Frequently Asked Questions
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The following is a list of commonly asked questions and answers. If you don’t see your topic or question here, feel free to reach out to me personally. I will be glad to answer your questions in a quick and timely manner.
Answer: While the intent of most life insurance plans (to provide a benefit upon the death of the insured) is the same, actual life insurance types can differ significantly.
Please review my site for information concerning a couple of the most common types of life insurance that I encounter, and remember that there are more types of life insurance out there that I haven't even scratched the surface on.
Answer: It is definitely great to take advantage of employer-offered life insurance. However, it is very important to know the facts:
1. Employee-offered life insurance plans typically pay a very limited death benefit
2. It is not a guarantee that all plans will cover other members of your family.
3. In a majority of cases, they are the property of the employer. If you quit, are terminated, or leave that employer in any way, your coverage very likely comes to an end. I’ve even experienced multiple situations from clients who have actually retired from a corporation, and STILL lost their life insurance coverage.
4. Having your own individual Life insurance plan, in addition to the one provided by the employer, is extremely recommended and adds a layer of security. It also gives you the best chance at customizing a plan which will absolutely meet the needs of your family, in the event of death.
Answer: There's no "only correct answer" here.
What you do want to ask yourself is " if I die, what are the immediate financial concerns that would be left to my family to have to take care of? Also, how would my family survive without my income?"
List those important things (mortgage, rent, kids' current/future education, bills
you'd like to pay off, projects you'd like to accomplish, etc). Let that be a gauge.
Another method would be to take your annual salary, and multiply it by 10 (if you make $50,000 per year, you should acquire no less than $500,000 worth of life insurance).
This is just my opinion, but in the cases of couples with children, I strongly recommend that both adults carry the same amount of coverage because, realistically, the expenses and vision for the future should be shared and common amongst them.
Answer: You put yourself at the mercy of the information in the envelope, when you do. I am not saying that it's wrong, and I'm not saying that all life insurance through the mail is bad; I am simply saying that the potential for product, price, and coverage-related information to be misunderstood is EXTREMELY, EXTREMELY high.
I know that we are living in a convenience, and technological/hands free era, but it is STRONGLY recommended that these types of purchases be made face to face, or through other interpersonal means.
Ask yourself: When you call into your phone company to ask questions about your phone service/review your bill etc., do you ABSOLUTELY LOVE speaking to the robot who's trying to help? Or do you do what you can to quickly get to a live representative? Most people want a human because that assures them the best means to getting their questions answered.
A paper in an envelope won't audibly answer your questions ... You just better hope you understand everything as you're filling it out.
Answer: Absolutely!
Many of my clients have multiple active policies prior to meeting me, and purchase more down the road! Certain companies have plan maximum limits, but you are always free to just select a different plan, and/or a different company if you are ready to add additional insurance.
Answer: I'll address a few topics under this question. With regard to the frequency of payment, premiums are typically paid:
Monthly
Quarterly (once every three months)
Semi-Annually (once every 6 months)
Annually (once a year)
The choice is yours.... whatever works best for you and your budget. The most common (and by far, most RELIABLE METHOD) of payment is through the use of your financial institution (checking or savings account).
Some companies also accept debit cards for premium payments. You choose the DATE that works best for you, and the premiums will be paid from the account you provide. Just be sure (in some cases) to give a little leeway for the payments to process; most companies will not process payments on weekends or holidays, so the payment typically won't reach your account until the next available business day.
*NOTE: if you are using the 16 digit number on your debit card to automatically pay monthly premiums (and if the debit card is attached to your bank or credit union), please remember that the company does not automatically have your bank account information. Meaning- if your debit card is lost or stolen etc, you will have to contact the insurance company to either provide them an updated card, or provide them with your banking information.
You can also choose 'direct billing' (mailing in a check or a money order). However, you potentially run into challenges using this method because everything falls on your ability to manually assure that payments are made, AND MADE ON TIME. Personally, I believe this is the worst, most demanding, and most problematic method of paying your premiums because it puts you at the mercy of the postal service to get your payment to the company, and on time. I’ve seen more policies lapse this way.
Answer: There's no "only correct answer" here.
What you do want to ask yourself is " if I die, what are the immediate financial concerns that would be left to my family to have to take care of? Also, how would my family survive without my income?"
List those important things (mortgage, rent, kids' current/future education, bills
you'd like to pay off, projects you'd like to accomplish, etc). Let that be a gauge.
Another method would be to take your annual salary, and multiply it by 10 (if you make $50,000 per year, you should acquire no less than $500,000 worth of life insurance). This is just a round example; your need may be much greater based on your individual family makeup.
This is just my opinion, but in the cases of couples with children, I strongly recommend that both adults carry the same amount of coverage because, realistically, the expenses and vision for the future should be shared and common amongst them.
What if you get sick and are hospitalized? What if you go out of town? What if family emergencies come up and last for a while? What if your money order gets lost in the mail? Or the company receives it late?
The risk for lapsed policies is the greatest when using the direct billing method, so be mindful of what choosing this method entails. I've had many clients over the years to tell me that "the company sent me my premiums back in the mail and I don't know why"....
This is either because they received it late, or you quite possibly did not send the correct amount. Human error mistakes are so, so much more common when using the direct bill method.
Answer: Several reasons....
1. Parents typically take out life insurance coverage on their kids when they're younger (though there is now an alarming percentage of parents that are having to secure the same coverage on adult children), to protect themselves in the event of an unfortunate loss of their child.
The idea is to cover a child throughout those growth years until they reach adulthood, and realize that this is a responsibility that they (the kids) need to take on their own. In the successful cases where this occurs, a lot of parents either assign the policies to their kids, or just cancel them all together.
2. Even if (as an adult) your parents still carry a life insurance plan on you, you definitely still need your own plan because you both live different lives. If you have multiple underaged children, own a home/pay rent, education etc., then you are going to have different financial needs/concerns than those of your parents.
That $15,000 life insurance plan that mom has on you will be helpful to take care of your funeral if you should pass away, but that's not going to do much of anything with regard to sustaining your children or your remaining household/lifestyle expenses. You definitely need your own individual life insurance plan.
Answer: The minute that you realize that you don't have your own plan, honestly...
If I was to get all technical, I'd say:
*When you're young
*When you're healthy
*When you have small children
*Whenever there is a death in the family
*When you start your own business
*When you get a job/new job
*When you get married
*When you buy a house
*Everytime you have another child
*Anytime you make any significant purchase that would need to be paid off
* If you desire to plant a seed for your family
All of these are correct/valid reasons; and there are many, many more.
Answer: Every company is different, and every company has it's own individual underwriting standards.
Just because one company denied you, doesn't mean all of them will. There are companies out there that specialize in insuring individuals with pre-existing conditions, and many agents like myself have a pretty exhaustive portfolio of companies that we can select from, in order to best help each individual.
Answer: Yes.
In most cases, that person will have to complete the application process, sign, and be subject to whatever underwriting process that the insurance company uses.
While life insurance should be a person’s individual responsibility, it’s an unfortunate truth that far too many view it as nothing more than an unnecessary bill that they don’t desire to pay. Because of this, family members often end up feeling pressed/obligated to take coverage out on that person so that they are not financially unprepared in the event of that unwilling family member’s death.
Answer: Great question ..
There are term insurance products out there, that are designed to pay back a portion of the premiums paid over the length of the term. Most of these plans are referred to as 'RETURN OF PREMIUM' insurance plans.
For example, if you acquire a 30 year RETURN OF PREMIUM term insurance plan, and successfully pay your premiums EVERY MONTH, for the entire 30 years, you will be eligible to have all (or a portion of) those monthly premiums that you paid over the course of that time returned to you-once the term expires. There may even be plans out there that pay all or some of the paid premiums back prior to the completion of the term, but you will have to confirm that with an agent or company.
Premiums for this type of insurance plan are typically a little higher, and you reference the specific details of your actual insurance plan, to be able to know just what premium payment amounts to expect at the end of the term.
If you select a term life insurance plan, WITHOUT THE RETURN OF PREMIUM RIDER, you are still covered for the entire length of the term (as long as monthly premium payments continue to be paid in full, and on time).
However, at the end of the premium paying term, your coverage ends- and premiums are NOT returned. Also, the policy will lapse should you decide that you no longer want the coverage or stop making the monthly premium payments.
Answer: Yes, you absolutely can.
I want you to keep in mind that, while I service individuals of all ages, and have done so throughout my 18+ year career, I feel total confidence in admitting that the average age of individuals that I ensure is 62 yrs old.
In addition to that, most of my clients/perspective clients, that reach out to me DIRECTLY, are in what's known as the Senior Market (which typically categorizes individuals from the ages of 50-85.... give or take a few years here or there).
You would be surprised by the number of individuals in this category who request a consultation from me, listen to me give a presentation of products, and after hearing me verbalize what their premium obligation will be, will then turn around and resort to this 'money in the bank' logic.
Also keep in mind that these individuals (in some cases SIGNIFICANTLY older) have absolutely NO LIFE INSURANCE in force ...
I love examples, so let's address this in example form ...
Let's say you decide that you will put $100 in the bank every month, to pay for your funeral expenses. I'm not sure of what today's date is (the date that you are reading this), so let's just assume that a person starts saving money "today", and saves faithfully for exactly 2 yrs from "today".
Then, the person dies, so let's do the math…
$100(per month)
Xl2(#months in year)
—————————-
$1,200 saved for the year
X2 (# of years)
————————————————-
$2,400 total savings
I will give this person credit, in their ability to faithfully stick to their plan of saving $100 a month. At least there is something to show for it at the end of things.
Of course, what we must also be willing to consider is that this is a 'perfect world scenario' ...
Let me ask you a question: If you have a similar mindset as that of this person, and you were saving money in a similar fashion ...
But then your car breaks down? Your stove stops working? Your kids need a school-related purchase, or clothing? You get sick and miss a few days of work, so your check is a little short? You decide you and the family needs to go have some fun? Your electricity is overdue and scheduled to be turned off? (Extreme example) A family member needs to be bailed out of jail? (Extreme example #2)
A family member dies, who has no life insurance, and the rest of the family is forced to pitch in, to help bury this individual?
WHERE IS THIS FIRST PLACE YOU ARE GOING TO GO, TO ACCESS THE FUNDS TO DO THIS?????
You are going to go to the same place, that the person in my example would have gone; to this account. And guess what will happen: all or a significant portion of the time you spent accumulating savings will be totally wiped out ... and you will have to start from scratch.
Going back to the $2400 example, I never even scratched the surface on how this amount is not even REMOTELY close to being enough to paying for what a standard funeral will cost!!!
Amounts may vary from provider to provider- but COMFORTABLY, you are looking at $8,000-$15,000 (and per client examples, I've heard a significant number of them to have personally experienced SIGNIFICANTLY higher). Your loved ones will be stuck with a substantial balance using this method.
Think of this too: it is going to be safe to assume that an individual in their 60s or 70s (or honestly, any fully grown adult who has locked into a mindset or a way of thinking for any extended period of time) is highly unlikely to embrace any outside thought process concerning this. You haven't taken action to this point in your life; why would it be reasonable to believe that you would handle things differently now?
The conclusion: though it sounds sensible to put yourself in control of your own savings, it may not be as cost-effective or practical as you may think.
In contrast, life insurance is designed to pay an immediate benefit upon the death of the insured.
If the insured was paying premiums on a life insurance plan that provided immediate coverage, proceeds form that policy are made available immediately (subject to the terms of that individual plan, as well as all administrative
requirements and industry- regulated procedures that must be carried out).
Life insurance is there to be a service & benefit to you and your loved ones, and to simplify your life as much as possible. Trust the professionalism of these companies; they've been around for a long time and are out here to provide the peace of mind that we may not be able to obtain using our own methods.
