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Life
Insurance
What is Life Insurance?
Life insurance protects individuals and assists their families in case of the primary income earner's untimely death. It ensures that your family or business can help pay any unpaid debts you may have at the time of your death, protect your family from your loss of income, and help pay for funeral or burial arrangements.
Why Should You Have Life Insurance?
The general rule with life insurance is that the younger and healthier you are, the less you will pay. Life insurance policies are either simplified issues or fully underwritten. Simplified issue policies only require that you answer questions about your health when completing the insurance application. Still, they may cost more since the insurance company has less proof of your health. Fully underwritten policies require a medical exam and lab work, usually resulting in a lower premium if your results show good health.
Factors Affecting Your Life Insurance Premium
While age is typically the most essential factor in calculating your premium rate, other factors may be included, such as:
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Gender: Females typically get lower rates than males because of their longer life expectancy.
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Health Questions: Answers to health questions on the policy application.
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Medical Exam Results: Results from medical exams and lab work (if applicable).
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Family Medical History
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Marital Status
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Location
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Lifestyle: Smoker or nonsmoker, alcohol consumption, risky hobbies like skydiving or scuba diving.
How Much Life Insurance Coverage Do You Need?
To determine how much coverage you may need, consider:
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Immediate Financial Needs: Funeral expenses, rent, mortgage, medical bills, etc.
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Future Financial Expenses: Estimate the money needed to sustain your family for years, such as supporting your children until they’re adults or your spouse until retirement.
Calculating Your Insurance Needs
By breaking it down into two categories—immediate and future expenses—you may find it easier to calculate your insurance needs. Consider your age, marital status, number of dependents, and living expenses. Here are some specific items to keep in mind:
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The income or lifestyle you want to provide for your spouse and/or dependents.
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The amount of debt you have—mortgage, car loans, student loans, etc.
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Other income you receive from sources like rental properties.
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Money you have in assets—savings, mutual funds, stocks, or retirement accounts.
Benefits of Life Insurance
Life insurance can offer financial protection and coverage that provides needed cash in an unforeseen event. It may help you provide funds to:
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Pay off a mortgage
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Pay for final expenses
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Pay for education and childcare costs
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Pay off outstanding debts
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Provide lifetime income to a spouse or child
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Ensure Business “Key Man” Protection
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Fund Business Buy-Out Arrangements
Things to Consider When Choosing Life Insurance
There are many things to consider when getting a life insurance policy that can help protect your family’s future financial needs. We are here to help you understand how life insurance works, the types of coverage available, why you need it, and how to choose the right plan. Think of life insurance as offering peace of mind for your loved ones.
Ready to Buy Life Insurance?
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Determine your needs: Calculate your debt, monthly living expenses, and final expenses. Include any future expenses, such as college tuition. Figure out how long you need replacement income and how much income it would take for your survivors to pay for immediate and future expenses.
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Choose a company with a solid financial rating: Companies with the highest ratings offer more guarantees that they will have the finances to pay your claim. Rating agencies like A.M. Best Company provide financial strength ratings.
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Make an appointment and get a quote from an insurance broker: After narrowing down your search to a specific company, speak with a licensed agent to discuss your needs and compare rates, policy features, and benefits to ensure you’re getting the best deal.
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Make sure you can afford the premium: Double-check how much income you have coming in and how much expenses you have going out to ensure your rate is affordable.
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Read your policy: After being issued a policy, read all the fine print. If you don’t like your policy, state laws generally mandate that you have a certain number of days to cancel it and receive a refund of any premiums you paid.
Types of Life Insurance
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Term Life Insurance: Provides coverage for a specified period, such as 10, 20, or 30 years.
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Whole Life Insurance: Offers lifetime coverage with a cash value component that grows over time.
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Children's Whole Life Insurance: This policy provides lifetime coverage for your child with a guaranteed premium rate. It also builds cash value over time that your child can use later in life. This policy ensures that your child has coverage regardless of future health conditions and locks in a low premium early on.
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Index Universal Life Insurance: Flexible premium payments with a savings component that can accumulate cash value.
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Final Expense Insurance: Designed to cover funeral and burial costs, typically with a smaller death benefit.
Life insurance is an essential tool for protecting your family's financial future. Whether you're looking for basic term coverage or a comprehensive plan with added benefits, Torain White at TWhite Insurance can help you find the right policy. Contact her today to discuss your options and ensure your loved ones are protected.
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