A Real Life Insurance Advisor Offering Real Answers
Here are some candid answers from an experienced life insurance professional who is NOT here to try and sell you something you don’t need while using language you don’t understand! Heaven knows you don’t need more of that.
Q: Why do I need life insurance?
A: The short answer is, you might not need it at all. Our job isn’t to try to sell you something you don’t need, but rather to find out if there is a need in the first place. And if there is, then we move on to see what you could qualify for and how much it would cost.
Q: What if I already have a life insurance policy?
A: If you have a policy but haven’t looked at it recently, you’re in line with the 90+ percent of folks who has something different than they think they have. The last thing you want is to find out your coverage wasn’t what you thought when you go to file a claim. Besides that, there may be new coverage or better pricing you could take advantage of.
Your existing policy may very well be the only coverage you want or need. However, your needs change as you age and it’s a good idea to meet up with your agent once a year or so. In fact, if your agent hasn’t called you recently, you might wonder if you are working the right agent or not.
Q: What’s the difference between term & whole life insurance?
A: When you think of term insurance, think “temporary.” Just like you can take out a mortgage loan for 30 years, you can get life insurance for 10, 20 or even 30 years. It doesn’t usually mean your coverage expires after that time but it does mean you won’t like the price after your term is up. Term is like renting. You’ll never get your premiums back. The good news is this is the least expensive form of life insurance.
Whole life is permanent coverage and never goes away. It also builds a cash value you can draw from, tax free. In fact a popular strategy wealthy people like to use is to leverage properly structured whole life policies to act as their own bank from which they can take loan whenever they like. When purchased at a young age, and with time on your side, a whole life policy can make significant growth due to the compounding interest. Whole life policies are more expensive than term.
Q: How do I know if I’d qualify?
A: The process of qualifying for a life insurance policy is called underwriting. As an agent, one of my primary responsibilities to my clients is that of an underwriter. It doesn’t matter that you have 100 quotes if you don’t qualify for any of them.
So how can you know if you’ll qualify? It takes a 10-minute conversation with someone who knows their way around an application and has access to a solid lineup of carriers to choose from. That’s why it’s in your best interest to work with an independent agent.
Q: Why do I care that you’re an independent agent?
A: An independent agent is not “owned” by any one carrier. He represents you and your best interests and fits you with the carrier who is most likely to make an offer and has the best rates available. A “captive” agent only has access to the products offered by the company he represents, which may or may not be in your best interest.
Here are some carriers that I happen to work with:
Q: What is mortgage protection life insurance?
A: So you’ve purchased or refinanced recently and have a flood of solicitations in your mailbox? And you’re wondering, “is it a scam?” Nope. Mortgage protection (a form of life insurance) used to be offered through the mortgage companies. But it was nothing more than accidental death coverage, much like your credit union offers.
You’re entitled to see your options that are no longer provided at closing. This coverage helps keep your family in the home and the equity in your family. It can also provide you with an extra layer of coverage, called “living benefits.” Mortgage protection insurance is not required through your lender, but oftentimes, it is a good idea to have in place.
Q: What are the living benefits all about?
A: Living benefits are a rider on a term (and some whole) life insurance policies that can give you access to a portion of your death benefit if you become critically, chronically or terminally ill. Traditional life insurance includes only a death benefit and sometimes the terminal illness rider.
My opinion, they’re extremely valuable. Chances are, you’ll use your policy for cancer, heart attack, stroke, disability, etc. before it pays out because you passed away. But are they more difficult to qualify for? Yes. I’m usually about 80-90% accurate on my assessments, so I can tell within about 10 minutes if you’d have decent odds of getting approved.
If you’re still confused, watch this cute little animated video.
Q: Can I get quotes without talking to a human?
A: Of course you can. There is no shortage of quote calculators on the inter-webs. A simple google search will pull up an overwhelming number of options. However, know that a quote is nothing more than a number on a screen, and any calculator can spit one out. If you’re ready to get coverage, what you need is an offer.
A quote means nothing until you go through underwriting to get an offer. This is the part that requires a human. Granted, I’m a very kind human but I would need to ask you some questions to find out which carrier to match you up with. You wouldn’t propose to someone you haven’t met yet, would you? Didn’t think so.
Q: What if I’d like to shop around?
A: Shopping around is a great idea. I encourage it. There are hundreds of life insurance companies across the country eager to provide coverage. But it can be like shopping for gas–it doesn’t make sense to drive across town just to save five cents a gallon.
I strongly recommend getting what you can while you are eligible. Life is so precious and your health can change any day, making you ineligible. Find a good agent (ahem…), get something in place and then feel free to continue shopping around. That way at least you’re covered. And if you qualify for something better, you’re free to replace it.