What I didn’t want to enter into the equation, however, was a long presentation by an insurance salesman on a topic I didn’t know much about: whole life insurance. But that’s what I got, and it didn’t end well.

Unfortunately, the wrong insurance salesman tried selling whole life insurance to us, and the ordeal was so confusing and full of insurance salesman cliches that it could have been cast for a short video on how not to sell insurance.

We were young and had enough income to buy a condo and consider adding to our family — which sounds like the best time to buy life insurance. If one of us died, having a child, mortgage and other expenses would be too much for the other to pay without insurance.

An insurance salesman knocks on the door…

I thought it was a pretty straightforward scenario, and one that could be solved relatively quickly with an insurance expert. I called an insurance agent, and we set up a time for him to come over and explain policies to my wife and I.

I didn’t know then what I know now about life insurance — that a term policy was much better for our needs than whole life.

When the salesman arrived at our door, his first and only pitch was for whole life insurance. I don’t remember all of the details, but the main thing that stands out is how he kept trying to show us how whole life insurance was an investment we should take advantage of.

What is whole life insurance?

Before getting into the investment pros and cons of a whole life policy, it’s first worth understanding what whole life insurance is.

As the name states, it’s insurance coverage for your whole life. You’re covered until death, when your beneficiary will receive the benefits.

That sounds great until you look at the high costs compared to term life insurance — which covers a certain number of years, such as 20. And since our family was just starting and we wanted to cover our family’s expenses if one of us died during our working lives or while our child was under 18, term life insurance seemed a better fit.

But not to the salesman who was in our dining room. Whole life was what we needed, he said, and was a great investment opportunity that we shouldn’t pass up.

Problems with whole life

After spending an hour explaining how in 30 years or so we could reap the benefits of a whole life policy as an investment, other problems about the policy kept popping up in our minds. Pushing life insurance as an investment was reason enough for us to decline whole life insurance from this guy, but he kept going.

As an investment, if it’s something I didn’t understand, then I saw no reason to buy whole life policies.

He talked about the price of whole life insurance, which I don’t remember the specific numbers, but I do remember it being at least triple what I later found out to be the cost of term life insurance.

Looking at the numbers now, term life insurance is incredibly cheaper than whole life. After a 20-year term policy, I could either drop the coverage, test for a new policy, or pay more to continue the same policy.

What term life insurance isn’t

Term life insurance is meant to insure you for a specified amount of time. Since your major earning years are when this is needed the most, a term policy of 20-30 years is a smart idea.

A whole life policy covers you for your entire life, and your heirs will get the face value of the policy when you die. Any savings that you’ve built up in the policy but haven’t used goes back to the insurance company when you die.

A term life insurance policy doesn’t have a savings account. That financial move is left to you to do on your own. This is the key part that kept bugging me during the insurance agent’s spiel to us in our home.

Why would I use a whole life insurance policy as an investment when I could take the difference in the price of the premiums between whole life and term life policies and invest it myself?

That’s the kicker that got us to get the guy out the door.

To learn more about whole life insurance, the Whole Life Rebellion starts May 31 as a way to educate consumers about the risks of investing in whole life insurance. 

How a Whole Life Insurance Salesman Confused Me Into Not Buying is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The answer is yes and you might be surprised at just how many people still need to have life insurance over age 60.

We’ll explain some of the main issues that might cause you some concern including changes to your health, underwriting guidelines for people older than 60 years of age, reasons you might need life insurance and what products are available.

Applicants Over 60 with Health Issues

The good news is that for many people, people looking for life insurance over age 60 in this day and age are a lot more health conscious than they used to be.

Additionally, rapid advances in medical technology and pharmacology have come a long way in the successful treatment of both disease and a multitude of health conditions.

Simply put, life insurers have also begun to take notice because it’s not as hard to get approval for an affordable life insurance policy even if you have health issues.

The key point any insurer wants to know in respect to any health issues, and for any age, is whether the condition is under control.

Some insurers are also more lenient for people who want life insurance over age 60 when it comes to height and weight ratios. This is also applicable to slight increases in cholesterol and blood pressure levels. Being older can also get you a break in some instances even if you have health issues as it relates to your family history.

Even though you might be somewhat overweight and have slightly higher cholesterol and blood pressure level increases, there are certain key birthdays where many life insurers will actually give you a break on a number of health issues simply because you turned a year older.

Regardless of your age even if you’re seeking life insurance over age 60, the health issue won’t be too much of a problem if the condition is being well managed. This assumes you don’t have other underlying health or lifestyle conditions such as smoking.

How Underwriters View People Over 60

The main concern for many people who are age 60 or over is whether there will be any changes to how you are tested. To qualify for any standard life insurance policy, you will still be required to take a medical exam.

For people who seeking life insurance over age 60, there will be some additional tests required by some insurers. The types of tests are not very invasive and are simply used to be more thorough.

The additional tests vary from insurer to insurer and also vary depending on your age group.

The main point is that these additional tests, if and when required by the insurer, shouldn’t be a cause for a concern.

You should also keep in mind that independent agents can find you an appropriate insurer if you are concerned about what tests are required.

This varies from insurer to insurer so it’s always best to use an independent agent to find those companies which will cut you a break, which can mean big savings. 

Reasons for Life Insurance Over Age 60

There are still plenty of good reasons why some over age 60 might still have a need for life insurance. Some of these reasons someone seeking life insurance over age 60 might still need life insurance include:

• Pay for estate and inheritance taxes
• Pay for final expenses
• Offset the potential loss of retirement income to a spouse at death
• To cover business insurance needs such as key man life insurance or a business partner
• Pay off debts
• To cover a spouse’s debts in common law states
• To provide a financial legacy to children and/or grandchildren
• To provide funds to your favorite charity

Products Available After Age 6o

You can still buy most life insurance products after age 60 such as Term Insurance and Permanent insurance including Universal Life, Indexed Universal life and Whole Life for example.

However, some term products are not going to be available or will not be available after a certain age.

For example, age 58 is the last year that you will still be able to buy a 30-year term policy as after age 58 there is no life insurer which will offer this product after this age.

Similarly, age 63 will be the last year that you will be able to buy a 25-year term life policy. However, you can still buy shorter terms such as a 20 year or a 15 year term for example.

Where to shop

You should always use the services of an independent agent especially if you are 60 or older. Independent agents can research numerous companies and find not only which ones are the most affordable but also which companies are the most lenient.

This post is written by Chris Huntley, a licensed life insurance agent in 48 states. He is director of marketing at JRC Insurance Group and blogs about life insurance at InsuranceBlogByChris.com

Life Insurance Over Age 60 — Cost and Tips on Approval is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

And, to complicate matters, there are many mortgage life insurance products available that confuse matters even further.

It’s important to buy some form of life insurance to cover your mortgage because if you don’t, your surviving family members may not be able to pay for the mortgage and the lender could foreclose on the home.

Most lenders generally want the mortgage amount paid off in full when the principal signatory passes away. The lender may allow the survivor to reapply for a new mortgage afterwards, but each lender has their own policies which vary.

Let’s clear up the confusion so you understand your choices.

What is Mortgage Protection Insurance (MPI)?

Mortgage Protection Insurance, also known as Mortgage Protection Life Insurance, is a product offered through lenders indirectly through a life insurance company, or is sold directly by a life insurance company.

There are variations of these products available. Some products are similar to a decreasing term life insurance policy, while others are a level term type of policy.

Some of the policies available will pay the death benefits as a lump sum while others will pay out death benefits as an annuity to cover the mortgage payments over time. Policies which pay out death benefits as a lump are more expensive than those which pay out as an annuity.

There are also variations of these products which contain attached riders which will also provide coverage for accident and sickness such as if you can no longer work, or to cover the life insurance premiums so coverage will continue. Needless to say, this additional coverage is convenient but is also more expensive.

Also, some policies will make the lender the beneficiary while others will allow you, as the policy holder, to name your own beneficiary. The advantage in the latter is that it allows your beneficiary to use the funds in any manner they choose.

What Type of Mortgage Life Insurance to Buy?

It depends on your situation. If you are young and healthy, you might be better off either buying a level term policy on its own by using an independent life insurance agent because they can find you the best rates. Your beneficiaries can use the payout to either pay the mortgage off and/or use the outstanding balance anyway they need.

You could also opt for a decreasing term policy where the amount of death benefits diminishes over set time increments.

Or, you could opt for a more specific MPI product which offers additional protection for accident and sickness or cover your premiums if you can’t work.  Keep in mind that these types of policies that offer this more comprehensive form of coverage are provided by life insurance riders and that this additional coverage will cost more.

If you are elderly and/or have health issues, you might be better off applying for a life insurance product which does not require a medical exam through either the lender or a private life insurer. The cost of life insurance is more but at least you can feel confident that the mortgage will be covered. Otherwise, if you try to buy a policy on your own you could end up being declined.

We recommend that before you decide, consider speaking to an independent life insurance agent. They can discuss your particular situation and needs. The agent can explain what choices you have and then they can perform the comparison shopping for you to find you the best deal.

Otherwise you will be stuck with what a private lender or a private insurer will charge. You can likely find a much better rate by using an independent agent.

Also remember that you can stagger or layer several life insurance policies together so you have several policies to cover different needs. If you have a policy strictly for you mortgage, you can cancel it when the mortgage is paid off and still have the other policies in force.

And finally, you need to keep in mind what you want for your family and what they will need.

Need Help with Mortgage Life Insurance?

Mortgage life insurance can be a complicated issue especially with so many products available. And, everyone has there own particular needs when it comes not only to life insurance but also for life insurance to coverage a mortgage.

To help you decide, we suggest that you contact the independent brokers at JRC Insurance group today because we can provide you with the advice you need to help you make that crucial decision. 

This post is written by Chris Huntley, a licensed life insurance agent in 48 states. He is director of marketing at JRC Insurance Groups and blogs about life insurance at InsuranceBlogByChris.com.

Life Insurance to Cover a Mortgage is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

“What type of life insurance is available?”

“Which is the best life insurance to buy?”

The first question is easy to answer, so let’s look at all the available types of  life insurance.

Types of Life Insurance

Life insurance basically comes in two types:

• Term Life Insurance
• Permanent Life Insurance

Term Life Insurance

Many people are familiar with term insurance but don’t realize that it comes in many formats with different names. So, let’s look at these types of life insurance in more detail.

Term life insurance is the most basic form of policy available and also the most affordable as it covers you for death benefits only. Although term provides coverage for life, you buy it in periods of time known as terms such as for 10, 20, 30 years. It can also be bought for an age specific time such as age 65.

You can also buy specialty term products such as a 1 year term renewable or a 5 year term which is ideal for business or SSL loans.

Basic Term Life Insurance Policies

Term insurance comes in three types of policies:

• Level Term – This means that the premiums you pay for a specific death penalty remain the same through the life of the term. This is the most common form of term policy sold today. It’s ideal for many life insurance situations such as income replacement and debt coverage.

• Decreasing Term – This policy sees a periodic reduction in your death benefits at various time increments throughout the term. Your premiums remain the same. This policy is ideal if you need life insurance for a mortgage or see a decreasing need for higher amounts of life insurance down the road.

• Increasing term – This simply means that both your death benefits and premiums increase at various time increments throughout the life of the term. This type of policy is less common but can be ideal for a young family starting out on a tight budget.

Other Specialty Term Policies

You have possibly seen these types of life insurance policies advertised as the following:

• No-Medical Exam Life Insurance

• Guaranteed Issue Life Insurance

• Funeral and Burial /Final Expense Life Insurance

• Graded Death Benefits

The key features of these types of life insurance policies are that they do not require a medical exam and provide coverage for lesser amounts of life insurance. Although convenient to buy, we don’t recommend them simply just for their convenience.

Many of these policies will cover you for life or are age specific such age 85 for example, so make sure you ask about how long they are in force.

These types of life insurance policies cost more and have less coverage because the insurer is taking a much higher risk to cover you because they have less medical information about you.

Some companies also have a graded death benefit waiting period where you must remain alive for a certain period of time such as 2 or 3 years before the policy will pay out benefits to your beneficiaries.

If you are young and healthy, we recommend that you buy a standard term policy with a medical exam because you will save a lot more money.

But, if you have serious health issues, need coverage immediately or only need limited coverage for final expenses, or you are elderly, then one of these types of policies might be your better option.

Permanent Life Insurance

These types of life insurance policies are different than term policies. They provide death benefits just like term but also have an additional feature as they also provide a cash value accumulation feature which grows throughout the life of the policy.

Most policies guarantee a minimum amount of interest so you might not gain as much during years when the market is prosperous, but you also don’t lose as much when the market tanks.

Another feature is that these types of life insurance policies cover you for your entire life and don’t have to be renewed.

The final feature which they showcase is that you can also borrow against the cash value and have the option to either repay the loan or chose not to do so but simply choose to opt for your death benefits to be reduced instead.

Because of the cash value accumulation feature, these types of life insurance policies tend to considerably more expensive than term life insurance policies because your premiums go towards three separate areas:

• Death benefits
• Cash Value Accumulation
• Administration Costs

There are two basic types of permanent policies which are sold in variety of hybrid formats by different insurers, but the two basic types include:

• Whole Life
• Universal Life

Whole life is somewhat more rigid as premiums and death benefits remain the same. Also, the insurer chooses where and how the cash value accumulation portion is invested.

Whole life policies are offered as “Participating Whole Life” which does offer you an option about the investment portion, and “Non Participating Whole Life” which does not offer any options.

Whole life policies are best used by those who aren’t comfortable in managing their money and prefer others to do so on their behalf.

Universal life insurance is similar to whole life but is more flexible as you can buy policies which allow you to alter your death benefits and your premiums during the life of the policy. They also allow you to choose which investment vehicle the insurer uses to invest the cash value accumulation portion.

Some of the hybrid varieties of these types of life insurance policies which you might see advertised include:

• Indexed Universal Life
• Variable Universal Life (Must be sold by a licensed securities agent only)

Most permanent policies are best purchased by those who are high income earners, or have a significant estate, or where you have maxed out your 401(k) and other tax breaks.

Which Life Insurance Policy is Best

There’s no easy answer for this because the needs for each person and family is different.

Before you decide among the types of life insurance, we highly recommend that you take the time to learn more by speaking to an independent agent such as those here at JRC Insurance Group because we can help you decide and explain what you need to know.

This post is written by Chris Huntley, a licensed life insurance agent in 48 states. He is director of marketing at JRC Insurance Group and blogs about life insurance at InsuranceBlogByChris.com.

Types of Life Insurance — Which is Best? is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Everyone wants to prepare for the worst possible situation to protect their families and buying the right life insurance policy provides this protection.

But how do you know which type of policy to buy?

Many agents want to pitch whole life insurance, as it provides lifetime coverage, but then other experts like Suze Orman and Dave Ramsey argue to never buy whole life.

While term vs. whole life insurance is a hot debate, there are some instances when you should always buy term. Let’s review them quickly so you never make the mistake of buying whole life insurance when term is the right choice.

When Term is Better than Whole Life

There are an abundance of reasons when it is much better to buy term than whole life. Term life is not only much cheaper to buy, it can also be used to fill in a lot of short term life insurance gaps so your loved ones won’t be left financially exposed.

Here are some of the many scenarios when term life insurance can be the ideal solution:

1. Income Replacement – When you only want life insurance to replace your income were you to die unexpectedly, then term insurance will suit your needs perfectly. Most people simply elect the term period that most closely lines up with their projected retirement age.

2. Only Need Insurance for a Specific Time – If you just need a policy for a short period of time or a specific longer period of time, ranging anywhere from a 1 year renewable term, or coverage for 30 years or even up to a specific age such as age 65, term can be used for almost any need. 

3. Business Loans – Almost any business loan you obtain needs to be life insured and you can get custom term products to cover the period you need for any business loan.

4. Cover your Mortgage – Term life insurance is ideal for mortgages. You can choose between a level term policy so any proceeds above and beyond the mortgage  payout goes to your family, or choose a decreasing term policy where the coverage diminishes over set periods of time.  Note: the maximum age you can purchase a 30 year term life insurance policy is 58 years old.

5. Children’s Tuition – If you have co-signed a tuition loan for your children or simply want to ensure that they will have the tuition money available down the road then a term policy can address these needs.

6. Buy Sell Agreement – When you enter into a business partnership, you will want the parameters of the partnership covered by appropriate yet affordable life insurance.

7. New Children – You may have just had your first child, and if you want coverage quickly and a policy that is affordable to financially protect your new offspring, a term policy is the way to go.

8. Recently Married – If you just married then you will want to get a policy to financially protect your partner. Also, in common law states, just keep in mind that when you marry someone, you also become liable for your partner’s debts so you want to financially protect yourself.

9. Key Employees – If you have very important employees that are vital to your business success and continued prosperity, you will want to get a term life insurance policy so your business can continue to operate.

10. Sole Proprietors – If you are self employed, you will likely be wracking up business debts and have business obligations that continue even after you die, you will want life insurance so your family members can properly dissolve your company and not be financially burdened.

11. Supplement Work Life Insurance – You may have purchased life insurance through your employer, but you will want to supplement this coverage with a separate policy. The reason is because the policy you buy through an employer is only good as long as you are still employed with them.   

12. Funeral and Burial Costs – Funerals in the U.S. are expensive and if you want to ensure that your surviving family members don’t have to pick up the bill, a term policy is ideal to cover these costs.

13. Locking in a Premium When Younger – Term insurance is especially cheap when you are young. Since you are going to need it sometime you should buy a policy when you are young as you can save you a lot of money because the cost of insurance increases as you get older.

14. Pay Estate Taxes and Create Estate Liquidity – When settling an estate you could be overwhelmed with estate taxes. Having a separate term insurance policy which can be paid as a lump sum can alleviate that problem and provide other badly needed assets.

15. Charitable Donations – You might want to leave some money to your favorite charities and a term policy would be the ideal way to achieve this objective.

Keep in mind for numbers 12, 14 and 15, many advisors would recommend lifetime coverage.  However, Dave Ramsey would argue to buy term and invest the difference, and you’ll save up just as much to be able to achieve your financial goals as what the whole life insurance would pay out.  If you’re absolutely dead set on permanent coverage, you might consider guaranteed universal life insurance instead.

This post is written by Chris Huntley, a licensed life insurance agent in 48 states. He is director of marketing at JRC Insurance Group and blogs about life insurance at InsuranceBlogByChris.com.

15 Instances to Buy Term Instead of Whole Life Insurance is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The two most common questions people ask me as a life insurance agent are:

“How much does term life insurance cost?” and,

“How can I save money on a term life policy?”

I have the answers to both questions, including some convenient sample term life insurance quotes, and the top five ways you can save money on term life insurance.

How Insurers Rate You for Term Life Insurance

All life insurers use underwriters to evaluate and rate you for a premium. The first thing you need to know is that not all insurers are the same.

Insurance companies can vary significantly in what they will charge you.

Why?

Well, it’s simple really. Some companies are much more lenient than other companies when it comes to various health issues such as how you are rated for diabetes, for example.

There are a multiple number of factors that life insurers take into account when deciding how you are rated and how much they will charge you for a premium. Let’s remove the mystery and consider the most important rating factors used by a life insurance underwriter.

What affects the cost of your term life insurance policy? The main rating factors include:

• Your age – Insurance becomes increasingly more expensive as you age.
• Gender – Women have a longer life expectancy than men and are charged less.
• Health – The healthier you are — the cheaper the cost of insurance.
• Height and Weight – Obesity has many inherent health risks so shedding pounds helps.
• Smoking – Speaks for itself.
• Occupation and Hobbies – High risk occupations or hobbies can put you at more of a risk.
• Family History – Genetics can have a significant affect in passing along undesirable health issues or lifestyle habits.

Sample Term Life Insurance Quotes

If you are wondering how much term life insurance costs, here a few sample quotes for both men and women. The sample is for a 20 year term policy for a $250,000 policy and for a person who would receive a “Preferred – Non Smoker” Rating.

MALES                                             FEMALES

(Disclaimer – Quotes are good as Feb. 7, 2015)

5 Ways to Save on Term Life Insurance

Here are five ways you save a ton of money when buying term life insurance:

Tip 1. Layering or Staggering Multiple Policies

Many people tend to think they should go out and buy one large policy for a long term such as 30 years for example. But if you really analyze your overall life insurance needs, you might not need all that coverage for such a long time.

Here’s a simple example:

Suppose you want a policy to cover income replacement, your mortgage, and your children’s college tuition. You go out and buy a term policy for $500,000 for 30 years.

You don’t really need to do that. Consider buying 3 separate policies instead.

You could get a 30 year term policy at $250,000 to cover your income replacement, a 15 or 20 year $150,000 policy to cover your mortgage, and a third policy for a 10 year term for $100,000 to cover you children’s tuition.

By splitting up some of the coverage into shorter terms, you’ll pay less than covering the entire $500K for 30 years.

The latter two policies you can simply cancel whenever your mortgage is paid or your children graduate. Either way you save money.

Tip 2. Choose an Annuity Payment Over Lump Sum

Just about every life insurer advertises that you will receive a lump sum when they pay on a claim. What they don’t tell you is that your beneficiary can receive the life insurance proceeds as an annuity instead. This is not offered by every carrier.

What does an annuity payment mean?

It simply means that your beneficiary will receive the life insurance payment either as a monthly payment or as a set amount over a number of years.

Choosing to take the payout as an annuity on a term policy is cheaper than buying a policy that pays the proceeds as a single lump sum.

Tip 3. Save on How Much Life Insurance you Buy

This is something many people don’t know about. Many insurers can offer you a savings for specific amounts of insurance. You might you only want a policy to cover you for $175,000, for example. But, the insurer may very likely give you a “price break” if you opt for $200,000 instead.

The reason is that most insurers are very competitive for set amounts such as $200,000 (applies to only a very few carriers), and especially for $250,000, $500,000 and $750,000.

If you think you need some other amount, it might end up costing you more as opposed to changing your coverage for one of these highly competitive “sweet spots.”

Tip 4. Buy a “Specialty” Shorter Term Policy

Ask most agents for a 1 year renewable policy, and they may look at you like you have a third head.

They’ll probably try to sell you 10 year term instead, promising that in the long run, it will be cheaper.   

The thing is, sometimes a person might only want a term life insurance policy for a specific reason and only for a very short time. One example might be that you have just divorced from a spouse and only want coverage until your youngest child turns 18.

Another reason could be that you need a short term to cover a business loan or SSL loan, and intend to have it paid in just a few years.

You might have the idea that the shortest term you can get is a 10 year term and that’s all you can choose. Not so, because you can also get “specialty” term life insurance products such as a1 year renewable term, or even a 5 year term policy.

Tip 5. Always Use an Independent Agent To Buy Term Insurance

Many people think all life insurance agents are the same. That’s not true because there are 2 types of life insurance agents. The first is a “captive” agent and these agents only sell for one company and can’t apply to competitors.

An “independent” agent can access dozens of different companies and find not the only the most suitable term policy for your situation but also the at the most affordable rates. This is especially true if you have a health issue, or if you smoke.

Need affordable term life insurance now? 

Get an instant quote in less than 60 seconds by clicking below.

Cost of Term Life Insurance? PLUS — 5 Cost Saving Tips is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.