Do I need Life Insurance?This should be the first question you ask. Life insurance is used to protect you or your family from a financial loss in the event that you die unexpectedly. There can be many types of financial needs at death, including:
- Final expenses, like funeral or cremation costs, lawyer’s fees and taxes
- Paying off any outstanding loans
- An emergency fund to tide your family over through a difficult time
- A fund to cover your children’s education
- A fund to replace your lost income
How much life insurance should I buy?You should buy enough life insurance to cover all of the needs you have identified. Figuring out what your life is worth – or what kind and how much insurance you need, is not that difficult. You can get an idea using our Insurance Need Calculator, or you can call one of our Licensed Insurance Advisors and they will be happy to help you through the process. Once you are done, you will know whether you need permanent insurance or term insurance, or both, and how much of each.
What kind of life insurance is right for me – Permanent Insurance or Term Insurance?There are only two basic types of policies: Permanent Life Insurance and Term Life Insurance. Permanent Life Insurance provides permanent protection – coverage as long as you need it, which means coverage until you die. This type of insurance:
- costs more, which makes sense because as long as you continue to pay premiums, this type of insurance will always pay out a death benefit,
- usually offers a partial refund of premiums if, for some reason, you decide to cancel your policy before you die. This refund is called a “cash value”.
- often offers a variety of premium payment options. Some permanent insurance plans are payable for as long as they are in force (sometimes called Whole Life insurance), while other plans allow you to pay a larger premium for a shorter period of time, such as 20 years.
- may offer a variety of additional benefits, either at no cost, such as a Terminal Illness Benefit, or for an additional premium, such as an Accidental Death Benefit.
- Costs less than permanent insurance. Usually, the shorter the term period, the lower the premium.
- Only pays a death benefit if you die during the term period. If you live beyond the term period, this plan does not pay a death benefit.
- Does not include any cash value if you cancel it early, and
- Like Permanent Insurance, may offer a variety of additional benefits, either at no cost, or for an additional premium.
What is No Medical & Simplified Issue insurance, and what is the alternative?Insurance companies have different ways of assessing risk, or deciding what policy you qualify for. The two broad approaches are referred to as “traditional insurance” and “No Medical or Simplified Issue Insurance”. :
- Traditional insurance is underwritten or assessed by an insurance company using an application that may be 20 to 40 pages long, with medical tests and doctors reports. It typically takes 4 to 6 weeks to be issued.
This type of insurance tends to be less expensive for healthier applicants who want larger amounts of insurance.
- No Medical & Simplified Issue insurance is typically underwritten with just a few medical questions, no doctors and no tests. It typically takes just a few days to be issued.
This type of insurance tends to be for smaller amounts of insurance and/or applicants who have more health issues. And it is often only available in one plan type – smaller amounts of permanent insurance
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