Despite their simple purpose and straightforward financial structure, life insurance policies may come with an exceedingly complex collection of caveats, riders and coverage exemptions. Life insurance shoppers frustrated by the time-consuming process of vetting individual policies and choosing proper levels of coverage may fail to perform adequate due diligence. In a worst-case scenario, policyholders who fail to catch a key loophole or restriction in their policy may render their beneficiaries unable to collect benefits. (more…)
Traditional medical life insurance policies require a detailed medical history and a medical exam by an insurance company-approved physician. Simplified-issue policies eliminate this step of the application process, but they will still require certain medical information from the applicant. A guaranteed-issue policy will not require any medical information from the applicant. Simplified- and guaranteed-issue policies are generally more expensive to purchase because the insurance company assumes an increased risk of medical problems. (more…)
I get it. You've never thought about life insurance before. I mean c'mon, you don't have kids, and you're not even married so why would you need to spend dough on something as uncool as life insurance? Here are some reasons why you might just want to.
Debt and Student Loans
Like most young people in their 20s or 30s you might have taken out student loans. Chances are your parents or someone else may have co-signed the loan for you. If you can't pay your debt the bank that made the loan will go after the co-signer to repay the loan. If you kick the bucket, chances are you won't be sending in a monthly check from heaven. Life insurance to cover your student debt is a good idea to protect whoever cosigned your loan. Do the right thing and make sure you have life insurance just in case the worst happens.
If you don't have any student loans, you might have daddy's credit card. Hopefully not the black AMEX, but maybe you put some debt on your visa card when you were younger than and not as wise as you are today. Don't leave mommy and daddy with the debt, get some life insurance and don't leave your parents hanging.
If you do die young your family will probably be devastated. The last thing you want them to worry about while they are grieving your death is putting together the money for final expenses, such as burial costs. Having a small policy to cover your final expenses is a really thoughtful way of showing you care about the financial impact on your family.
If you have a favorite charity, temple or church you are affiliated with, having a life insurance policy can be a nice way of leaving them some much needed funds when you are no longer here. That doesn't mean you're have to leave everything
to the charity, but if you have a $100,000 policy, you can leave as much or as little of that to your charity of choice. Maybe you'll look down from heaven and see the giant plaque they made commemorating you because you were just so generous!
Preparing for the Future
You may not die young at all. In fact one day you may become a real adult with a family and responsibilities. You would want to get a life insurance policy today because you can save money by getting a policy when you're young and healthy. As you get older rates go up and you may put on some pounds, or worse develop a health issue and not be able to get a life insurance policy at all. Lock in your insurability while you're young to prepare for the future.
Lastly, most people think that life insurance is expensive. For a few cups of Starbucks a month you can have a life insurance policy. When you are in your 20s and 30s, a policy can be as cheap at $10 or $20 bucks a month and you can even get a policy without having to go through a medical.
So yes, no kids, no wife, and maybe not much money, but getting even a small life insurance policy is the right thing to do. So stop texting and tweeting, and request a quote on our site!
Suze Orman has created 12 steps to wealth. Basically, 12 important financial tips that are essential for a healthy financial life. Her steps include getting out of debt, and savings for your children’s education. The 8th step is “insuring your well being”. In this step Suze says that if anyone is relying on you for income, you should get life insurance.
If you have ever watched an episode of The Suze Orman Show or read one of Suze Orman’s books, you would know that Suze absolutely detests whole and universal life insurance policies. Suze believes that when whole or universal life insurance is looked at as a savings tool instead of just an insurance policy, the money that is contributed to a whole or universal life insurance policy could be earning a better rate of investment return elsewhere.
Suze Orman is a big supporter of term life insurance policies, and she firmly believes that those types of policies are the best ones to have. She insists that term life insurance policies are cheaper than whole and/or universal life insurance policies and that they just make sound financial sense. Suze has also mentioned that many companies or insurance agents try to sell whole life or universal life insurance policies to people just so they can earn more commission money.
Suze recommends that you should get term life insurance and continues to add that most people should get a 20 year term policy. Suze Orman also says that the coverage you should get, should be 20 times your annual income. She gives an example that a 35 year old earning $40,000 per year, should get $800,000 worth of coverage. She also endorses select-quote as the place where you should shop for term insurance.
Suze Orman usually suggests that people who own whole or universal life insurance policies redeem the policies for their cash value and instead purchase good term life insurance policies.
I respect Suze Orman, and I think that she does give some really good advice to people. I also agree with her that term insurance is going to be what most people end up buying because term insurance is very affordable.
However there are a couple of points that I don’t agree with. First, I don’t think that 20 year term insurance is what everyone should be getting. For example a 35 year old might want to consider a 30 year term policy since he/she will likely work until at least age 65, and a 30 year term life policy will cover that 35 year old for his/her entire working life, as opposed to just 20 years. The cost difference is also very little between a 20 and 30 year term policy for a 35 year old.
On the other hand many 50 year old people that I work with choose to get a 10 or 15 year policy. Often they choose this because a 10 or 15 year policy can be significantly cheaper than a 20 year policy when you are at that age, and a 10 or 15 year policy can cover you until retirement. So what I don’t agree with Suze Orman is that a 20 year policy makes sense for everyone – I think it really depends on the person.
I also think that some people like the idea of getting a permanent policy. If you want to know that the premiums you are paying are going to guarantee that you leave something for your spouse and kids, than a Guaranteed Universal Life policy might make sense. Often times I recommend that my clients purchase some term insurance and some permanent insurance. This combination gives them the peace of mind that they will definitely leave something behind, and it also lowers their total cost by blending a combination of term and permanent coverage.
Lastly Suze Orman recommends Select Quote. While Select Quote does offer some of the top life insurance companies, there are a few reasons why I wouldn’t recommend them:
Hi, this is Liran Hirschkorn from ChooseTerm.com; and today I want to talk to
you about Suze Orman and life insurance.
First, I want to say that I respect Suze Orman a lot. I think she gives
people some really great advice. I watch her show myself. Where I don't
agree with here on a couple of things I'm going to point that out to you
today in this video.
What does Suze Orman say about life insurance? Suze Orman recommends that
generally most people should get a 20 year term life insurance policy at 20
times your annual income. What does that mean? That means if you're 30
years old and you make $50,000 a year you should get a million dollar 20
year term life insurance policy.
She also says if you are a 50 year old you should get a 20 year term
policy. She gives the blanket advice most people should get a 20 year term
policy at 20 times their annual income. Where I don't agree is that every
person's situation is different. You want to assess your age. If you are 50
or 60 you might be looking at a 10 or 15 year policy, especially because
it's going to be significantly cheaper than a longer term policy.
If you are 20 or 25 you might want to get a 30 year term policy or you
might even want to get permanent insurance. But, If you are looking at term
you are going to want get maybe a 30 year policy because you are going to
want that to last a long time especially because you are young and it's
very cheap compared to a 20 year policy. You may have very young kids or
you may be planning a family and you want to have a policy that could
protect them until they get out of college.
First, I don't I agree that everybody should have a 20 year term policy. I
also don't agree that everyone should have 20 times their annual income. I
think that results in either people having too much insurance or too little
For example, you want to assess things like, do you have children? Are you
protecting just a spouse or are you protecting a spouse and three kids?
That makes a difference. Do you want to have funds to pay off a mortgage,
to replace your income for five years or for 10 years for 20 years? Does
your spouse work and how much coverage will she need to maintain the same
lifestyle? Do you want to have funds set aside for your children's
education as well as part of a death benefit if something were to happen?
These are all things to consider when deciding the type of coverage that
you want. Obviously, also figuring out what you can afford and figuring out
what the right number is for you. At ChooseTerm.com we work with you
specifically to help you find the right number for you. I don't think
everybody should just get 20 times their annual income or a 20 year term, a
50 year old is very different than a 30 year old.
Suze Orman also recommends SelectQuote. While SelectQuote is a well-
established company, they only work with about 10 life insurance companies.
Now, if you are in great shape, have no health conditions you probably will
get a competitive quote from SelectQuote. However, SelectQuote doesn't work
with every life insurance company so, when it comes to having a specific
health condition what we do is we work with over 30 companies. We know to
match you up specifically with the companies that are going to offer you
the most favorable rates.
For example, if you have diabetes or if you've had any other specific
health condition we can match you up with the right company. At SelectQuote
less likely that's going to happen. We've worked with people that either
have been declined or have gotten much higher quotes after applying with
SelectQuote and then being able to save them money by matching them up with
a different company that's more suitable for them. We work with all the
companies that SelectQuote works with plus at least another 20 other
companies that we can match you up with.
SelectQuote is also a call center so, you are not going to have that
personal relationship that you would have if you worked with an independent
agency. When you call SelectQuote you work with a call center agent. That
person is likely never going to call you again. As far as customer service
goes you'd be working with a different department, you won't be working
with the same agent that sold you the policy and, it's less personal.
At ChooseTerm.com we are an independent life insurance agency. You work
with the founder of the company. When you have an issue before, during or
after the sale you get to work for the founder of the company. It's a much
more personalized touch and approach to working with our clients.
So we agree with Suze Orman on a number of things. Term insurance makes
sense for a lot of people. You can get great rates by shopping the market
and working with an agency that can shop the market for you. But, we don't
necessarily agree with her specific blanket recommendation of one size fits
all, that one thing works for everyone. We also recommend that you work
with an independent agency like ChooseTerm.
Over the last month large insurance companies have settled with several states to pay out millions of dollars owed on life insurance death benefit claims. Basically several states have sued large insurance carriers and AIG, Prudential, Nationwide and several others have agreed to settle claims that they haven’t done all they could to locate beneficiaries who haven’t claimed life insurance death benefits. Going forward insurance companies will be required to check their data against social security records to locate beneficiaries. If they can’t locate beneficiaries, they will hand over the death benefit proceeds to the states’ unclaimed funds division. This is good news for consumers as insurance companies will be required to do more to find beneficiaries and provide them with money that is rightfully theirs.
Here are some things you can do to make sure your life insurance death benefit proceeds can get to
your beneficiaries as quickly as possible:
Some life insurance company applications won’t require you to list a social security number for your life insurance policy’s beneficiaries. Even if the company you apply with doesn’t require it, you should list beneficiary names and social security number. This will make it easier for insurance companies to locate them should they need to find them.
Review all your current life insurance policies. That means if you have individual policies and your policies through your employer. Review that you have beneficiaries selected and social security numbers listed for them. Reviewing your policy every couple of years is a good idea anyway since you might want to make changes to your beneficiary designations anyway.
In addition make sure to update any changes on your policy. For example if you have moved you will want to update your address with the life insurance company. This will insure that you don’t miss a bill from the company and let your policy lapse, and also that your beneficiaries can potentially find mail from the insurance company and discover your policy in case they didn’t know about it.
Keeping your policy in a safe place where others will be able to find it is also important. If at worse case your beneficiaries don’t know a policy exists, at least they will be able to find it if you keep it with other important documents, such as your will, insurance policies, etc. I suggest you keep a fire proof safe in your home, where these important documents should be kept.
While people often don’t want to tell their beneficiaries that they have money coming to them when they pass, it is a good idea to tell your beneficiaries about your life insurance policies. You don’t need to tell them how much life insurance you have if you choose not to, but you should at least tell them you have a policy and let them know which company your life insurance policy is with.
If you follow the tips in this blog post your beneficiaries won’t have a problem collecting on your death benefit proceeds and you can have the peace of mind that they are properly protected and can access the money that you’ve left for them.
How important is all this? Let's just say, you can avoid a big mess.
Life insurance is bought to provide protection, comfort, and money to loved ones in the event of your loss. However instead of leaving loved ones without financial worries, you could leave them frustrated, angry, and in a court of law.
A big mess is exactly what happened to Warren Hillman in a case that went all the way to the United States Supreme Court in the case of Hillman v. Maretta.
Warren Hillman had a group life insurance policy through his employer - he worked for the Federal Government and had a policy through the FEGLI - Federal Employee Group Life Insurance. In 1996 Warren named his wife Judy Maretta as the beneficiary of the policy. Warren and Maretta got divorced in 1998, and he remarried Jacqueline Hillman in 2002. In 2008 Warren passed away unexpectedly without changing the beneficiary on his Federal Employee Group Life Insurance policy. His ex wife, collected the proceeds of the insurance, which totalled over $124,000.
The story however gets more interesting. This happened in the state of Virginia (where there are many Federal Employees). In Virgina there is a law that states that a divorce revokes the beneficiary designation and that an ex-wife is responsible to give the proceeds of the life insurance to a new spouse or the kids of the insured person that passed away.
Jacqueline Hillman sued Marietta in Virginia Circuit Court under Section D of the Virginia statute and initially won the case - that Marietta had to pay her the proceeds of the life insurance. The case then went to the Virginia Supreme Court and the ruling of the lower court was reversed, granting the proceeds to Marietta. The decision was based on the fact that FEGLI was created by Congress under Federal Law and that State law should not override Congress.
The case went all the up to the United States Supreme Court. The Supreme Court ruled that the funds belong to Marietta - the ex wife, because the law congress enacted in regards to FEGLI, preempts a State Law.
We can learn a very valuable lesson from this case. That is - review your life insurance policies annually, and update your beneficiary designations accordingly. Any time you have a life changing event, whether that is getting married, having a child, getting divorced, etc.. you need to review your life insurance policies. If you have life insurance in place and haven’t taken those policies out of the cabinet in a while, its a good idea to pull them out and review them. Review your beneficiaries, take a look at your death benefit, your premiums and if your policy is set to lapse or expire. You may be surprised at what you find, and your family may thank you one day for being responsible with your life insurance policy.
If you Google the words "Term Life Quotes" you will see ads like the image above. Unfortunately advertisers such as Met Life advertise that you can get $250,000 of coverage for as low as $14 a month. While they are not lying, they are misleading many consumers, which is not good. Metlife is a reputable company, and they are one of over thirty high quality life insurance companies that we offer at ChooseTerm.com, however we don't condone their advertising methods.
You can get $250,000 of life insurance for $14 a month, if you are a 30 year old female and in perfect health(read the fine print that comes up for about a second in the video below) however most people aren't 30 year old women or in absolute perfect health. Metlife isn't the only culprit, there are other companies that use the same tactics, however Metlife also makes the same statement that you can get $250,000 of coverage for $14 in their TV commercial that you can see here:
Next time you see this commercial you will know that in reality life insurance will typically cost you more than just $14 per month.
How Do Life Insurance Companies Decide What to Charge You?
Life insurance companies decide how much to charge you for insurance based on several factors:
These are the main criteria insurance companies will look at to determine your health rating.
Life insurance companies can quote you anywhere from 14 different health ratings up to a decline. The first four ratings are generally for people without pre-existing conditions, while the last 10 are considered sub-standard ratings and are used to rate people who might have had or have a pre-existing health condition, or are obese.
The typical 4 ratings that non smokers typically fit into are:
The better the health rating you get, the better the price your policy will be. Smokers have two categories they can fit into, Preferred or Standard Tobacco, and beyond that there are also substandard ratings for smokers with pre-existing conditions, or who are obese.
There is a lot that goes into quoting you properly for life insurance. The last thing you want to happen is that you get a quote from an inexperienced agent that doesn't ask you the right questions, and after the insurance company reviews your medical records and history, they come back with a much higher quote.
After reading this post I hope you are more educated on how life insurance is priced, and that you won't fall for ads that show $14 for life insurance. If you would like instant life insurance quotes compared among the top life insurance companies including metlife insurance quotes online, compare quotes below or contact us.
Author: Liran Hirschkorn
Despite what you might read online, there are no magic formulas to how much life insurance you might need. There are basically two methods of figuring out what works best for you.
The first approach to deciding how much insurance you need does not start with the question of “how much insurance do I need.” This approach asks the question “how much life insurance do I want.” Meaning, if cost was not an issue, what amount of money would you want to leave your family? Are you the type of person who thinks your spouse will probably get remarried and you don’t want to leave too much money, or are you the type to want to leave your family as much as possible. Is it important to you for your family to maintain their current lifestyle, or are you ok with the possibility of them having to downsize the home? If you are the type of person who wants to leave your family as much as possible, and for them to never have to worry about financial issues, then the question you should ask is how much life insurance do I want, and start there.
Another view of life insurance or the more traditional view is how much life insurance do I need? Again, a magic formula doesn’t exist if you choose this approach. The amount you need depends on several factors. How much of your income does the family need?. How much debt do you have? Will the mortgage be paid off in 10 years or 30 years? How many kids do you have? Do you want there to be money for them to go to college included in the death benefit? The amount of insurance you need depends on the answers to these questions. When you speak to us at ChooseTerm, we will help you figure out what number is right for you and your family.
After determining how much life insurance you might need or want, cost of life insurance is considered. Based on how much you want to allocate towards insurance, will help determine the type of policy you should have. Your family situation will also dictate the type of policy you should buy. For example if you have little kids, and you need a large amount of coverage, then getting a substantial 20 or 30 year term policy might be the answer for you. If on the other hand you want insurance that will last your entire life then you can explore permanent coverage, or a combination of term and permanent coverage. The last thing you want to do when allocating a monthly or annual budget for life insurance is over extend yourself. You want to make sure that you purchase a policy you can afford that you won’t stop paying for in the future.
Speaking with an independent agent, like ChooseTerm.com allows you to get advice on which type of insurance is best suited for you and your family and how much you should get. We can help shop the market for the best term rates, as well as options for permanent life insurance coverage. We’re knowledgeable on matching your specific situation and any health conditions you might have with the right life insurance company. You can also use this calculator to help you figure out the right amount of coverage for your family. Then fill out our quote form, or call us to get a quote today.
Author: Liran Hirschkorn