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

Dangerous Hobbies That Could Make Your Life Insurance Policy Go Up

photo-1457084583470-03efe987ed21

These days, it’s all about seizing the day, living in the moment, and living your best life. Unfortunately, you’ll also have to pay a lot more for living an adventurous life. Participating in any dangerous hobbies can result in an increase in life insurance fees. Because statistics show that these hobbies increase the chance of untimely death, it is not surprising that life insurance increases. Here are a few hobbies that will raise your life insurance, and the extra costs according to Trusted Choice and Archstone Insurance Services:

1. Skydiving

Many people like to skydive once or twice in their lives, but for those who do it often as a hobby, the insurance is bound to go up. For a skydiver who jumps less than 50 times per year, the fee will be a flat extra of $2.50 to $3 for every thousand dollars of insurance coverage. Skydivers who jump between 50 and 1000 times per year will have to pay a flat extra of at least $5 per $1,000. If you do more than 100 jumps, the flat rate is $7.50 per $1,000. That certainly adds up. If you have a $100,000 policy, this means a fee of $250 to $750 a year. Perhaps if you join a skydiving club, you’ll be able to get a discount.

2) Aviation

Being a pilot is also considered a risky skill. And that means it has the high life insurance to match. For pilots over the age of 26 who fly between 301 and 600 hours per year, the extra cost per $1,000 of coverage is $2.50. For those who fly more than 600 hours, the extra cost is $5.

3) Hot air ballooning

While hot air ballooning may seem a lot more peaceful than sky diving, it still involves going to extreme heights. With a risk like that, insurance levels are bound to rise, through the additional cost is not nearly as high. The extra cost can range from no cost to $2.50.

4) Climbing

If you like to climb, the cost is determined by the height you climb. If you climb up to 13,000 feet, expect to pay anywhere between $2.50 and $3.50 per $1,000 of coverage. For those who climb higher than 13,000 feet, this extra cost can be anywhere from $5 to $7.50.

5) Diving

If you dive less than 100 feet, then you typically will not have to pay any extra cost.  If you dive deeper than that, the extra cost will be $3.50 to $5. The cost will be affected by the number of times you dive per year.

6) Hang gliding and paragliding

Hang gliding and paragliding, like other activities that involve going up in the air, can add an extra hefty sum to your life insurance. This extra cost can range anywhere from $2.50 to $7.50 per $1,000.

7) Auto racing

If you participate in sprint, drag or modified racing, the extra charge per $1,000 of coverage will be $2.50. For other types of racing, the charges vary.

All in all, living life on the edge comes at a price. And we’re not just talking about the price of your safety. If you have a dangerous hobby, expect your life insurance to go up.

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.

5 Reasons To Buy Life Insurance

16540465893_5e8585fbe9_o

Some people believe that life insurance isn’t a worthwhile investment. They might be under the impression that it’s not worth the monthly fee for something that they may not need. But that’s not true. There are multiple uses for a life insurance policy that can significantly help ease your financial burdens.

It’s not as expensive as you think

Many people think that life insurance is a big expense that they won’t be able to afford. But they are wrong. Life insurance isn’t as expensive as many people think. A recent study from LIMRA and Life Happens, a nonprofit insurance education group, found that 80 percent of consumers have the wrong idea about the price of life insurance. Life insurance actually happens to be lower than other forms of insurance and, moreover, are usually less expensive than monthly cable and cellphone bills. However, it is important to keep in mind that prices to vary depending on your age, gender and health.

For your family

Life insurance isn’t really for you, it’s more for your family. If you are the one providing for your family, especially if you have kids who aren’t old enough to work, then getting life insurance isn’t even a question. Your children still need food, clothing and shelter if you unexpectedly pass away and they don’t have anyone’s income to live off of anymore. Moreover, ensuring that your home is covered under your life insurance is crucial to make sure that there is enough money for your family to pay off the mortgage.

Income replacement

A life insurance policy will act as a substitute income that you bring to your family in the chance that you unexpectedly pass away. The expenses that your family needs to pay for don’t just disappear if you pass away, they will still need to pay for them and may have no steady income to do so.

Help during retirement

For many, they can’t save up enough money to live comfortably after their retirement for the rest of their life. That’s where life insurance comes in. A life insurance policy can help fill in the gaps that your income used to support when you retire.

Changes in your life

If a significant life event happens then you might find yourself with more expenses. A new baby, marriage, buying a home, a new job, or college are all things that require you to change your budget significantly. Having life insurance can help cover these costs.

Life Insurance For Small Business Owners

life-insurance-movement-details

For anyone, having a life insurance policy is in their best interest. But for small business owners, having a policy is even more important to ensure that your family and dependents are left in a secure place in the chance you pass away unexpectedly. Read on to learn why this is so important for small business owners:

Business continuation

As the business owner what will happen to your company upon your death? Will your heirs need to sell the business in order to pay estate taxes and liabilities? Do all of your heirs coperate enough to take over your business or handle the transition properly? Having life insurance can help ensure that at your death the transition to a new owner will happen orderly and economically.

Key employees

Every business has key employees that help it operate smoothly. But in a small business, the roles of key employees are exasperated and they can sometimes truly be unreplaceable. What happens if one of these employees unexpectedly passes away? Could your business still function as well and be as profitable? Life insurance may be able to ensure that you have cash when you leave it.

Employee benefits

One of the most important things that potential employees look for in a company is quality benefits, which includes life insurance. Many businesses don’t have a good benefit program in place and therefore have trouble attracting and retaining high quality employees. Investing in a life insurance policy for your company can indirectly help your business by helping your recruit the best employees who are looking to stay somewhere long term.

It can replace your income

If you support anyone financially, especially if you’re a small business owner, then it’s imperative that you have life insurance. If you die unexpectedly then your dependents can use the life insurance from your policy to pay for anything from funeral costs, to a college education to day-to-day expenses.

It can protect your heirs from estate taxes

If you die unexpectedly without life insurance and don’t have a lot of money saved up, your family might have to sell your business in order to pay the estate taxes. Having a life insurance policy can help them pay the estate taxes while keeping the business intact.

If you are interested in taking out a life insurance policy contact us at Tom Jones Financial.

Types of Life Insurance

insurance-451282_960_720

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.

Life Insurance Terms

Ronny Powell

For many, understanding life insurance can seem impossible. There are many terms that those who aren’t in the industry would never have heard before they went to buy life insurance. For those who don’t really know what any of these life insurance terms mean check out this helpful guide of some of the most common terms:

Annuity: A fixed sum of money paid to someone each year, usually for the rest of their life.

Beneficiary: The person named in the policy who will receive the insurance proceeds at the death of the insured person. Anyone can be named as a beneficiary.

Cash surrender value: If the policy owner decides to voluntarily terminate their policy before it becomes payable by death or maturity, this is the amount available to them. The amount available is stated in the policy minus a surrender charge and any outstanding loans and any interest thereon.

Direct response: When an insurance company sells insurance directly to the insured through its own employees by mail or over the counter.

Evidence of insurability: A statement of proof of your health, finances and/or job. This helps the insurer decide if they want to take the risk to insure you or not.

Lapse rate: The rate at which life insurance policies terminate if you fail to pay your premiums. If a policy does lapse before enough premium payments are made to cover early policy expenses, then the company must make up this lost from remaining policyholders. As a result, the lapse rate will not affect the cost of the policy.

Policy proceeds: The amount of benefits payable when the insured dies or when the policy owner receives payment at surrender or maturity.

Rating: The basis for an additional charge to the standard premium. This happens because the insured person is classified as a greater than normal risk usually as a result of a health issue or having a hazardous occupation.

If you have any additional life insurance questions ask me on my twitter (@RonnyWPowell).