Why is it important to buy life insurance?
Life insurance isn't for the people who die. It's for the people who live.
If you have people who depend on you for income---a spouse, young children or teenagers, a disabled adult or elderly parents, life insurance is part of a sound financial plan.
Your life insurance plan can provide immediate cash to pay off debts, funeral expenses or death taxes. More importantly, it can cover major daily living expenses by replacing lost income. It can help pay for your children's education costs.
What are the top insurance myths?
• You should buy the most insurance you can afford.
Not true! Any reputable insurance company will recommend an amount of coverage based on your specific financial needs, like your mortgage, tuition and daily living expenses. What you can afford has nothing to do with what you need!
• If I die during the first two years, the insurance company won't pay.
This is not true! The two-year waiting period only applies to specific situations, like suicide or misrepresentation when you purchase the policy.
• The longer I wait to buy insurance, the more I save.
Actually, the best time to buy life insurance is when you are young and healthy. Later, it can be much more expensive and harder to obtain. It makes far more sense to get life insurance when you are eligible to receive the most favorable rates.
• If I have diabetes, insurance is out of the question.
Well, you might be pleasantly surprised. AHIA works with insurance companies and other health advocates that specialize in helping people who have Type I and Type II diabetes. I will be able to find you a plan that fits your needs.
What types of insurance products are out there?
There are two basic options, term or whole life, with many variations. But for most people, it's an easy decision - Term insurance is typically the most sensible and affordable way to go. This is because Term insurance provides coverage for a specific period of time (or term) –usually 10, 20 or 30 years. At the end of that term, the policy may be renewable for an additional number of years. With term insurance, your payment stays the same for the entire term of the policy, plus you can decrease the coverage - and the cost of the insurance - as you get older.
Whole life, on the other hand, provides life insurance for your entire life. It is much more expensive than term insurance because you're paying for insurance AND for an investment. As an investment, whole life typically doesn't pay nearly as well as other options, like CD's or mutual funds. So, unless you have a lot of extra money, whole life rarely makes sense.
Term insurance covers you for a specific period of time, while whole life covers your---whole life. Term makes sense for most people because at some point, expenses like tuition and mortgage payments are behind you. Why pay for insurance you won't need?
How much life insurance do I need?
The question isn't really how much you need, it's how much money you must replace to ensure your family maintains its standard of living.
To figure that out, start by calculating a rough estimate of your annual family budget. Include such fixed expenses as mortgage or rent, auto payments, child care, insurance needs, utilities, medical and dental bills, and other basics. Then add in future expenses such as private school and college and braces or music lessons for the kids.
Next, estimate your assets and income. If you are married, will your spouse earn any income? Do you have assets that your spouse could liquidate on very short notice? Do you have three or six months of income readily available as an emergency fund? You should consider how much of your income must be replaced over a period of several years to arrive at an understanding of your life insurance amount.
Should I buy life insurance for my husband/wife or children?
In most cases, it makes a lot of sense. Even though the breadwinner is the most likely candidate for life insurance, a stay-at-home parent's contribution to the family's standard of living is also important. In fact, when you add up the costs for daycare, meal preparation, bill paying, running errands and more, it's estimated that the stay-at-home parent contributes the equivalent of $70,000 year to the family's standard of living. Consider: if something happens to the caregiver, could you really comfortably afford daycare and other child raising expenses?
Children can also benefit from life insurance. Insurance rates will almost certainly go up, and by purchasing a universal life policy for your child today, you can help assure that he or she can carry it into adulthood at current lower rates. Your son or daughter may also convert term life coverage into a universal policy down the road and that's especially valuable if a health condition arises.
Why should I buy life insurance if I already have insurance through my employer?
If you lose your job, you will most likely lose your insurance. Most certainly, even if you're still covered by your employer's insurance, you'll lose your favorable rate, which was negotiated for you as part of a group policy.
In any event, your coverage from your employer may simply not be enough. Typically, work-sponsored life insurance is no more than one to three times your annual income. If you add up your mortgage, childcare and other important expenses, you'll quickly discover that your work-sponsored coverage won't get those you leave behind very far. It's virtually always good to supplement your meager work-sponsored policy!
How do beneficiaries collect after someone dies?
Just keep your insurance policy in a safe place where your loved ones will easily find it. It contains a claims form and a phone number for personal guidance. They will need to get a death certificate. This is usually provided by the hospital or the people handling funeral arrangements. The claims form and death certificate are mailed to the insurance company. The insurance company will usually write or call within 10 days to make payment arrangements. Your policy also lists a phone number for a claims representative, who is trained to help with knowledge and courtesy at this sensitive time.
How easy is it to apply and purchase a life insurance policy?
It very easy to apply for life insurance. Here's what you'll need:
Most of it, you already know, like your name, address, place of work, that sort of thing. You'll also need to provide basic medical information, including your doctor's name and a little about your most recent doctor’ visit or hospital treatment.
You will also name your beneficiary who will receive the proceeds of your policy. And just to be totally prepared, have his or her social security number on hand.
If your coverage requires a medical examination, it will be quick and simple, and at a place and time of your convenience. A medical professional will measure your weight, height and blood pressure, and obtain a small blood and urine sample. That's why you may be asked to fast for 6-8 hours prior to the exam. Some policies don't require a medical exam and can be purchased today for instant coverage, so ask your AHIA representative if this is your preference.
If I do need a medical exam, what should I expect?
You will need to provide a blood and urine sample and your blood pressure will be checked. Your height and weight will be measured as well. The entire process normally takes between 15 and 20 minutes. Keep in mind that this information is being gathered because the insurance company is covering a risk and wants to ensure that you get the best rate possible.
What is the difference between term and whole life insurance?
For most people, term insurance is the most sensible and affordable way to go. It provides coverage for a specific period of time (or term) – usually 10 or 20 years. At the end of that term, the policy may be renewable for an additional number of years. With Term insurance your payment stays the same for the term of the policy, and you can decrease the coverage as you get older. The amount you select is paid upon death to the person(s) you choose to be your beneficiary.
Whole life insurance, on the other hand, provides life insurance for your entire life. Cash values can grow over time and can be borrowed. As a result, you're paying not only for insurance, but for the investment portion -- a kind of "forced savings" for later years – which makes it more expensive.
I'm not in the best of health. Can I get life insurance at an affordable rate?
Absolutely! I specialize in finding insurance for almost anyone. For example, if you have high blood pressure, I can negotiate preferred rates for you depending on recent readings. And I've had great success working with those who have been diagnosed with Type I and Type II diabetes.
The bottom line is this: if you are under a doctor's care for health-related issues, and if your condition is under control, you are very likely insurable. Talk to your personal insurance advisor to see how I can help!
What life insurance issues should I be concerned with in a divorce?
Be sure to read your policy carefully. Ask yourself these questions: "Are you covered with a spousal rider? Who owns the policy? Who is the person responsible for paying? Will your policy lapse? What -- if anything -- does your divorce decree specify?" Then talk it over with your personal insurance advisor to see how I can help you during and after your divorce.
What health considerations are important?
The better your health, the more insurance options you are likely to have. The best time to buy life insurance is when you're healthy. For the most part, if your health issue is under control, you will be insurable.
Certain conditions – like some particularly onerous cancers - may create problems for you. But before you determine that for yourself, speak to your personal insurance advisor. You may be pleasantly surprised!
What happens at the end of my term policy?
Your term policy is most likely renewable to age 95. And you can usually convert it to a whole or universal policy – which covers you for life – before age 70.
Your needs are constantly changing, so make sure you speak with your personal insurance advisor to make sure you are covered and your family is protected
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