Frequently Asked Questions

What is life insurance?

Life insurance is a contract between an individual and an insurance company, where the individual pays regular premiums and in return, the insurance company provides a lump sum payment, known as the death benefit, to the beneficiaries of the policy upon the death of the insured individual. The purpose of life insurance is to provide financial protection for the policyholder's dependents in the event of their death.

Why is life insurance important?

Life insurance provides financial protection to your loved ones in the event of your death. It helps ensure that they can maintain their standard of living, pay off debt and cover end-of-life expenses, without having to worry about the financial burden. It also offers peace of mind knowing that your family will be taken care of in the future, even if you are no longer there.

Who should have life insurance?

Life insurance is a personal decision and is appropriate for anyone who has dependents who rely on their income, such as a spouse, children, or other relatives. It is also beneficial for individuals with significant debts, such as a mortgage, or those who want to ensure their final expenses, such as funeral costs, are covered. Ultimately, anyone who wants to provide financial security for their loved ones in the event of their unexpected death may consider getting life insurance.

Should I have life insurance policies on my kids?

Life insurance is a form of financial protection that provides a death benefit to beneficiaries in the event of the policyholder's death. As difficult as it is imagining losing a child, having life insurance policies on children is not that uncommon. Children typically do not have financial responsibilities or dependents, but having life insurance can still provide several benefits for them.

-Financial security for future needs: A life insurance policy can help cover future expenses such as education costs, living expenses, and other financial obligations.

-Estate planning: If a child has a significant amount of assets, a life insurance policy can be used to pay any estate taxes, preserving their inheritance for future generations.

-Funeral expenses: A life insurance policy can provide funds to cover the cost of a child's funeral and other final expenses.

-Investment opportunity: A permanent life insurance policy can also serve as an investment that can provide cash value over time.

In conclusion, while children may not have immediate financial needs, having life insurance can provide peace of mind and financial security for the future.

 What is term life insurance?

Term life insurance is a type of life insurance policy that provides coverage for a specified term, usually ranging from 10 to 30 years. The policy pays a death benefit to the beneficiaries if the insured person dies during the term of the policy. If the person does not die during the term, the policy expires and does not have any value. Term life insurance is usually less expensive than other types of life insurance, making it a popular choice for people who want to provide financial protection for their loved ones.

What is whole life insurance?

Whole life insurance, also known as permanent life insurance, is a type of life insurance that provides coverage for the policyholder's entire life, as long as the premiums are paid. It is a combination of life insurance and a savings component, where a portion of the premium is invested and grows over time. Unlike term life insurance, whole life insurance has a cash value component that can be used during the policyholder's lifetime, either through loans or withdrawals. The policy pays a death benefit to the beneficiaries when the policyholder dies, and the death benefit is generally higher than the death benefit provided by a term life insurance policy of the same size. Whole life insurance is typically more expensive than term life insurance, but it provides lifelong coverage and a savings component that can be used to meet financial goals.

What is final expense insurance?

Final expense insurance, also known as burial insurance, is a type of life insurance designed to cover the costs of end-of-life expenses, such as funeral costs, medical bills, and other final expenses. It is typically sold to individuals who want to ensure that their loved ones will not have to bear the financial burden of their funeral and other end-of-life expenses. Final expense insurance policies are usually small in coverage amount, with the average policy ranging from $5,000 to $25,000. The premiums for final expense insurance are typically level, meaning they do not increase with age, and the policies are usually guaranteed acceptance, meaning that no medical exam is required for approval. Final expense insurance is a way for individuals to provide financial protection and peace of mind to their loved ones during a difficult time.

What is the best type of life insurance?

The "best" type of life insurance depends on an individual's specific needs and financial situation. There is no one-size-fits-all answer to this question, as the best type of life insurance for one person may not be the best for another. 

-Term life insurance is often the best choice for those who need life insurance coverage for a specific period, such as the length of a mortgage or the number of years until retirement. It is usually the most affordable option, providing coverage for a specified term at a fixed premium. 

-Whole life insurance, also known as permanent life insurance, may be a good choice for those who want life insurance coverage for their entire lives and who also want to accumulate cash value over time. Whole life insurance is typically more expensive than term life insurance, but it provides lifelong coverage and a savings component that can be used to meet financial goals.

-Final expense insurance is a good choice for those who want to ensure that their end-of-life expenses will be covered. It is usually a small policy that is easy to obtain, with premiums that do not increase with age.

Ultimately, the best type of life insurance is the one that meets an individual's specific needs and financial situation. It is recommended to consult with a financial advisor or insurance agent to determine the best type of life insurance for you.

Is life insurance expensive?

The cost of life insurance can vary widely depending on factors such as the type of policy, the coverage amount, the age and health of the insured, and the term of the policy.

-Term life insurance is usually the most affordable option, with premiums that are lower than those for whole life insurance or other permanent life insurance policies. The cost of term life insurance can be further reduced by choosing a longer policy term, such as a 20- or 30-year term.

-Whole life insurance, also known as permanent life insurance, is typically more expensive than term life insurance due to the added savings component. The cost of whole life insurance is also higher because it provides coverage for the policyholder's entire life.

-Final expense insurance is also typically less expensive than other types of life insurance, with premiums that are lower due to the smaller coverage amounts.

It's important to keep in mind that the cost of life insurance is just one factor to consider when choosing a policy. It's also important to consider the coverage amount and the length of the policy to ensure that the policy will meet your needs.

Why should a young and healthy person have life insurance?

There are several reasons why a young and healthy person might want to have life insurance, even if they do not have dependents or significant financial obligations:

-To cover final expenses: A life insurance policy can provide funds to cover end-of-life expenses, such as funeral costs and medical bills, ensuring that their loved ones will not have to bear the financial burden of these expenses.

-To protect future income: Life insurance can provide a financial safety net for a young person's future dependents, such as a spouse or children, if they were to pass away unexpectedly. This can help ensure that their dependents will be financially secure in the event of their death.

-To lock in a lower premium rate: Life insurance premiums are based on factors such as age and health. By purchasing a policy while they are young and healthy, a person can lock in a lower premium rate that will not increase with age or changes in their health.

-To ensure insurability: A life insurance policy can be difficult or even impossible to obtain later in life if a person develops a serious medical condition. By purchasing a policy while they are young and healthy, a person can ensure that they will have access to life insurance when they need it.

-To provide peace of mind: Knowing that their loved ones will be protected in the event of their death can provide a young person with peace of mind and a sense of security.

While life insurance is not necessary for everyone, it can provide valuable financial protection and peace of mind, especially for young and healthy individuals.

How much life insurance should I have?

The amount of life insurance you should have depends on your individual circumstances, including your financial obligations, your dependents, and your long-term financial goals. As a general rule, experts recommend that you have enough life insurance coverage to provide for your dependents in the event of your death. This typically means that you should have coverage equal to at least 10 to 12 times your annual income. This calculation is based on the assumption that your dependents will need enough money to cover living expenses for 10 to 20 years after your death.

In addition to providing for your dependents, you may also want to consider other financial obligations, such as paying off debts, covering final expenses, and funding your children's education. You should also consider your long-term financial goals, such as maintaining your standard of living, preserving your wealth, and ensuring that your assets are passed on to your heirs. It's recommended to consult with a financial advisor or insurance agent (that's us! lol) to determine the amount of life insurance coverage that is appropriate for you, based on your individual circumstances.

Which term should I select when choosing a life insurance policy?

The term of a life insurance policy refers to the length of time that the policy will provide coverage. When choosing a term life insurance policy, it's important to consider the length of time that you will need coverage for and to choose a term that matches that need. There are several factors to consider when choosing a term, including:

-Length of coverage: Consider how long you will need coverage for, taking into account your current age, your future goals, and your dependents' needs.

-Age of dependents: Consider the age of your dependents, such as children or elderly parents, and choose a term that will provide coverage until they are no longer dependent on you.

-Remaining debt: Consider the length of time that you will have outstanding debts, such as a mortgage or student loans, and choose a term that will provide coverage until those debts are paid off.

-Career stage: Consider your current career stage and future plans, and choose a term that will provide coverage until you reach your financial goals.

A common term length is 20 or 30 years. In general, the longer the term, the higher the premium will be, but you will have the peace of mind of knowing that your dependents will be protected for a longer period of time. It's recommended to consult with a financial advisor or insurance agent to determine the most appropriate term length for your individual circumstances.

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