Buying life insurance is not high on the list of America’s favorite pasttimes. I think more often than not, we just don’t know an agent we trust well enough to guide us through the process.
Most people probably feel under-educated on life insurance and simply do not know the right questions to ask and making an informed decision may seem difficult.
Let’s make it easy
Generally speaking, there are TWO types of life insurance: Term and Permanent. Let us walk through the difference between both kinds.
TERM LIFE INSURANCE – Is sold typically as 10 year term, 20 year term, and 30 year term. With most carriers, the premium will stay the same for the duration of the term, then go up. For example, if you buy a ten year term, the rate locks in through the tenth year. Then it increases.
Think of it as renting an apartment versus buying a home. When you rent, the monthly payment locks in for the duration of the lease. When the lease is up, the owner can increase the rate. Term insurance also does not accumulate value, or cash. If you drop the coverage at some point, you do not get money back.
Term insurance usually ends at a set age too, usually by age 75.
On the plus side, term is typically cheaper but not a very good long range solution to life insurance.
PERMANENT LIFE INSURANCE – Locks in a rate today for the rest of your life. Permanent life insurance will cost you more money per month to own initially but saves you money in the long run. It’s like buying a house. You have to put a higher down payment and your monthly premium is typically higher than renting. But you own it. The premium locks in today for the remainder of your life.
While some one who rents faces a increasing payment, home owners have the peace of mind knowing that their payments stay the same. It is the same for life insurance.
You build equity in a permanent policy. If you sell the house some day, you get money back. Permanent life insurance is the same. If you cancel down the road, you will get some money back, usually. It is possible to get all your money back in some cases.
The main benefit is locking in a premium today for the rest of your life.
How much life insurance
Advertisements on television suggest you buy 7-10 times your income. You can do that or make your decision any number of ways. One method I’ve seen is for families to add up all their debt. Then decide how much money a surviving spouse would need on an annual basis for a set length of time. Finally, add in funeral costs and they arrive at a number. There is probably no wrong way of buying life insurance.
Locking in your great health
One factor most people totally neglect to consider when they are looking at life insurance - protecting their insurability. On occasion people will want to wait before buying life insurance. Waiting for what, I am not sure. But consider this – if you are in good health and qualify for a Preferred Arizona Life Insurance policy today, what would happen if you suddenly found out you had cancer, or something less severe such as high cholestrol, which can lead to heart disease and other illnesses.
Your interest in buying life insurance might suddently increase. The problem is, now you may not qualify for a Preferred rate or qualify at all. You could be declined, depending upon the nature of your sickness.
Buy life insurance today, when you are in the best health possible and before that next birthday comes around.
Does my age factor into my life insurance?
Of course it does. Consider this: your policy will lock in at whatever AGE you are today. If you are 40, your rate will be less than if you wait until you are 50 to purchase it. Buy it today before you have another birthday. Rates typically increase as you age, unless you already have locked a policy in.
Also, some term insurance can no longer be sold to you once you hit certain milestones. Ask us for guidance on buying life insurance.
We offer Phoenix Life Insurance, Arizona Life Insurance, and Tucson Life Insurance, and coverage throughout Arizona.