Life Insurance demystified. Your questions answered.

September 27, 2016

Tucson wants to know!  What is life insurance...what does it do?  Do you need life insurance?  When do you need it?  How much do you need?  What are your options?  How do I qualify?

 

A brief but accurate description of life insurance is that it insures that your financial contributions to your family continue if you die.  What that contribution is varies greatly based on your needs and the life products you choose.

 

Most people need some form of life insurance protection.  Unless you are very rich it makes sense that you should have some kind of life insurance.  Rarely does what they give you at your job cover you for anything but the final expense of burial.  Don't rely on your "free" life insurance.  You get what you pay for with "free".

 

Obviously life insurance "kicks in" when the insured dies.  But that's just one of the functions of life insurance.  Whole Life insurance also acts similar to an investment and is an important part of any diversified financial portfolio.  With certain life products you can borrow money against it.   It's kinda like loaning money to yourself rather than borrowing from a bank! 

The big question is how much do you need?  And the answer is NOT as much as you can afford.  You might need more than you can afford!  But, of course it only makes sense to purchase what your current budget allows.  You also have to figure out what it is you want your death benefit to do!  Cover the cost of your burial only?  Replace your income?  Pay for your children's college?  Pay off your mortgage and automobiles?  Only you can answer these questions.  We can help you.

Typical insurance products are Term Insurance, Whole Life, and Universal Life.   Universal life insurance is a form of Whole Life.

Term is what is sounds like.  It covers you for a specified term.  10-20-30 years.  This is the least expensive of all the options.  It is also the easiest to qualify for.

Whole life covers you for your whole life, as long as you keep making premium payments.  It is more expensive and generally harder to qualify for.  

Universal life just like Whole life covers you for as long as you pay the premium.  There is no set term.  But universal also adds a savings element to the policy that can help you pay the premiums.  

How do you qualify?  There is no good quick answer to this question.  There are many factors that go into calculating your rate and if you qualify for the insurance at all.  The only true-ism here is that the younger and healthier you are when you buy, the better rates and conditions you will get.  You can cover young children for very little money.  Buying coverage when you are over 65 years of age is expensive and your choices are very limited.  Sitting down with us to talk about your coverage needs and qualifications is the only sure way to get sound answers.

 

 

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