WHEN BUYING LIFE INSURANCE, AVOID COSTLY MISTAKES

When considering Life insurance, many consumers believe term insurance is the best option. However, this assumption is not always accurate. It is true that term Life insurance, which covers you for a specified amount of time, such as 10, 20 or 30 years, is almost always less expensive than other forms of permanent insurance. The reason is that term insurance only pays out when you die (that is, if you die while the policy is in force); whereas, permanent insurance provides coverage for your entire life, assuming premiums are paid when due, and may also include a cash value component. To make the best decision, it is crucial that you understand just what you’re buying when you shop for term Life insurance. Even an inexpensive policy, if not designed to meet your particular financial needs, can result in money down the drain. Below are five of the most common, and costly, mistakes consumers make when buying Life insurance.

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1. Selecting term insurance based solely on the price tag. Shopping for Life insurance only by comparing premiums is asking for trouble. You should compare company ratings to determine financial strength and policy features, such as convertibility options. While the policy’s premium should be considered, ensuring that your policy matches your financial needs is more important.

2. Believing that term insurance is permanent. That’s why it’s called “term” insurance -- because you buy it for a specified period of time, most commonly 20 years. This is fine for satisfying temporary needs such as insuring yourself until your mortgage is paid off, or funding your children’s college expenses in the event of your premature death.

A 20-year level-term insurance policy you bought when you were 30 would expire when you’re only 50. At that point, you may still need to carry insurance, but your age and health conditions might make it impossible or very expensive to do so. If your policy has a convertibility option you may be able to get coverage, but it may be cost prohibitive.

3. Buying from an unstable insurance company. Don’t be afraid to ask about an insurance company’s ratings. You can also look for an insurer’s Standard & Poor’s, Moody’s or A.M. Best ratings on the Internet. There are many insurance carriers with high financial ratings (A+ or better) so you shouldn’t have to purchase insurance from a lower rated company. However, keep in mind that ratings can and will change, so ratings should not be the only consideration.

4. Basing your insurance coverage needs on a pre-determined formula. You may have heard that a good rule of thumb is to buy Life insurance coverage equal to 10 times your annual salary or 10 times your beneficiary’s annual financial need. The idea is that if your surviving beneficiary invests the Life insurance proceeds in the stock market (getting an average 10% annual return), they’ll have a steady income stream and never need to tap the investment principal. Although this formula isn’t a bad place to start, everyone has different needs, so don’t assume that 10 times your salary is what you need to carry in Life insurance. The best advice here is to sit down with a knowledgeable agent that will take the time to learn about your needs.

5. Failing to revisit your policy on a regular basis. Is your former spouse still the beneficiary of your Life insurance policy? Did you buy term insurance to cover you while you pay off your mortgage? If you refinanced during the latest rate drop and restarted the clock on your loan, you might also need to update your insurance term. Life definitely has a way of throwing changes your way. Just make certain your Life insurance changes along with you.

The bottom line is that it all comes down to doing your homework. Whatever your Life insurance needs might be, we can help you evaluate the best options for you to protect your family’s financial future.

PROTECT YOUR STANDARD OF LIVING WITH DISABILITY INSURANCE

Almost everyone needs Disability insurance. Think about it. Your capacity to earn a living is crucial. Your income makes it possible to buy food, make mortgage payments, provide for your children, take a vacation, and countless other things. Many faithfully pay premiums for car, life, homeowner’s insurance, and perhaps even a pet’s medical insurance, but they neglect this extremely important protection, Disability insurance.

There are few things as disruptive to a family’s happiness as having a parent, or maybe both, lose his/her income due to accident or illness. When income is drastically reduced, it creates stress and unmet needs and expectations. It often creates feelings of guilt in a parent. Life is hard without a reliable source of income.

A LIFE Foundation study states that 70% of working Americans could not be without income for more than one month without serious financial difficulty. Surprisingly, the same study states that one of every four Americans couldn’t last a week if they were seriously injured and unable to work. Clearly, the answer to the question, “Does almost everyone need Disability insurance?” is a resounding “Yes!”

It is important for an individual, and especially important for a family, to have a financial plan. Disability insurance should be one of the foundation stones of everyone’s financial plan, because it protects such an important asset – your income.

Other statistics need to be considered. The Senate Finance Committee states that 70% of people between the ages of 35 and 65 will become disabled for three months or longer and that 90% of injuries will occur away from work.

After you make the decision to purchase Disability insurance, there are still important questions to be answered and decisions to be made. “How large a benefit do I need; how much will it cost to purchase a plan with that level of protection?” “Does my spouse need this kind of policy even if he/she doesn’t work or has a small income?” “How long is the waiting period before I start receiving checks?” “Does my employer offer a disability plan that I am not aware of?” “Will I need this kind of insurance after I reach age 65?” All these and many other questions need to be taken to a capable, experienced insurance agent who is a specialist in this type of insurance. This is an important decision with a great number of complicated considerations, such as, “Is the plan guaranteed to be renewable?”, “What is the maximum benefit period?”, and “Which occupation class does my job fall into?”

Once the decision is made and the policy is purchased and in effect, you can breathe a sigh of relief. You have done what is necessary to protect your happiness with Disability insurance. More importantly, you have protected your family by providing for them if your ability to work is interrupted.

PONDER THE TOP TEN REASONS TO PURCHASE LIFE INSURANCE

We hear the stories every day. People dying suddenly from heart attacks or freak car accidents. That makes us think, what if that happened to me? Consider these 10 reasons for owning Life insurance:

1. Debts - What happens to your debts if you die right now? Existing bills, medical and funeral costs. It’s a debtor Mount Everest on which you strand your family without Life insurance. Who covers the expenses you have amassed already and those you leave behind?
2. Your family may lose their home - Will they face foreclosure? Be forced to sell? They’ve just lost you now they may lose their home, too. Who will be there to pay the mortgage when you can’t be?
3. Family lifestyle - Most couples in this day and age must both work to sustain their families. Think of the vacations and Christmas mornings your income provides. =
4. Income for necessities - What about school for your children? Do you envision them going on to college? Who will pay when you’re gone?
5. Your spouse’s sleepless nights - They already have to deal with an empty bed. How many sleepless nights will there be for him/her? Life insurance assures peace of mind
6. The legalities - There may well be taxes and legal and probate costs to cover. Life insurance can leave tax-free money to your beneficiary to cover such expenses.
7. Quality care for your kids - What about the expenses that health insurance doesn’t cover? Will they go to the better doctors? Does your son depend upon asthma medication? Does your daughter need braces? Will they one day? If so, who pays for that without you?
8. Your extended family - With uncertain times, with retirement benefits vanishing, who will care for your parents as they are too old to care for themselves? Will you be there for them as they were there for you?
9. The Unexpected - A young mother killed in a car crash. Six months later, her husband dies of a heart attack. They left five minor children. You may think “my spouse will take care of them” but what if he/she can’t?
10. Pride - How do you want to be remembered? As someone who thought of his family enough to provide for them in your absence?

In closing, are you even eligible for Life insurance? At rates you can afford? As we age, our health issues become paramount. Tomorrow you will be older than you are today. Tomorrow is promised to no one. The time to think of Life insurance is today.