Unless you're that odd person who's
buying life insurance every day (which
would probably correspond with an
official diagnosis), it might seem a
little confusing. You have a vague
sense of the risk of what would happen
if you were to pass away but that
doesn't help much when a range of
options appear on your screen with fancy
names wrapped around words like "sure",
"safe", and "trust". What does it
all means and how you do find the right
plan for you. Most
importantly, you don't want to pay too
much. Let's look to see if we can
simplify the world of life insurance for
someone new to the market.
answer some of the big questions first.
The first consideration is what type of
life insurance makes the most sense.
As you see from our website title, we
have our preferences and it has
everything to do with what works in your
interest. Let's be up front...we
could recommend whole insurance and come
out ahead as life insurance agents.
The life insurance company would also be
pretty happy. Whole life is quite
a bit more expensive than term life.
We have written extensively about why in
our articles such as
term life versus
why term life
makes sense but we'll give
you a quick synopsis. Term life is
for a fixed period of time...usually
anywhere from 5 to 30 years. You
are able to lock in a lower fixed rate
during this time for a fixed amount of
term life benefit. With whole
life, you pay a higher premium to offer
a lower amount of benefit
for...well...your entire life.
There are little add-ons such as the
ability to add cash value to your policy
over time. This amounts to a sales
pitch in our opinion. You're
paying the life insurance company extra
(significantly more) premium to then
give you a percentage of that money
back?? It's hard to make the math
work. Why do people go with whole
life with such a set-up? Well,
there's a psychological mechanism at
play where life insurance for a person's
entire life feels good. But really
think about it. In order to
correctly view this thought process, we
need to look at what life insurance is
for to begin with.
break this down as simply as possible.
We have two people. Person #1 is
like us...they are not guaranteed to
live to age 100. #2 has some
amazing deal where he/she is guaranteed
to live to age 100. It must be
some new diet craze. Would person
#2 buy life insurance? Of course
not. Why?? Let's look at
person #1 to answer this question. If
person #1 passes away early, what's
different from the situation that person
#2 is in. His/her income goes away
for those remaining years.
Usually, people buy life insurance when
they have family members that are
financially dependent on them . Life
insurance is about lost income over a
period of time. The key
there is long period of time...not
months...but years...maybe decades
depending on their family make up.
It's usually to help raise young
children or reduce/remove financial
obligations for a dependent spouse.
Does it make sense to cover this
potential loss for your entire
life...let's say to age 85 (as life
expectancy averages continue to
increase)? In light of the higher
premium that whole life requires, it's
hard to justify this coverage.
Especially in light of other strategies
life and investing the
difference. We are happy to walk
you through different comparisons
between whole and term life but let me
just summarize by saying...I personally
have term life for my family.
we've realized the benefits of term life
insurance, there are two critical pieces
of information left. The first is
amount of term
life insurance and the second
we want the protection. This is a
little trickier as it's based on each
person's specific needs. We have a
more comprehensive articles and a
Term life Planner
tool to help with the amount.
Our recommendation is simple.
Establish a monthly or annual budget you
feel comfortable with and then use our
term life quoting tool to stay within
that budget. It's very important
that can afford the coverage you sign up
for. Otherwise, it defeats the
purpose of life insurance to lapse
coverage due to non-payment. Our
quoting tool is pretty impressive (if we
can praise ourselves). It will
automatically find the best priced plans
to meet your amount/term length
requirements. You can then adjust
up or down on either parameter to find
the right blend that meets your budget.
A lot of life insurance agents will tell
you..."You need this much or this
amount" regardless of the pricing.
They're not the ones paying for it and
ultimately, affordability is important.
We would rather you have a life
insurance policy you can afford over the
course of the policy than more coverage
(or even over-insurance) that you can't.
Again, we're looking out for your
we have addressed type of life insurance
(term), and amount/length of term (based
on budget and needs), our engine will do
the remaining work. Of course, as
brokers, we are here to help
you with the sometimes overwhelming
world of life insurance. We'll
help you narrow down the pieces and find
the right coverage to address your needs
at the best possible price. That's