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Ready for the most sobering statistic you’ll ever read? There is a 100% chance that you are going to die someday. It’s harsh, but the implication of this statistic is incredibly important: you need to have life insurance in place to be sure your loved ones are cared for when you’re gone.
Think about it for a moment. In the event of your passing -especially if it is unexpected -your loved ones will face major struggles, both in the short-term and long-term.
And no matter how much you wish you could be there to help in those difficult moments, it just won’t be possible.
Other than telling your loved ones how much you love them and care for them here and now, life insurance is the only way for you to give a gift that says “I love you” even after you’ve passed away.
Don’t have life insurance yet? Have you been putting it off? Are you confused about your options or how much life insurance you really need?
In this post, I’m sharing the top 5 things everyone needs to know about life insurance.
Life Insurance Basics
At its most basic level, a life insurance policy is basically a contract that a policyholder has agreed to with an insurance company. The policyholder pays a monthly premium to the policy provider in exchange for the promise of a lump-sum payment to the policyholder’s survivors (called beneficiaries) when the policyholder dies. In all but extreme cases, death benefits are paid tax-free.
Beyond that, life insurance takes on many different forms, including whole life, term life, and universal life. Term life policies cover the insured policyholder for a set number of years (often 20 or 30), while universal and whole life policies remain in force indefinitely, provided premiums are paid. In other words, term life policies expire, while whole and universal life policies do not.
Regardless of the type of life insurance, the purpose of a policy is clear: to provide financially for the survivors of the policyholder.
Life Insurance Isn’t Expensive
Many people neglect properly protecting their families with life insurance because they incorrectly believe that policies are too expensive. The sad reality is that many people are putting their families at risk all because they’re not paying a monthly premium which costs approximately the same as a large pizza.
For example, consider the following sample rate data:
|$500,000, 20-year term life insurance policy||$500,000 whole life insurance policy|
|Men age 30||$246 per year||$5,178 per year|
|Women age 30||$213 per year||$4,688 per year|
In the above scenario, a healthy 30 year-old male can receive a 20 year, $500,000 term life insurance policy for $20.50 per month.
Let’s be honest: if you think you can’t afford $20 per month, you’re lying.
Whole life insurance policies are more costly, which leads to our next point.
Term Life Insurance Provides the Best Benefits for Most People
In all but the rarest of circumstances (think extreme wealth), a term life insurance policy is the best and most affordable way to protect your family.
As we saw above, a modest monthly premium on a term life insurance policy provides assurance that your family will have a financial safety net in the event of your death. Payouts can be used to pay off mortgage balances, cover living expenses for years if not decades, pay for kids’ college, and much more.
And while a whole life or universal life policy can certainly provide the same level of protection, it often comes at an alarmingly-higher premium rate – and it doesn’t provide any appreciable benefits beyond term insurance.
For most people, a term life insurance policy in the amount of 10-15 times annual income on a 20-year level term policy will provide more than adequate coverage. However, individual circumstances vary, so you should always consult with your investment adviser and estate planning attorney.
Your Health Matters – a lot!
While some companies offer life insurance without any medical exam, the way to qualify for the best rates is to demonstrate your overall health through the completion of a medical history survey and medical exam.
Because insurance policy issuers evaluate applicants using rate classes, a full picture of your health history is required to make a decision regarding premium rates. Most companies consider overall health, family medical history, and current lifestyle to evaluate the risk of insuring applicants.
Generally speaking, if your weight and blood panels are within normal healthy ranges and you are a non-smoker, you may qualify for better rates.
It Is Easy to Apply for Life Insurance
Life insurance sounds like a pretty good idea to most people until it becomes time to actually apply and get a policy in place.
Many people are reluctant to spend the time and effort required to apply for life insurance, but the surprising truth is that the process really isn’t too difficult.
For example, I recently decided to see if I qualify for better rates than what I am currently paying on one of my existing term life insurance policies. I spent about 15 minutes on the phone with an agent, scheduled a time for a professional medical examiner to come out to my home for an exam, and I was finished. And thanks to my history of good health and habit of running several times per week, my rates were far better than rates on my previous policies.
If you’re ready to take the next step in protecting your family, I recommend connecting with HealthIQ. You can get the process started quickly online or by calling one of their agents. I recommend starting online for most people. The process only takes a few minutes.
Believe it or not, HealthIQ may be able help you find plans which meet your needs for less than $1 per day, especially if you live an active lifestyle, work as a personal trainer, or maintain a vegan diet. My favorite thing about them is their commitment to working with a variety of carriers and companies to help their clients find the best rates available to them based upon their needs, budget, and health history. They’ll even help you determine your coverage needs if you’re unsure.Check out your options with HealthIQ now.
As we’ve seen, life insurance is an incredibly simple way to protect your loved ones in the event of your untimely death. But it does more: it also provides you, the policyholder, with much-needed peace of mind that your death won’t be a painful financial burden to the people you leave behind.
If you don’t have life insurance in place (or it’s been a while since you’ve reviewed your policies), please don't wait another day. It sounds trite, but a quick phone call or online quote is all it takes to get the ball rolling to provide your family with the financial protection they need and deserve.