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Life Insurance and Annuities


Life insurance is a contract between an insurance company and an individual, in which the insurance company agrees that if the individual ("the insured") dies during the term of the life insurance policy, the insurance company Will pay the default amount of money. to the beneficiary chosen by the insured upon his death.

Life insurance can be purchased for a predetermined period, usually 5 to 30 years, or permanently.


Reasons to buy life insurance

People buy life insurance for many reasons. The most common reason is to leave some money to your family in case you die, so that you do not end up in financial crisis due to your loss of income. However, there are some other reasons to buy life insurance that you may want to consider:


  1. 1.To cover funeral expenses.
  2. To insure your mortgage instead of buying insurance through the bank
  3. To pay credit debts or other loans so that your estate or family does not get stuck with your debts
  4. To pay property taxes
  5. To protect your spouse's lifestyle, even if you don't have children
  6. To protect your future lifestyle by ensuring a lower life insurance rate while you are younger, healthier and have no problem with a medical exam
  7. To build wealth as part of your financial strategy

Life insurance data that may surprise you

According to a 2016 Life Insurance Property Trends study:


  • 84 percent of Americans think that most people need life insurance
  • 70 percent said they needed life insurance, but 41 percent of Americans did not have it
  • Millennials overestimated the price of a $ 250,000 life insurance policy at 3 or 4 times the actual cost
  • 83 percent of Americans felt they would consider life insurance if it were easier to understand

The data, then, suggests that there are some things about life insurance that are confusing for the average person. We will clarify some misconceptions, explain some basic concepts about life insurance and answer some key questions such as:

   
  • Do you really need life insurance?
  • When should you buy it?
  • What kind of life insurance is best?
  • How do I save money on life insurance?

What Are the Different Types of Life Insurance?

Let's start by walking through the different types of life insurance, and the pros and cons of each:

Term life insurance: Term life insurance is an affordable option that allows you great flexibility with respect to the duration of the policy, as well as the insurance limit. Because it is for a specific period, you can also request a fixed rate that allows you to budget your payments for the given period. Term insurance starts at 5 years and can go up to 30. This is the least expensive option.
Whole life insurance: Whole life insurance is a permanent form of life insurance because it covers it for the end of your life. Unlike the term insurance that expires after the selected number of years for which it was insured. The disadvantage for some people in a lifelong policy is that premiums tend to be higher.
Universal life insurance: Universal life is a type of complete life insurance policy. In the past, the historical performance of universal life made many people cautious due to the investment factor of a portion of the premiums. It can be an interesting option if benefits are reported, such as the ability to borrow money from your life insurance policy.

Conversion of term life insurance to whole life insurance:

If you are not sure what type of policy will work best for you, you should also consider asking if you buy a cheaper and less expensive option, such as a term life insurance policy, if you will have the option of converting it into a lifetime. policy later.

Where can you get life insurance?

You can buy life insurance directly through an insurance company, through a life insurance broker or financial planner, or through group or membership associations. More and more people buy life insurance online or directly through insurance companies. Sometimes this seems like a quick and easy solution, but you may not get the best coverage for the price you are paying. Always check some places or work with a planner or financial broker to get some advice for your circumstance.

4 tips to save money on life insurance

In addition to choosing a term policy, there are ways to save money on your life insurance.

1.Compare your life insurance to find the best rates: Consider using a life insurance broker that can verify many different life insurance companies and policies for you and offer you the various options. Using a broker or financial advisor will also give you the advantage of working with someone who will analyze your needs and find solutions that work for you. Find someone you can trust and enjoy working with who answers all your questions. Life insurance prices are regulated, so do not feel that you need to call many brokers, just deal with the one you like best, you will get the same rates.

2.Buy life insurance when you are younger and healthier. Life insurance prices are based on your age and your health status. You don't know what will come in the future, so if you're healthy now, consider getting a policy where you can pass the medical exam and get the best rate. Be sure to ask about guaranteed level premiums so you can benefit from a constant rate during the term of the policy you choose and have no surprises. If you have health problems, be sure to compare prices, see the first point above about using a broker because some life insurance companies will give you better rates for certain medical conditions, while others will charge more. A financial advisor can help you.

3.Don't smoke:Non-smokers get lower life insurance rates than smokers. If you smoke, consider quitting smoking. Although you can buy a policy as a smoker, if you can quit smoking for a period of 12 months, most life insurers will adjust the rates once they have been smoke free. But don't postpone the purchase of life insurance until you quit smoking, especially if you have it in the plans; Just get your policy and find out what the cost will be once you are smoke free. This can help motivate you in the long term, and your family will be protected while working on it.

4.Ask if there is a better rate to pay your premium annually instead of monthly. Some companies will offer better rates when you pay annually.

Life insurance through your work: is it enough?

According to the 2017 Best Life Rates study, a third of Americans who have life insurance only have a group life policy. Although it is better than nothing, there are some reasons why you should not rely on the life insurance you get through work:


  1. You can lose it when you change jobs
  2. You will have to take a new medical exam if you decide to get a new policy
  3. The limit of your group life insurance through work is limited; For example, it may be only twice your salary (or less). In most cases, this will not be enough to help your family or to cover your long-term financial debts and responsibilities.

Misconceptions about life insurance, discredited

Life insurance is often considered an unnecessary expense or one that is deferred. Here are some things you can think about before deciding that life insurance is not for you at this time.

"People who don't work don't need life insurance"


Even if he does not work, his death would still have financial consequences if he performs care or domestic duties while his partner works. If something happened to you, there may be no loss of income, but there would be a drastic increase in expenses. Childcare and cleaning costs, for example, may be necessary if you suddenly left. If you want your family to maintain your lifestyle and take care of things in a similar way to what you do now, you would have to consider the cost of hiring people to take care of those tasks and allow your partner to continue working and earning income. .

"People without children or spouses do not need life insurance"


If you do not have dependents or children, but plan to have a family later in life, you may want to consider buying life insurance earlier, while you are younger. Life insurance costs are based on a number of factors, which include your age and health status. When you are younger, you will have significantly lower rates than when you finally get married and have that family.

"Life insurance is too expensive"


Waiting to pay off debts before buying life insurance seems like a good idea, but if something happens to him tomorrow, he would leave the debt to his family. Would they be able to cover these debts and compensate for lost income due to their absence?

There are cheap life insurance options that can be purchased for just a few dollars a day. Having a small amount of life insurance can now allow a good safety net for your family.

How long does it take to get life insurance?

In general, the life insurance process involves 3 steps and can usually be completed in 4-6 weeks from the time of completing the application:


  1. Discuss options and then complete a life insurance application
  2. Take the medical exam
  3. Receive the results of the medical examination and subsequent approval, adjustment of the fee or denial of benefits.

Will life insurance be paid immediately after purchase?

Many companies will "keep you covered" for life insurance benefits from the moment you submit the application under the conditions that:


  1. Everything has been declared according to the application.
  2. The medical exam arrives without new information.

Ask your life insurance company about this when deciding to buy the policy and sign the application. Find out if coverage begins immediately or if there is a waiting period. Also, be careful of exclusions in the policy, such as the suicide clause and the dispute period.


Five Insurance mistakes to avoid

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