from you.
Remember, while working for most employers, our income is protected against our injury or illness by disability insurance. This coverage goes away in retirement. At Eagle Group Associates, Inc., we’ll help you determine the best way to ensure smooth sailing for years to come.
Assisting children and relatives.
You’ve probably already guessed that this is related to the item above. But here, we’re reminding you that our economy is still fragile and fickle. Often family members “get together” to help one another during times of unemployment or major illness.
If this is the case with your family, please let us know. We’re experts at making what seems like a tenuous situation one that’s easy for you. What’s more, we care.
There are always special needs for insurance. For example, if you had to use retirement savings to cover an unexpected cost and are only partially retired (due to financial need), life insurance may make sense. Also, events like having children later in life, remarrying, or maintaining multiple, blended families all may call for life insurance.
The good news is that Eagle Group Associate, Inc. will work through the details, research the options, and help you know whether life insurance during retirement. We promise to keep it easy, complete, and affordable.
Please speak with us before you cancel any existing policies. Coverage is more expensive as you age. Plus, canceling Term Life after the covered period doesn’t result in any savings.
What might we have in mind? We might suggest a guaranteed, level-premium, term life policy with just enough death benefit to cover a certain cause. But, we’ll want to talk to you, and ideally, meet with you in person, before we suggest anything. We make sure that all our recommendations are personalized to each client and their circumstances.
Something to consider from Jayne Bryant Quinn, writing for The AARP Bulletin of AARP.org in 2012, which still holds true, “…instead of paying insurance premiums…invest the money.” We have a world of solutions. But, we also know retirement is often a time to pursue life’s joys. That’s why Eagle Group Associates, Inc. will be there to recommend a strategy and to support your questions, and any changing needs, during your well-deserved retirement years.