The Three Most Common Type of Life Insurance and Who Should Get Them

The Most Common Types of Life Insurance and Who Should Get Them

The Three Most Common Types of Life Insurance and Who Should Get Them

Life insurance policies are not one size fits all. There are a lot of different types of policies out there, and if you’re not in the know the choices can be dizzying. This post will break down the most common types of life insurance that you should be aware of when making your decision, as well as who generally benefited the most by each policy.

 

Term Life Insurance

Term insurance is the most common type of insurance for one simple reason: it is the cheapest. When you purchase term insurance, you are guaranteeing a payment for your loved ones within a certain time frame. For instance, if you buy a 20-year term policy, then if you were to die anytime in the next 20 years, your family could collect a lump sum payment. It’s status as the cheapest type of policy makes terms insurance very attractive to many buyers. The downside, however, is that if you buy term insurance and then do not die during the specific time frame for the policy, you are back where you started and your beneficiary’s do not receive any payment.

Who should buy term life insurance: Still, term insurance is often the best option for many people, especially if you are only just beginning your career and money is tight. Although those early in life often have the least disposable income, they often have the most to lose. You may have a mortgage, car payments to meet, or a young family to support. If this is you, you might want to invest to ensure that your family will be cared for in your absence and protect them from being overwhelmed by bills while still keeping as much money as possible in your pocket here and now.

 

Whole Life Insurance

If, however, you are most concerned with making sure your investment pays off no matter when it might come time for your family to collect on it, you may want whole life insurance. This type of policy has no expiration date. It is absolutely guaranteed to pay your beneficiary no matter when you die. The premiums for this type of policy are significantly higher than they are for term insurance, and some of that money is directed to an investment fund which is professionally managed. Because your investment is actively being returned under the watchful eye of professional managers, your policy actually builds up its own cash value. If later on you should decide to cash in the policy before your death, you will receive some money back. In most cases, you can even borrow against that value.

Who should buy whole life insurance: Whole life insurance is ideal for people who have some financial security and want to protect their family for the long term. It has the benefit of being a very hands-off investment, and also acts as an asset in its own right.

 

Universal Life Insurance

Universal Life Insurance also promises a death benefit on any timeline, but it is designed to give you much greater control over your money. In this type of policy, part of your premium payment goes to your death benefit while the other part goes towards a cash account. Your premium will then fluctuate depending on how the cash fund investment is doing. This has the considerable benefit of a variable premium, which means you could potentially end up paying less for your premium.

Who should buy universal life insurance: This is the perfect policy for those who want to have control over their investment, are willing to accept some risk in exchange for the possibility of lower cost.
Go here for more information about these types of policies.

Why You Need an Insurance Agent

 

Why You Need an Independant Insurance Agent

Why You Need an Independant Insurance Agent

This is one of those cases when cutting out the middle man isn’t actually a good thing. A local insurance agent is an important ally you can rely on when navigating the often confusing world of insurance, where the rules are constantly changing state by state and company by company. It’s their job to understand and communicate the important points to you when you’re handed a contract that’s over 50 pages long. If there are any abnormalities or unpleasant surprises hidden in the fine print, your agent is equipped to find them and explain them to you.

Sometimes even more importantly, a good agent has access to the prices and packages of dozens or even hundreds of different insurance companies, and they can sort through them all to find you the best deal. With so many choices to compare, chances are an agent will be able to get you a better result that you could get yourself.

 
Read more about why it’s worth it to use an independant insurance firm here

Who Needs Life Insurance

When you die will someone suffer financially? Then you probably need life insurance because it will provide your family with cash after your death. Upon your death your family will receive a death benefit, which replaces your income and can help your family meet their financial needs, from funeral costs to daily living expenses to college funding.

If you’re married

Many people are under the impression that you don’t need life insurance until you have kids. But this simply isn’t true. If your spouse passes away tomorrow would you have enough money from just your income alone to pay off credit card balances and car loans? Or to just pay for monthly rent, utility bills and food costs? It’s important to get life insurance as a precaution. Additionally, if you are planning on starting a family most life insurance companies won’t insure pregnant women so it’s important to get your policy ahead of time.

If you have kids

The majority of families wouldn’t be able to survive without two incomes coming in to make ends meet. If your spouse died suddenly would just your income be enough to support you and your kids? Would you be able to buy your kids food and put a roof over their head? Would your kids still have a college fund? These are all important things to think about and major reasons to get life insurance.

If you’re a single parent

As a single parent you are the only lifeline for your children. You put a roof over their head, you cook, clean, drive them around, and do so much more. If you don’t have life insurance and something happens to you what is to become of your children’s financial future?

If you’re retired

When you pass away your heirs could be hit with an estate-tax payment of up to 45% after you die, depending on the size of your estate. The money from a life insurance policy is available immediately, allowing your heirs to pay off the taxes and take care of other things like funeral costs and other debts without having to worry about their own finances.

If you’re a small business owner

Did you know that life insurance can take care of your small business and not just your family? What would happen to your business if you, a fellow owner or a key employee suddenly passed away tomorrow? Would the business just come crumbling down? That’s where life insurance comes in. You can opt to get a policy that is structured to help your business in the case of your death. A buy-sell agreement ensure that the remaining business owners have the money to buy the company interests of a deceased owner at a previously agreed upon price. This allows the owners to get the business and your family to get the money. In order to protect your business against losing a key person opt for key person insurance, which is payable to the company and provides the owners with the financial flexibility needed to either hire a replacement or work out an alternate arrangement.

If you’re single

Most single people don’t need life insurance because no one depends upon them. But there are some exceptions to this. If you are taking financial care of an aging parent or a sibling with special needs then your life insurance plan can go to help cover those costs. Additionally, if you are in any type of debt it’s important to get life insurance so that your debt isn’t passed down to surviving family members upon your passing.

Everyone should have life insurance. You never know what will happen and it will only be beneficial. Think about getting a life insurance plan when you’re young because you will get the best rates when you’re young and healthy.

Types of Life Insurance

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Life insurance is a smart financial decision that everyone should choose to do. But if you aren’t a life insurance professional, how will you know where to start? Keep reading to learn all about the different types of life insurance.

There are four main types of life insurance coverage:

  • Term Life
  • Whole Life
  • Guarantee Universal Life
  • Index Universal Life

With all of these types you are provided a death benefit but they differ significantly in terms of length of coverage, premium flexibility, accumulation and distribution of cash values and other factors. Keep in mind that the specific policy will differ based on the company.

Term Life

Coverage needs: temporary period of 10-30 years

Cash value accumulation: no cash value

Premium flexibility: fixed for an initial period

Guaranteed death benefit: for length of term period coverage

Whole Life

Coverage needs: lifetime

Cash value accumulation: guaranteed cash value

Premium flexibility: fixed

Guaranteed death benefit: lifetime

Guarantee Universal Life

Coverage needs: up to lifetime

Cash value accumulation: interest crediting rate set by the insurance company

Premium flexibility: flexible

Guaranteed death benefit: lifetime coverage or “dialed down” to any length of coverage

Index Universal Life

Coverage needs: up to lifetime

Cash value accumulation: interest crediting rate can be linked to the percentage change of an index

Premium flexibility: flexible

Guaranteed death benefit: guarantees typically range from 10-30 years

 

If you are interested in getting life insurance contact us at Tom Jones Financial.

Factors That Affect Life Insurance

Ronny Powell

There are many different factors that can affect how much you pay for life insurance. However, there are some factors that may be weighed heavier than others. Check out this list below to see the factors that are most important to life insurers when giving someone a life insurance policy rate.

Age
This is one of the most important factors that will affect your rate. Simply put, the younger you are the lower your rate will be. The reason being is that the younger you are the less likely you are to pass away. As a result, many life insurers recommend buying a policy when you are younger.

Your job
Certain more risky and dangerous occupations, such as race car drivers and construction workers, may result in an increased rate or even a denial of coverage because they carry a huge risk of accidental death.

Your current health
Typically, you must go through a medical exam when trying to get life insurance. They will check out things such as high blood pressure or anything else that may be an indicator of future health problems. Those who are in better health will usually receive lower rates.

Your health history
Your health is another big factor in deciding your rate. If you have a history of chronic illnesses or any other health problems you are more likely to have a higher rate.

Your family history
Many people who have a family history of serious illnesses, specifically those that can be hereditary, are more likely to pay more.

Smoking
Nowadays, everyone knows that smoking is an unhealthy habit to be in. It can cause many illnesses such as lung cancer. As a result, those who smoke usually pay more for life insurance just because of the inherent health risks of the habit. Nevertheless, if you quit you may be able to lower your rates within a year.

Drinking
As with smoking, drinking heavily can take a toll on your health. During your health screening you will be asked about your drinking habits. If you are a heavy and habitual drinker you will most likely pay more for your life insurance.

Your gender
Generally, women live longer than men so they may pay less for insurance.

Why You Should Work in the Life Insurance Industry

Ronny Powell

No kid dreams about being a life insurance agent. Many people think about life insurers sitting at alone at their desk just crunching numbers. However, this perception of the industry is completely wrong. The life insurance industry, and the greater industry of insurance, is actually an incredible industry to be in. With amazing benefits, a generous salary and great perks, all different types of people should consider getting into the industry if they want to have a full and long career.

You don’t have to have a specific background to get into the industry

In order to get into the insurance industry you don’t have to have a specific educational background or set of work experiences. There are insurance diploma programs, certifications and specializations that can give you an advantage of getting into the field, you can still begin a successful career in the industry without necessarily having a background in insurance. There are many different branches of insurance so having previous knowledge and experiences can come from many different areas such as cars, business, medical terminology, law, and infrastructure.

Many different roles

There are many different types of job responsibilities and opportunities for career specialization when it comes to the insurance industry. Many people think that insurers just work independently crunching numbers all the time. Yes, there are some insurers who do that but there are also insurers who like working with people, who can spot trouble before it happens, or who enjoy research and analysis. No matter what you like, there is definitely a job that’s right for you in the insurance industry.

Stability

Insurance is an industry that is constantly growing. People will always have a need for it. In the United States alone there are 850 life insurance companies that employee over 345,800 people.

Room to learn and grow

The room to grow in an insurance company is endless. There are many different roles that you can take on. As you learn more, whether on your own, from your experience at the company, at an outside class, or through training companies that your company offers, you can easily move up the ladder in your company.