The main concept of life insurance is well known and, for the most part, understood by those who purchase it.  Essentially, if you are covered by a life insurance policy and you pass away, a certain amount of money is paid by your life insurance company to the beneficiary you have designated.  While the general concept is easy to grasp, there are several other things to keep in mind,

Why should I buy life insurance?

There are many reasons why a person should buy life insurance.  A short list of popular reasons would include: (1) the cost of your own funeral/burial, (2) replacement income for your spouse and/or children as they can no longer rely on you to earn income, (3) mortgage/debt payoff.  Other valid reasons that should be considered include tax-free distribution of your wealth to your heirs/beneficiaries, children’s education expenses and buy/sell agreements for business partners.

Do I need to review my life insurance policy after I purchase it?

Yes, it is very important that you take the time to review your life insurance policy every few years.  Although not the case for all, most people undergo some significant changes in their life over a two or three-year time period.  Here are a few examples.

Got married? (Not the same as Got Milk?!)  If so, a review of the policy beneficiary and the value of the death benefit is in order.  No changes have to be made but common sense dictates a modification may be needed.  Got Divorced?  (Again, not the same as Got Milk?!)  The same holds true in this case as when you get married; death benefits and beneficiary should be reviewed for changes.

Purchasing a new home will also trigger the need to review your life insurance policy.  Suddenly, your $50,000 policy becomes insufficient when you consider your new $250,000 mortgage.

Have you gone on a health kick and lost a bunch of weight?  Good for you!  Not only will you be healthier, you may qualify for a preferred insurance rate and obtain more coverage for the same price or pay less premium for more coverage!

Life changes are happening all the time.  Make sure your life insurance policy keeps pace with your life style.

What is the difference between whole life insurance and term life insurance?

I like simple explanations of things and “simply put” the main difference between term and whole life lies in the name of the type of coverage.  A “whole life” insurance policy is designed to cover you for your entire lifetime. Term life (for this purpose) can be considered short for the word “terminates”.   Term policies are typically designed for a specific period of time and then expire. (i.e. 10 years, 20 years, 30 years).   Because whole life polices usually last longer and have some sort of investment return included in the contract, whole life costs more than term life policies. Because of their specified length of coverage, term life policies are recommended to insure agreements that have timelines ie.mortgages, business arrangements.  As with most products, term life and whole life polices can be designed with a variety of features and benefits.

How much life insurance should I have?

A tough question and I am not sure there is one “correct” answer. 

Everyone’s situation is different and there are many variables that come into play: Married, Single, Children, Income, Age, Health. Many professionals advise that the amount of life insurance should be a multiple of your earnings…..perhaps.  I think a better approach is to discuss your specific situation with an insurance professional and agree on an amount that you are comfortable with knowing the reasons why you agreed on that certain amount.

Is it hard to apply for life insurance?

No, as the saying goes, it is relatively painless!  An application will be required.  These applications will ask for your personal demographics along with your health history.  Depending on your circumstances, a completed application may be all that is required. In certain circumstances you may be required to have tests performed i.e. blood test, blood pressure, EKG.  Again, the amount of information required and tests performed will depend on your individual circumstances and amounts of life insurance you are seeking.  Remember that your Agent can assist you with the application process and with any questions that you may have.