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In This Article I’m Going To Talk About The Process Of Getting Life Insurance Coverage On Your Family
Either you’re looking for coverage on yourself or you’re looking at coverage together with your spouse and you’re interested in possibly insuring other dependents in your family, such as your children. If this is the case, you’ve found the right article.
I’m going to describe a five step process you can utilize to get the best family life insurance available. I will also cover things to avoid and consider during the application process.
Here’s An Overview Of Today’s Topics:
- Define Your Life Insurance Goals
- Define Your Budget
- Understand Different Life Insurance Policy Types And What Works Best With Your Goals
- Work With A Broker, Not A Captive Agent
- Apply And Await Results
1. Define your life insurance goals
It’s important to take time to consider the real reason why it’s important for your family to have life insurance to begin with.
Sometimes when we’ve been pressed by family members from an early age to get life insurance, it’s important to take the time to think through why we need life insurance and what use this life insurance would have upon our passing.
Let me give you a few things to consider as someone who has life insurance on my family and believes coverage is important.
The biggest reason why I purchased life insurance to protect my family is because if I pass away, my family loses its source of future income earnings. I would not want my wife and children to change their lifestyle dramatically or potentially struggle financially.
Life insurance essentially takes my place when I pass away by paying a lump sum benefit to help with financial concerns. Whether you’re a one income earning family or two income earning family, if you lose one of those incomes or both, it’s going to have a great effect upon your family.
Purchasing an insurance plan can protect your income, allowing your family to stay in your home and maintain the same lifestyle they are used to without experiencing the financial loss that often comes with the unexpected loss of a loved one.
Another reason that I have life insurance in place is to pay off any sort of debts that I have, such as a mortgage or business loans.
Regardless of what your debts are, life insurance does a great job of eliminating those debts so the people you leave behind, whether kids, spouse, or other family members will not have the burden of paying those debts out of pocket.
One important aspect that you need to consider as part of the process of buying life insurance is to figure out how you’re going to prepare for retirement.
If you die earlier than expected and you haven’t adequately saved for your retirement, you’re putting your family in a position where they’ll have to subsist on less.
As your spouse approaches the retirement years, a life insurance plan can self fund the savings you otherwise would have saved and allow them to be in a position to retire much more comfortably than if the life insurance plan wasn’t there.
I hope these ideas for life insurance coverage are helpful in giving you a better idea of what life insurance can do for you. These are all great reasons to get coverage, especially if you have a spouse and kids.
2. Define your budget
This may be a surprise coming from a life insurance salesperson, but I think it’s really important to lead first with what you can easily afford.
I’ve been in the life insurance business since 2011 and most of the people I deal with have a tight budget. Unfortunately a lot of these people get taken advantage of by slick sounding, high pressure life insurance salesmen that push their clients into premiums and coverage amounts they like but are just too expensive for their budget.
More often than not they have to drop the coverage in less than a year. Imagine the impact of paying a premium of $100 a month for 12 months and then dropping coverage. You’ve sunk $1,200 into something that has absolutely no benefit to you. I think that’s a travesty and a waste.
I would have much rather recommended something that was half the price that you could keep making payments on than you drop coverage and God forbid, you died without something on the books.
For me, budget is a huge factor. You need to determine what you’re comfortable with. Is it $25 a month? Or maybe $50 or $100 a month.
It doesn’t matter to me personally as far as what amount you choose, it’s just picking one that you know you can comfortably afford because the only policy worth having is the one that’s there when you pass away, for your family’s sake.
3. Understand different life insurance policy types and what works best with your goals
Now that you have an idea of what you want to accomplish, let’s talk about the different kinds of life insurance coverage available. There are a lot of different plans, but life insurance generally boils down to two different kinds of product – term insurance and permanent insurance.
Term Life Insurance
Term life insurance is the most popular type of life insurance product on the market. Generally 80 to 90 percent of the population that buy insurance, buy term life insurance. Term Life insurance is the cheapest form of life insurance.
It is temporary in nature in that it covers for a 10, 20, or 30 year period of time in which the premium remains the same. Once you outlive the term length of time the plan usually cancels or the price goes up to the point of being unsustainable.
Why pick a plan like this? Because usually it’s 5 to 10 times less expensive than what’s commonly known as a permanent life insurance plan. Plus it’s more useful to use in temporary obligation circumstances such as funding retirement, replacing your income or paying off debt, which are all temporary things that hopefully, if you’re following good financial advice, you’ll ultimately pay off and not have to worry about later in retirement.
For most individuals, the odds are pretty high that you’re going to pick a term life insurance plan.
Term Life Insurance Coverage – 10 Year Term – $100,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $250,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $500,000 in Coverage
Term Life Insurance Coverage – 10 year Term – $1,000,000 in Coverage
Permanent Life Insurance
The second option is a permanent life insurance plan, which differ from term insurance in that it offers permanent protection and generally lasts for the life of the person insured.
Although there are some exceptions, the rates never increase during the life of the plan. The coverage never cancels due to age or health and most of the time you’re fully protected from the first day.
The biggest benefit to these plans is that you cannot outlive them. If you outlive the 20 year term plan, you may still have a need for life insurance. Whereas with a permanent plan, you can’t outlive it, so you have peace of mind knowing you have coverage no matter what.
The biggest drawback to permanent life insurance plans is that these plans generally don’t provide nearly as much coverage per dollar as people really need. The cost to get $10,000 to $15,000 of permanent life insurance is equivalent to what you could get with a 20 or 30 year term plan for $100,000. And most people need that amount of coverage.
As much as I liked the benefits of permanent plans, I find that most families have a restricted budget and decide that the term insurance plan, despite some of its deficiencies, is a better choice overall.
Rates For $10,000 In Burial Insurance
Rates For $25,000 In Burial Insurance
$150,000 Whole Life Insurance, Life Pay
$250,000 Whole Life Insurance, Life Pay
4. Work with a broker, not a captive agent
It’s important during the process of looking for insurance to not only figure out your financial goals, set a budget, and pick the right kind of policy, but also to work with a broker like Buy Life Insurance for Burial.
Brokers like us are able to shop the major carriers to see which company is going to give you the best package deal. Sometimes you’ll work with agencies like State Farm or MetLife that work with one singular agent or one singular company, which means they can only give you one option for insurance.
While this may not sound bad on the surface, it actually could be if you have unique health problems, are older, or have unique factors such as a risky profession that could cause your premium to skyrocket. Under these circumstances, working with a captive agent could mean you pay significantly more for insurance than you have to.
It’s always best to work with a brokerage like us at Buy Life Insurance for Burial where we can take your particular circumstances, such as particular health history issues, and custom tailor a plan that not only will satisfy your insurance goals, but also meet your budget.
5. Apply and await results
Once you settle on a budget, decide which kind of insurance is best for your situation, and find a broker, all that is left to do is apply and wait for your results.
The application process is fairly simple. Most likely each family member will complete an individual application with the exception of any children. If you do have children, their information will be included with one of the parent’s life insurance plans.
You’ll either do a non-medical exam, which is simply a review of your existing medical records, or a fully underwritten exam, which will include a fully underwritten application and a physical exam to determine your eligibility for life insurance coverage.
I usually recommend exams when a family decides to do a large coverage amount or if an individual has a unique health history or occupational issues that may be otherwise precluded from a non-medical exam.
A lot of it just depends on the amount of coverage that you want and your willingness to undergo an exam. Some people flat out don’t want to do an exam and that’s fine, because there is the non-medical option.
Results for life insurance coverage typically take one to two weeks for a non-medical life insurance application, and typically three to six weeks for medical examination applications. It takes longer with an exam application because an examiner will come to your house to take a blood sample and vitals in addition to pulling medical records.
If you’re interested in getting life insurance on your family and you’d like one of our experts here at Buy Life Insurance for Burial to help, it’s very easy to get in contact with us. Give us a call at 888-626-0439 or shoot me a message and we’ll be happy to help you find a plan that’s right for you. Thank you for visiting. Take care.