Term life insurance coverage at every stage of life

November 9, 2023 | Blog, Life Insurance |

Throughout your life, you will likely celebrate many milestones, from graduating college and starting a new job to getting married or buying your first home. Each momentous occasion can bring new financial responsibilities, but how would your family handle those obligations if you passed away unexpectedly?

To help protect your loved ones and ensure they have the financial support they need if you are no longer here, term life insurance can provide a financial safety net they can count on during a challenging time, such as a sudden death. Term life insurance provides a set amount of coverage for a certain length of time, usually 10, 15, 20, or 30 years, and can help your family pay for daily expenses, pay off debt, or build up savings for the future. Here’s how term life insurance can offer valuable protection through the different stages of your life.

Paying off student loans

Graduating college and heading into the workforce can be an exciting time. With a regular paycheck and potential employee benefits, you can take an important step toward building a strong financial future. But if you’re like many people, you may have graduated with student loans to pay off. On average, bachelor’s degree graduates leave college with around $26,190 in student loan debt.

What would happen to your remaining student loan debt if you were to pass away? Depending on the loan, it may fall back on someone to pay the remainder. This is where term life insurance can help—having a policy in place for the years you’ll be paying off loans can help protect your loved ones from shouldering additional debt. Depending on your student loan payment plan, a 10- or 15-term policy might be a good fit.

Tying the knot

If you’ve recently married, it can be a time of financial transitions, including combining accounts, creating a budget, or purchasing a house. As you discuss your finances with your partner, life insurance can be a valuable addition to the conversation. If you both purchase a term life insurance policy and list the other as the beneficiary, you can help ensure that your significant other will have some financial protection if you were to pass away. The death benefit can be used as the beneficiary wants. Some options include:

Funeral expenses
Living expenses
Debt repayment
Medical costs

Purchasing a house

It’s official, you’re a new homeowner! Purchasing a house is an exciting milestone and one worth celebrating. You may already have homeowner’s insurance to protect your new purchase, but have you considered life insurance? A term life insurance policy could be set up for the same length as your mortgage—15, 20, or 30years to help pay the outstanding balance. This way, if you were to pass away, your family would not be forced to move or sell the house during a difficult time. A life insurance policy can help your loved ones pay the mortgage and keep your house your home.

Replacing income

If your family depends on your paycheck, they could take a big hit financially if you were no longer here to support them. The death benefit from a term life insurance policy can help replace lost income if you pass away during your working years to assist with paying the bills, caring for children, and maintaining their lifestyle. The length of the life insurance policy can be determined based on the years until your children become adults and may even provide some money for their college education, alongside funeral costs. Some term life insurance policies include living benefits, which may allow you to accelerate a portion of the death benefit if you’re diagnosed with a qualifying illness.¹

Life is full of many exciting and happy milestones. By protecting your family with term life insurance, you can create a financial safety net for a time when it’s needed most. With many budget-friendly coverage options and various terms, you can find a policy that meets your needs, helps alleviate financial stress about the future, and gives you and your family the peace of mind you deserve to enjoy every moment on the road ahead.

¹Subject to eligibility requirements. Texas Residents: Receipt of acceleration-of-life-insurance benefits may affect your, your spouse’s or your family’s eligibility for public assistance programs such as medical assistance (Medicaid), Aid to Families with Dependent Children (AFDC), supplementary social security income (SSI), and drug assistance programs. You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect your, your spouse’s and your family’s eligibility for public assistance.

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North American A SAMMONS Financial Company

Busting 5 myths about life insurance underwriting

August 17, 2023 | Blog, Life Insurance |

Once you submit a life insurance application, the insurance company will begin underwriting. To determine if you’re eligible for coverage, your risk profile, and your premium amount, underwriters will look at various factors, including age, gender, lifestyle, and health history. For example, if you’re a smoker, you may pay higher rates for coverage than if you’re a non-smoker. To help make applying for coverage smoother and less stressful, it can be helpful to understand what’s involved and the common misconceptions that surround this procedure.

Myth 1: Underwriting is a lengthy process

The underwriting process can vary depending on the insurer, death benefit applied for, and type of coverage, but on average, it can take two to four weeks. The process can be much quicker for certain types of coverage, like guaranteed issue and simplified issue life insurance. To help streamline the underwriting process, gather all your health information and list of prescriptions before you begin your application.

Myth 2: I do not need to include all information on my application

Providing accurate and complete information on your application will help speed up the application process and help you avoid any fraud issues. As you complete each application section, include as much detail as possible and be honest about your health, smoking status, and hobbies.

Myth 3: To get life insurance coverage, I will need a medical exam

For certain types of life insurance policies, bloodwork or a medical exam is not required. “The more comfortable companies can become using other sources to assess risk, the less frequently medical exams will be required,” says Sammons Financial Group Chief Underwriter Chris Regione. “That said, when a medical exams may still be needed it is critical for risk assessment.”

Myth 4: My pre-existing condition will make me ineligible for life insurance

Even if you have a medical condition, you may still be able to get approved for life insurance coverage. “Many clients with one or more pre-existing conditions could still qualify for life insurance,” states Regione. “Understanding pre-existing conditions and the severity of these is critical to underwriting . Companies take a holistic approach to risk assessment. This means they are looking for ways to offer coverage within the company’s risk appetite and tolerance.”

Your health history can affect what type of policy you are eligible for and how much premium you’ll pay each month. If you have asthma, for instance, the underwriter may review when you were diagnosed, how frequently you have symptoms, if you’ve been hospitalized, and what medications you take. If you manage your asthma effectively, you may still qualify for a standard or preferred rate. However, even if you experience asthma attacks or need medical assistance, you can still be eligible for coverage, it just may be at a higher premium.

Remember that underwriting guidelines vary among insurance companies, so working with a financial professional can help find the best policy for you.

Myth 5: Risky hobbies will prevent you from getting coverage

When applying for life insurance coverage, you will likely be asked about your lifestyle habits and hobbies, safety precautions, and how often you participate in these activities. “The key is for the company to have a nuanced understanding of a person’s lifestyle habits, hobbies and activity,” shares Regione. “For example, understanding how often they engage in risky behavior and the type of activities they engage in will provide guidance to determine the best rate class that can be provided.”

Even if you enjoy skydiving or rock climbing, it doesn’t necessarily put you out of the running for getting a policy. Since participating in high-risk jobs or hobbies can affect your life expectancy, the insurance company must consider these. Many companies will still approve you for coverage, but these factors may increase your monthly premium.

Separating fact from fiction regarding life insurance underwriting can help you become better informed about the process and what you can do to make the steps go smoothly. When you understand the timing and what to expect, you can help lower your stress about applying for coverage and help put financial protection in place today.

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NORTH AMERICAN A Sammons Financial Company

Is life insurance available to a non-citizen?

May 11, 2023 | Blog, Life Insurance |

Life insurance can help safeguard your loved ones’ future and financially protect them from the unexpected, allowing them to cover final expenses, keep up with daily living costs, and save for the future. If you’ve recently moved to the U.S. for a permanent stay and are wondering if you’re able to purchase life insurance, there are a few things to keep in mind.

Life insurance for immigrants

Each life insurance company may have different rules around applicants who are not U.S. citizens, so it’s important to do your research. Life insurance companies may consider some of the following:

Length of residency: You may need to provide proof of U.S. residency for a certain number of years before being eligible to apply for coverage.
Country considerations: Some countries may not allow you to buy life insurance in the U.S. due to regulations.
U.S. limitations: People moving to the U.S. from certain countries may require additional underwriting.

For people who have moved to the U.S. and have obtained a green card or visa, many life insurance companies do provide coverage options. Along with the typical underwriting process, you may be required to provide some additional information when you apply.

Visa holders

If you have a visa, you have permission for residence within the U.S for a designated period of time, typically for school or work. To apply for life insurance, visa holders typically have more documentation to provide to the insurance company than a green card holder. You will often have to share, how long you have been here and whether you plan to permanently reside here in the future. You may need to provide a copy of your visa and other supporting documentation. The insurance company may also have you fill out a foreign resident questionnaire that asks you questions about your employment and travel history.

Green card holders

If you have a green card, you are considered a permanent resident and can usually apply for life insurance coverage as a U.S. citizen. There will likely be a section on the application that allows you to disclose your resident status.

Undocumented immigrants

Without proper identification and documentation, such as a green card or visa, it can be more difficult to obtain life insurance coverage. Not all carriers accept undocumented immigrants, but companies that do most likely require an Individual Taxpayer Identification Number (ITIN) and may have limitations on the death benefit amount or type of coverage that they offer.

NORTH AMERICAN A Sammons Financial Company

So What Happens to Your Life Insurance After You Die?

March 30, 2023 | Blog, Life Insurance |

Getting life insurance is a no-brainer, as it can provide your family and loved ones with crucial financial protection if you pass away. But how exactly does it work? And by that, we mean how does it “kick in” and provide the benefits once you die? Let’s explore this question and more.

First steps

First, it’s worth mentioning that it is the responsibility of the policy beneficiary, or beneficiaries, to file a claim. In other words, they must contact the insurance company and inform them of the policyholder’s death, typically by sending a death certificate and filling out a claim form to ask the insurer for the money. Contrary to what some may believe, there is no “death list” that goes around to perform this task automatically, so know that it’s not the life insurance company’s responsibility to realize that you have passed away or chase down your beneficiaries.

Because you will likely want to know who gets your money after you die, be sure to create a will that clearly states who will receive your money and informs them that you purchased a life insurance policy. In your will, it’s very helpful to include detailed information, such as your policy number and accurate contact details for your insurer. Without this information, it may take some additional time to verify your claim before the payout is received.

With all information in order, the beneficiary can proceed with contacting the insurer, sending the death certificate, filling out the claim forms and receiving the processed benefit amount when it’s paid out.

More detailed information on the entire claims process can be found here.

Who gets your life insurance payout when you die?

Life insurance claims can be paid out in several ways. Here are some of them.

To an estate

If your beneficiaries are not specified as part of your life insurance policy, the proceeds will likely, by default, be treated as part of your estate. If a will was enacted, then your beneficiary wishes will be followed as closely as possible.

This is another good example of why the creation of a will is very important to ensure there is no ambiguity over your estate and your life insurance proceeds.

To a beneficiary

If you include accurate, up-to-date beneficiary information on your life insurance policy, the money can only be claimed by the beneficiary or beneficiaries. However, there are sometimes mitigating circumstances to consider, such as an untimely death of a beneficiary. In most cases, if the listed beneficiary dies before the policyholder, the beneficiary’s heirs are entitled to the proceeds.

Into a trust

If you set up your life insurance proceeds to be paid into a trust when you pass away, that money will be held in the trust appropriately and distributed as a claim per the instructions outlined in that trust.

Naming and paying out to a trust can be an excellent way to help mitigate inheritance taxes and may also be used to satisfy an inheritance tax bill (typically on a larger-sized estate) without needing to liquidate assets.

Will my beneficiaries have to pay taxes on the proceeds of my life insurance policy?

Good news! When considering the death benefits of a life insurance policy, the payout is generally free from any income tax to your selected beneficiary or beneficiaries.

However, you may choose to have the insurance company keep these proceeds for a while after your death so they can be distributed to your beneficiary in a series of installments or at a later date. This way, the funds may continue to earn interest. When a payment is made to your selected beneficiary later on, it may be a larger amount because of the interest earned. Note that while the principal portion of the payment is typically free of taxes, the interest portion would be taxable to the beneficiary as ordinary income, so they would be on the hook for at least some taxes in this scenario.

Finally, in some cases, if the ownership of your life insurance policy is transferred to another party for monetary value before you die, the proceeds your beneficiary receives at your death could also be considered taxable income.

We hope this information is helpful to you. As with any complicated financial matter, it’s always best to seek the assistance of a professional who can walk you through your questions and particular situation.

Life Happens, by Kirk Cremer | March 8, 2023

Why buy life insurance in your 40’s

January 12, 2023 | Blog, Life Insurance |

There was a time, perhaps a generation or two ago, when turning 40 meant you were “no longer a spring chicken,” or “over-the-hill.” In other words, 40 was old.

But in the last 30 years or so, a dramatic change has taken place. With all we’ve learned about the benefits of proper diet and exercise, it’s no surprise that people are taking better care of themselves. The amount of adults who smoke has declined from 21% to just 15% and that number is still dropping. Millions have instead taken up running, biking, meditating, and other healthy activities. As a result, people are living longer and looking far younger than their birthday might indicate. And 40? It’s taken on a whole new meaning.

Why do I need life insurance?

People are taking better care of themselves and thus living longer, but there are reasons for getting life insurance beyond living a longer life. Many people are also postponing marriage, children and home buying well into their 30s and beyond. So rather than the usual financial obligations ending for most by their mid-50s as they once did, today their obligations can stretch well into their 60s.

That means many 40-somethings are in the peak years of their heaviest financial obligations – paying the mortgage while saving for college and retirement. Life insurance over the age of 40 for most people isn’t just a consideration, it’s a necessity. In fact, it may be exactly the right time to increase your existing coverage, or to get coverage for the first time.

And while life insurance might have been less expensive to buy in your 20s, the longer you wait to protect your family, the more expensive that coverage will continue to become.

Financial needs are easier to assess in your 40s

Yes, life insurance does cost more the older you get, but here’s some good news. By the time you reach your 40s, it’s far easier to precisely determine your financial needs. When you were in your 30s, and especially your 20s, $200,000 probably sounded like a fortune. It was easy to imagine living on that money for the rest of your life. But as the years have passed, your salary has increased along with the costs of maintaining your home, car, a 529 plan, and the day-to-day expenses of life.

Buying life insurance when you were younger meant guessing where you’d be in your life. It would have been easy to buy too little or maybe even too much coverage. So if you did purchase life insurance at a younger age, it’s a good idea to review your coverage annually, in case your needs have increased.

Think about what you need to protect now

Whether you’re getting life insurance for the first time, or increasing existing coverage to protect your expanding assets, the first step is to assess your financial needs and obligations. Has your salary increased over the years? Is it likely to continue increasing? Do you have children? Are you paying for college? Or contributing to a 529 plan? Are you and your partner prepared for retirement? How much is left on your mortgage? These are all enormous expenses that your partner will have to take on alone should the unthinkable happen to you.

Then again, you may be farther along in your financial obligations. Your mortgage may be paid off, and your children may have already finished college. If so, good for you! In that case, your life insurance needs won’t be as critical but you might want to consider term life insurance for estate planning. Naming your partner as beneficiary would provide for a more comfortable retirement, free of the tax implications that may come with inheriting retirement accounts like an IRA or 401(k). Of course, you could also name your children as beneficiaries, and help to transfer some of your assets to the next generation without worrying about taxes.

Getting the details right

While term life insurance is one of the most affordable types of coverage available, getting the details right can help make sure you get the right coverage at the right price. These details include:

Coverage amount. As we’ve shown, your finances will determine how much coverage you need. Experts recommend six to eight times your annual salary, but that’s just a start. To get a more accurate number, take a good look at where that money may need to go:

Living expenses, including rent or mortgage
Household debt
Childcare expenses
Estate and other taxes
College tuition
Medical bills
Funeral costs

The term. If you’re buying life insurance in your 40s, you might think a shorter duration would be a good way to save money. But think about a 10-year term. That only takes you into your 50s. You’re still young and may have some significant financial obligations still to come. Be sure to consider everything, and plan for it.

Beneficiaries. People usually choose their partner as sole beneficiary. But, if you have dependents, you may need to think about naming what’s known as a contingent beneficiary. This is often a family member who would care for your children if both you and your partner were to die.

Stay-at-home parents. Do stay-at-home parents need life insurance? It’s impossible to overstate how much a stay-at-home parent contributes to the family finances. While he or she may not earn a salary, they provide non-stop benefits that would have to be paid for if they were no longer there – daycare, at-home education, carpools, preparing meals…you get the idea.

The best age to get life insurance? Right now.

We all know what life insurance is designed to do. And many of us wait years, or decades to start a family, or buy a home. So, we never even asked ourselves, “When should I get life insurance?” because we never thought we needed it. But for those of us who woke up one day with house and car payments or little ones filling the house with love and laughter, there’s no going back. Now is the time to think about how much they mean to you, and how much you mean to them.

By purchasing term life insurance now, in your 40s, you can help protect all the joyful days the kids have ahead, or your partner’s ability to pay the bills and let them stay in the home they know and love. Because what we do now matters in the years ahead of us, not the years behind us.

Banner Life/Legal & General

Why you need to consider term life insurance in your 20s and 30s

December 15, 2022 | Blog, Life Insurance |

Life insurance? Under 30? You might be asking yourself why anyone who’s young and healthy would even need to think about life insurance. Well, as it turns out there are a lot of good reasons for people to consider getting term life insurance as early as possible.

Protect your family. Now.

Many people often ask themselves what’s the best age to buy life insurance? When you’re young and single, and no one financially depends on you, you probably think you don’t need it. But family obligations come in many forms, and life can change on a dime. Being prepared for the unexpected is far better than scrambling to figure things out once it’s too late. We all have people we care about–people who we want to protect even if we’re no longer around.

Family members. Even if you’re single, there may still be someone who depends on you. Perhaps a parent, or a sibling. But what if you (and your income) were suddenly gone? What would your loved ones do? Having a life insurance plan in place when you’re starting out gives you peace of mind, knowing the people you care about will be taken care of should something happen to you.

Your partner or spouse. Marriage, of course, means financial interdependence. But the same is often true of people who are not yet married. Could one of you afford to stay in your home on one income? Whether you’re married or permanently partnered, life insurance may be one of the most important decisions you can make to protect one another from the unexpected. It means giving your partner the financial resources to pay the rent or mortgage, cover the bills, while grieving and figuring out what comes next.

Children. In 2016, millennial moms accounted for 82% of births in the US even though the general trend these days is to wait to have children later in life. So, whether you’re 25, 35, or 45, having children means needing life insurance so their lives are not permanently interrupted should the unthinkable happen to you or your spouse.

Your coverage will never cost less.

While life insurance may be the last thing on your mind in your 20s and 30s, the fact is you’re passing up a once-in-a-lifetime opportunity by waiting until you’re older. Life insurance premiums are calculated based on your age and health when you initially buy the policy. Being young and healthy means your premiums will be lower than at any other time in your life. And with every year that you wait, the premiums will typically increase. And, rather than saving money by skipping life insurance for all those years, you’ve actually cost yourself a great deal more in higher premiums later on.

Easy to qualify.

Remember when we said being young and healthy meant low premiums? Well, being in tip-top health is also an advantage. In fact, you may be able to get the life insurance coverage you need right away – without the inconvenience of a medical exam. That saves time and money. And think of the alternative. You wait 25 years or so. You may still be in great shape. You exercise. Eat well. But your blood pressure is just a little high. Or you may have a few extra pounds you can’t get rid of. And suddenly you find that getting the coverage you need has become not only more expensive, but more difficult as well.

There’s a lot more to come. And a lot more to protect.

When you get life insurance you have to remember you’re not just protecting what you have now, but everything you and your family could have in the future. That’s why for many people term life is the best type of life insurance for a 30-year old because it offers the best of both – affordable coverage and the protection you need during the years you need it. And term life is flexible. It’s available in policies that cover you for 10, 15, 20, 25, or 30 years.

In order to figure out how long you’ll need coverage, think about where you are in your life right now. Have you just started a family? Then you might consider a policy that protects your family until your youngest graduates college. Are you in your 30s, and just bought a house? Maybe you want to get a longer term to make sure the mortgage is paid so your spouse doesn’t have to raid your retirement savings to get by.

Your debts and final expenses are covered.

Many people don’t realize that when they die their financial obligations live on. And some of us can have quite a bit more debt than we realize, from credit cards and car loans to student loans and mortgages. In fact, the average 35-year old has $133,100 in debt on average. And like we said, it doesn’t just go away once you die.

Let’s look at the type of debt you may have. If your parents co-signed a car loan or a credit card, they’d be responsible for paying that off after your death. Depending on what state you live in, your spouse may also be financially obligated to pay off all your debts even if he/she wasn’t a co-signor. And while government student loans are forgiven, private student loans are not. Anyone who co-signed for your student loans are on the hook for those too.

We know no one wants to think about it, but on top of everything else, your loved ones will have to pay for your funeral. And that could really hurt. Because the average funeral now costs about $8,755, according to the National Funeral Directors Association. And then there’s the rent, car payment, bills, and all the usual day-to-day expenses that are a part of life.

Your life has only just started. Protect it.

While it may seem like you don’t need life insurance because you don’t have anything to protect, chances are you probably have a lot more that needs protecting than you realize. Plus, it’s always smart to plan for the future. Are you planning on buying a house one day? Settling down and getting married? Maybe even having a few kids? If the answer is yes to any of those questions, then you should consider getting life insurance while you’re young and healthy.

So, if you’re still asking yourself what’s the best age to buy life insurance? The answer is now. We are here to answer your questions – 817.545.3900.

information provided by Banner, Legal and General

How much life insurance should you have?

October 27, 2022 | Blog, Life Insurance |

Even if you’re not always here for your loved ones, life insurance can offer a way for you to continue to take care of them even after you’re gone. Deciding how much life insurance you need is unique to each person, but there are several factors that can help you estimate the amount of coverage that can best meet your goals.

Final expenses

Along with the emotional distress of losing a loved one, paying for costly funeral expenses can add to the hardship, especially if your family does not have the savings to do so. On average, a funeral costs around $8,000, and can quickly increase with additional items and services. With life insurance, your family can rest assured that these expenses can be covered by the benefits of your policy. To help estimate how much will be needed for final expenses, think about your preferences for burial/cremation, cemetery plot, and memorial service.

Supporting your family

If you have a family or other loved ones who depend on you, you may be considering life insurance to help create a financial safety net for the future. When determining how much life insurance you may need, think about the cost of caring for your dependents, such as your children or parents. This includes the amount of money they would need to cover daily living expenses, like utilities, groceries, and medical costs, and perhaps nonessentials like vacations. To begin estimating the minimum amount of life insurance you may need, thinking about these questions can help get the ball rolling:

How many years will my family need my financial support?
How much income would I like to provide after I’m gone?
How much would I like to provide for childcare?
How much outstanding debt would I like to pay off?
How much do I want to put into an emergency fund?
Would I like to provide college funding for my children?

Tackling debt

If you have outstanding debt, your family may become responsible for paying down these amounts after you die, so this can be an important factor in calculating how much coverage you need. Debts can include credit cards, car payments, mortgages, student loans, and any other personal loans you may have. With life insurance coverage in place, your beneficiaries can use the benefit amount to help pay off this debt.

Paying for college

When deciding how much life insurance coverage you may need, you may want to consider the cost of sending your children to college. Tuition can be one of the largest expenses your kids will have, where the average in-state tuition at a public 4-year institution costs over $9,000 per year. This does not include additional expenses and costs of living, like books and supplies, room and board, and transportation. If your kids plan to attend college or a trade school, or are currently enrolled, you may want to include these amounts when determining the amount of coverage that is right for you.

Your age and health status

Your current age and health are commonly determining factors when deciding the type, amount, and cost of life insurance coverage. Typically, life insurance rates increase as you get older, since as you age, there’s a greater risk of death. This can be a good thing to keep in mind when deciding the best time to consider buying a policy. Certain pre-existing health conditions, like high blood pressure, diabetes, and high cholesterol, may also impact your eligibility and rates. Overall, the younger and healthier you are, the more affordable it usually is to get coverage, so don’t delay if financially protecting your family is at the top of your list.

The cost of life insurance

If you research how much life insurance coverage is recommended, you will likely see that many experts suggest estimating six to ten times the amount of your annual salary. This rule of thumb can offer a good starting point, but remember that since your individual situation is unique, you will want to consider all the factors that pertain to you. A financial professional can be very helpful in determining the type of life insurance and coverage amount that can meet your needs and budget. Together you can create a well-thought-out list of your financial obligations and goals and determine how much life insurance can ensure your loved ones are protected.

Buying life insurance for your whole family

October 6, 2022 | Blog, Life Insurance |

Life insurance is an important part of financial planning for everyone in your family. It’s designed to help protect our loved ones when we pass away, both financially and emotionally. Although most of us tend to imagine individuals when we think about life insurance buyers, coverage can also be extended to your children and other family members to help make everyone’s lives a little easier when a death occurs.

How to purchase policies for extended family

You can take out a life insurance policy on an extended family member or someone important in your life, such as a romantic partner or business partner. To do this you’ll need to get the person’s consent on the policy. In other words, you need him or her to know what you’re doing and you need to get their permission via signature to collect vital data, such as vehicle records, prescription records, and relevant health and life insurance information for the application. The person will typically have to undergo a life insurance medical exam as well.

Another important part of the process is demonstrating insurable interest, which means you need to be able to show proof that you will suffer emotionally and financially if the person dies. Typically, your spouse or parents do not have to prove insurable interest when purchasing policies. Other connections, such as a business partnership or a girlfriend/boyfriend relationship will need that documentation. Your insurance company will want to verify that there’s a true relationship between you and the person you want to cover.

It’s important to note that you cannot buy a life insurance policy for anyone you want. An acquaintance or stranger will be rejected by your insurance company.

Why you might want to buy coverage for others

There are many reasons why you might want to cover people with life insurance, depending on who they are, their relationship to you, and their situation. Here’s a breakdown of potential insurees:

Spouse or partner

Life insurance is an important part of securing a future with your spouse. It’s a good idea for you to have a policy that can cover:

Outstanding mortgage payments
Payments for any debts from your assets
Investments or future income
Day-to-day living expenses
Child care expenses
Final expenses when you pass away

For more on buying life insurance for your spouse check out our blog, how to buy life insurance as a couple.

Parents

Aging parents often come to depend on their children in their golden years and caring for them comes with financial responsibility. Buying life insurance for your parents can provide you with financial protection if they leave behind unpaid bills when they die. Some of the financial considerations that life insurance can help cover include:

Medical bills – As your parents age, they may accumulate significant medical costs. Prescriptions, medical treatments, doctor or hospital visits, and other care costs may be outstanding when they pass away. If a parent dies in a hospital, the medical bills can be costly for the final days of treatment.
Financial debt – If your parents have a mortgage, credit card balances, or other outstanding loans, those debts are often passed down to other family members, leaving them with bills they didn’t expect.
Funeral expenses – When a parent dies, you may need to make funeral arrangements if they weren’t already planned. Funerals can cost thousands of dollars. Costs for a casket, urn, flowers, obituaries, transportation, use of funeral home and more can be a financial burden on you and your family.
Moving a surviving parent – If one of your parents dies, you may want to move your living parent closer to home to care for her or him. Those moving expenses, as well as the process of selling the old home, can cost thousands of dollars, especially if your surviving parent lives out of state.
Caring for your living parent – To care for a surviving parent, you may need to take time away from work, which can impact your income and savings. If a surviving parent requires long-term care in a facility, the cost can be significant.

Children

Life insurance is financial protection that helps dependents cover the bills when a family breadwinner dies. Very young kids don’t provide financial support to your family, so in most cases, it isn’t necessary to take out life insurance for them. The main reason you’d consider taking out a policy on a child would be to cover the cost of his or her funeral expenses in the event of an unexpected death.

A policy for a child would lock in premiums at a young age, protect your child’s insurability, and could be used for investment or savings for your child’s future expenses. However, while life insurance rates will go up as your kid ages, chances are they won’t ever be priced out of or denied a policy when they need it.

If you have an older child, and you cosigned student loans, mortgages, car loans, credit cards, etc., you may want to take out a life insurance policy to pay off those loans if your child dies prematurely. Conversely, as a son or daughter with a co-signed loan, you could take out a life insurance policy on your parents to make sure you can cover the costs on the money borrowed, should they pass away.

You can insure your child by purchasing a children’s life insurance policy or adding a child rider to your own life insurance policy.

Siblings and other relatives

There are some scenarios in which covering your brother, your sister, your aunt or uncle, or even your cousin makes sense. If your sister, who is taking care of your elderly parents, suddenly dies, for example, your parents may not be able to cover the care they need. To ensure their continued support, you would purchase a life insurance policy for your sister and name yourself the beneficiary. That way you would get the money to help care for your parents.

If you are considering a life insurance policy for your children or an extended family member, it’s a good idea to make an appointment with a financial professional to understand your options and develop a strategy.

North American, A Sammons Financial Company

Is a life insurance policy through your job enough?

September 1, 2022 | Blog |

Most people get life insurance through their employer because it’s easy and convenient. All you have to do is sign up. You don’t have to take a medical exam, and you only have to fill out one form and name a beneficiary. The problem, however, is that the coverage you get through your work probably won’t be enough. To secure the appropriate amount of coverage for you and your family, it’s vital to consider buying a supplemental or individual life insurance policy. Here’s why.

Why relying on your employer-provided plan might not be enough

Life insurance offered by your employer is often included as part of your overall benefits package. While some life insurance coverage is preferable to none at all, you may want to ask yourself whether or not relying just on the life insurance offered through your job is enough. There are some ways employer-provided life insurance may fall short, such as:

Limitations to coverage

While the coverage provided by your job may be low-cost, it might not offer enough coverage. The U.S. Bureau of Labor Statistics, for instance, found that the average life insurance benefit amount for flat-dollar plans in 2020 ranged from $10,000 to $25,000.² If you are single with no dependents, this amount may be enough for you. On the other hand, if you’re married, have children, or own a home, or you’re planning for any of those things, that amount of coverage likely won’t go very far. There’s no one-size-fits-all amount, but various professionals in the life insurance space may recommend purchasing coverage that is several times your annual income.

Policy options may be restricted

Work life insurance policies are part of group life insurance plans, which are completely determined by your employer. This means you’ll likely have zero say in the details of the policy and you can’t customize it to fit your needs. You’ll also have limited coverage for a spouse.

Lack of control

Your employer can decide to drop its life insurance plan at any time. If they do, you may lose your coverage immediately, without any say in the matter. Your employer is the policyholder, not you, so you’ll likely find it difficult or impossible to talk to the insurance carrier.

Changes in employment

Your life insurance through your employer is tied to your employment status, so if you decide to leave your job, retire, or get laid off, you will likely lose your coverage. If you can take your employer-sponsored policy with you, you probably won’t receive the pricing benefits provided by the employer. This means you’d be paying more money for coverage that likely isn’t sufficient.

Should I consider an individual life insurance policy?

Forty percent of Americans are either without life insurance or are underinsured, according to Life Happens and LIMRA’s 2021 Life Insurance Barometer Study.¹ Most people don’t even realize that the coverage provided by their job may be insufficient. While employer life insurance is a great starting point, you must consider getting your own policy if you want to acquire the right amount of protection. Individual life insurance plans offer:

Get the coverage amount your need

Coverage through your employer can vary and often may not fully address your needs. Additionally, there are many different types of life insurance policies available to you and the policy options offered through your job could be very limited.

Affordable options

Many people feel that they simply can’t afford to buy additional life insurance. But the fact is, individual policies can often be affordable based on your budget. Certain term life insurance policies, for instance, can cost as little as $160 a year.¹

What are the different types of individual life insurance?

Purchasing individual life insurance can go a long way toward providing the kind of financial stability for your loved ones that an employer-based plan may not. There are a variety of choices worth exploring, but the two main options are term and permanent life insurance.

Term life insurance

Term life insurance has level premiums that last for a set number of years (the term). This life insurance generally includes a death benefit in the form of a lump sum of cash that’s paid out to a beneficiary by the life insurance company if you die while this coverage is active. This lump sum can be used for a variety of things, such as burial expenses, mortgage, and debt payments, living expenses for your family, or donations, generally tax-free. Additionally, you may have the option to convert your policy to permanent coverage before the term ends. After the term expires the policy may either terminate or automatically renew annually. If your policy is slated to terminate at the end of the term period, then in order to continue the coverage you may need to shop for a new policy.

Permanent life insurance

Permanent life insurance premiums are used to maintain the policy’s death benefit and may allow the policy to build cash value that can be borrowed by the policy owner, which is another great benefit of permanent life insurance. There is often a waiting period after the purchase of permanent life insurance before borrowing is permitted. This allows potential cash value to accumulate in the policy. But, after that waiting period expires you’ll have the option to withdraw potential cash value to help you when you need it most. If you have an emergency medical issue, for example, the potential cash value can be used to pay for health costs. Many policyholders also tap into potential cash value for other reasons such as building a fund for college costs or to help supplement retirement income, to name a few.

Watch this short video to learn more about these two types of policies.

https://youtu.be/iLKg8skN0gE

¹Source: 2021 Insurance Barometer Study, Life Happens and Life Insurance Marketing and Research Association (LIMRA). Methodology for 2020 Insurance Barometer Study: The Insurance Barometer is an annual study that tracks the perceptions, attitudes, and behaviors of adult consumers in the United States. In January 2020, LIMRA and Life Happens engaged an online panel to survey adult consumers who are financial decision-makers in their households. This survey generated over 2,000 responses. LIMRA conducts research on distribution systems for the financial services industry. Life Happens, is a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families financial futures. Life Happens does not endorse any insurance product or agent.

² Source: 2020 National Compensation Survey, U.S. Bureau of Labor Statistics

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

North American, a Sammons Company

Life insurance for stay-at-home moms

August 11, 2022 | Blog, Life Insurance |

As a stay-at-home mom, you may not be the family breadwinner, but the things you do for your loved ones daily are incredibly valuable. In fact, according to the 2020/2021 salary.com survey of 19,000 mothers, a stay-at-home mom’s salary value is equal to $184,000. Needless to say, all that you do every day would not be easy to replace. That’s why it’s so important to consider having a plan in place to help ensure your family could stay afloat. One option is life insurance. Here are some of the ways a life insurance policy can benefit your family:

Cost of living

The main benefit of a life insurance policy is to provide a death benefit to beneficiaries should you pass on. A life insurance policy can help to keep your family financially stable after you pass away. The death benefit proceeds from a life insurance policy can help to cover everyday expenses like mortgage or rent payments, utility bills, groceries, and more. Getting a payout from a life insurance policy could be a big help for your family to maintain their standard of living.

Debt

Should you pass away, death benefit proceeds from life insurance can be used to help pay off those debts or make them more manageable for your family. It can also be used to help pay for any of your outstanding debts.

Childcare expenses

One of the biggest expenses your family will have to shoulder without you is the long-term costs of child care. According to a 2021 Care.com survey, 72% of families say child care is more expensive and 46% of families say child care is more difficult to find, due to the pandemic. If you pass away, your kids will need someone to watch them while your partner is working. Your children may also need to be taken to school, the doctor, sports practice, and other places, so someone will need to drop them off and pick them up. Hiring a caretaker is a line item your family likely did not have in the budget. Death benefit proceeds from a life insurance policy can help to make sure your kids are looked after if you aren’t there.

Home costs

If you pass away, maintaining a home by cleaning, shopping, and cooking is a big job. Some of these chores can be covered by your partner but chances are good that help will be needed. This can also be a big expense where death benefit proceeds from life insurance can help.

Mental support

Should you pass away, your family may face a difficult adjustment period, emotionally and financially. Life insurance can help make that process a little easier by helping pay for such things as grief counseling. It can allow your partner to take time off.

Cost of final expenses

The price of a funeral can be very expensive. According to the National Funeral Directors Association, the median cost is $7,848. A life insurance policy can help your family pay for funeral arrangements and other related expenses required to lay you to rest. Not having to worry about money for your final expenses can help make things easier for your grieving family.

Inheritance

With a life insurance policy, you can not only set aside money for your children to help them carry on when you pass but also aid them in the future. Leaving your beneficiaries money can go a long way toward helping your loved ones pay for something like higher education down the road.

What types of life insurance are available?

The type and amount of life insurance needed as a stay-at-home parent depends on your personal situation. Some factors to consider may include:

Home services for your partner. These might include outsourced services for housekeeping, grocery shopping, cooking, transportation, etc.
Cost of full or part-time child care in your area if needed.
Types of life insurance available, how much they cost, and your budget constraints. Some options include:
Term life insurance –Term life insurance is typically the least expensive. It provides death benefit protection for a specific period, typically 10, 20, or 30 years as long as the premiums are paid.
Permanent life insurance – Permanent life insurance offers lifetime coverage and some offer the potential to build cash value, as long as premiums are paid.