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Should I Purchase Life Insurance for My Child?

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Families have long debated whether or not life insurance for children is a worthy investment. Some advisors and agents believe it’s a smart financial move, while others believe the cons far outweigh the pros. The one point that most agree on – purchasing a life insurance policy for a child should be secondary to more critical investments. If you’ve built an adequate emergency fund, invested in a college fund for your child, have a solid retirement plan, and life insurance on yourself, then you can begin thinking about investing in a life policy for your child.

Let’s take a look at the pros and cons and let you decide for yourself.

Your Options

If you have a child under the age of eighteen, there are two types of policies you can purchase:

1) Rider on your own life insurance policy – When purchasing a term life policy for you or your spouse, ask your agent if the carrier offers a rider that would cover your minor child. This rider offers an affordable option for parents looking to buy a small term policy for their children. Coverage amounts are usually limited to $20,000 or less, with term limits of 10, 20, or 30 years.

2) Permanent policy – Your other option is to purchase a permanent policy on your minor child. While these policies are still typically for a small amount, it does extend the option for a little more in coverage. Policy coverage is generally limited to $50,000 or less, with coverage provided for a lifetime, or as long as the premium is paid.

Pros and Cons of Life Insurance for Children

Insurability for the Future

Pros: Many parents choose to purchase a life policy to protect their children later in life. Everything can change on a dime, and none of us really know what the future holds for us. Purchasing a permanent life policy can help protect against those unknowns, ensuring your child still has coverage, even if he/she is diagnosed with a serious disability or illness later on down the road. Not only does this ensure coverage later in life, it locks in the cost at a much lower rate. If your family history puts your child’s future insurability at risk, purchasing a life policy at a young age could prove beneficial.

Cons: While it’s impossible to know what the future will hold for your child, medically or otherwise, the chances of them becoming uninsurable are very small. Although family history will play a factor in insurability and premium, underwriters will also consider medical advances, making it easier to purchase a policy with chronic conditions such as diabetes and cancer. One should also remember that it’s very difficult to determine exactly how much coverage your child will need in the future.

Death Benefits

Pros: While your child doesn’t likely have any income to replace should they pass away, the death benefit is a great way to cover final expenses and any unpaid medical bills. With the proper rider, your child’s policy could even cover medical treatment prior to their passing.

Cons: If death benefits are your primary reason for considering a life policy for your child, there are more affordable ways to ensure these expenses are covered. Consider adding a rider to your own policy or, if this option isn’t available to you, consider purchasing a small, low-cost term policy instead. $10,000 should be enough to cover final expenses and the premium is much more affordable than a permanent policy.

Accumulated Cash Value

Pros: Unlike term insurance, permanent life policies accumulate tax-deferred cash value. This cash value can be used for future planning, such as a down payment on a new home or college tuition. For many, this is an effective way to help contribute to their child’s savings.

Cons: While many consumers find benefit in utilizing the cash value on a permanent life policy, there are some downsides as well. It’s important to keep in mind that policy loans and withdrawals will reduce the overall death benefit. A loan, coupled with annual policy fees, could potentially cause the policy to lapse, if not closely watched. If saving for your child’s future is your primary goal, consider purchasing a small term policy and putting the rest into a savings account. When properly managed, the savings account could yield higher results and offer you greater control over its assets.

Before You Buy

Before purchasing a life policy for your child, take a close look at your current financial situation and goals for the future. Meet with a trusted representative, who can help you paint the big picture, ensuring both your child and finances are protected.

What to Do If You Can’t Afford to Pay Your Life Insurance: Part 1

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If you own a life insurance policy, you’ve already weighed every option and determined the value it stands to add to your portfolio. You’ve considered the financial strain an unexpected death could put on your family, and defined how much your dependents would need to survive, without your income. While we spend each day educating our clients on the importance of life insurance, we are still conscious of the fact that everyone falls on difficult times. And, when those days arrive, life insurance payments may become one of the first casualties.

Whether it’s the loss of a job or unexpected expenses, everyone falls on tough financial times at least once in their adult life. This is when we have to analyze the family budget and identify ways to cut back on spending. Since none of us have any plans to pass away anytime soon, life insurance is often the first part of the budget families consider slashing. After all, how can you worry about your family’s financial situation ten or twenty years from now, when you can’t even figure out how to get past today?

If you’re having trouble paying the premium and are considering canceling your life insurance policy, make sure you understand all the potential repercussions. Don’t make a hasty decision now that could significantly impact your family later, just to save a money in the short term.

Life After Death

When a family member dies, those left behind are often left with a great number of expenses. In addition to the mortgage and daily living expenses, there are funeral costs, credit card bills, and taxes. In fact, 62% of consumers polled indicated they would be financially strapped almost immediately, if the primary breadwinner passed away unexpectedly. While most companies are sensitive to a family’s loss, they would go out of business if they absolved the outstanding debts of everyone who suffered the loss of a loved one.

Far too many people allow their life insurance policy to lapse, without considering all their options. Most don’t even realize that they have any options at all. Let’s look at a few ways you can keep your current life policy in place, even when you can’t afford to pay your premiums.

Term Life Insurance

A term life policy covers you for a specified period of time. If you pass away during that period, your beneficiaries receive a death benefit. If you’re still here, once the policy period expires, no one receives anything. If you fail to pay the policy premium when it comes due, the policy will lapse and your beneficiaries will receive nothing.

If you own a term policy, there are a few options available to you:

  • Grace period: While you’ll need to check the specifics of your policy, most insurers offer a 30-day grace period. Just send in your payment within the grace period and the policy will continue on as usual.
  • Payment plans: Most insurance companies also offer the option to pay your premium in installments. If you currently receive a bill annually, or even semi-annually, call your insurer and ask what installment options are available to you.
  • Reinstatement of a lapsed policy: If you failed to make your premium payment within the grace period, the policy will lapse. Don’t get discouraged though, there’s still hope. Most companies will allow you to reinstate your policy after the lapse date. The rules very from insurer to insurer, so check with your agent or the company to find out their specific rules. Some allow for reinstatement up to five years, but do require the insured to undergo the underwriting process again.

Permanent Life Insurance

If you opted to invest in a permanent life insurance policy, you likely had a number of reasons for doing so. Unless your situation has changed drastically and it’s probably a good idea for you to keep the policy in place. Fortunately, there are a number of options for you to consider:

Use your cash value to pay premium: This option is best for insureds who have had a permanent policy in place for quite some time. In the initial years, the policy is slow to build up cash value. As time goes on, however, it does build enough cash value to make a significant impact on one’s financial situation. While we recommend holding off on cashing in until you’ve reach the goals you set when purchasing the policy, we also understand that unavoidable circumstances occur. And using the cash value to pay the premiums is certainly better than allowing the policy to lapse. Before selecting this option, be sure to discuss the long-term implications this could have on your policy. Using the cash value of your policy is considered a loan. If you don’t pay it back, the death benefit your beneficiary receives will be reduced and, in some cases, cause the policy to lapse.

Use your dividends to pay premium: If your permanent policy pays dividends on the policy’s investments, you may be able to use these to offset your premiums.

Reduce the death benefit: Many insurers allow customers to decrease the face value of the policy in exchange for a reduced premium. In some cases this diminishes the premium amount enough for the policy to be considered “paid in full.” In this instance, the policyholder is able to stop paying on the policy entirely.

Waiver of premium: Many policies include a waiver of premium rider, which allows the insured to stop paying on their policy if they meet the disability conditions set by the carrier.

Convert to a term life policy: While you would incur some cancellation feeds, converting to a term policy is another option for those carrying a permanent life policy. In this case, you would cancel the permanent policy, using the cash value to convert to term insurance. If you’re considering this option, just keep in mind that your new policy would only provide a death benefit should you pass away during the defined timeframe.

If you’ve found yourself in a financial predicament, remember – nothing in life is permanent. This too shall pass. Work with your insurance advisor and explore all your options before allowing your policy to lapse. Stay tuned for Part 2, where we explore a few more potential alternatives and answer some questions frequently asked by others in your same situation.

Busted: Top 10 Life Insurance Myths

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For many, the subject of life insurance is uncomfortable. Let’s face it, no one really enjoys facing the idea that they could leave their family before they’re ready. Believe me, I understand. I’d be willing to bet, however, that you’d do just about anything to protect your loved ones.

When it comes to ensuring your family’s financial future, it’s vital that you take the time to separate fact from myth. To help you on your quest for the truth, we’re here to debunk the 10 most common myths about life insurance. Armed with the facts, you can make an informed decision, ensuring your loved ones are financially set should something happen to you.

Myth #1: Smokers can't get life insurance

While smoking is one of several factors that will determine your rate class, it is seldom the exclusive cause for denial. However, since non-smokers are typically given a better premium rate, smokers are encouraged to quit before applying for a policy. Most insurance companies require at least a year smoke-free before qualifying you for a non-smoker’s rate.

Myth #2: I'm single, or newly married with no children – I don't need a life insurance policy

When we think of life insurance, we often picture middle-aged couples with young children in the home. While life insurance is more critical for individuals with dependents, that doesn’t mean they’re the only ones to benefit. Remember – the younger and healthier you are, the lower the premium. So, planning early not only ensures your loved ones are able to pay off any outstanding debts you owe, it also locks in your premium at the lowest rate possible.

Myth #3: Life insurance is too expensive

According to a recent study, 64% of polled consumers are unaware of the actual cost of life insurance, believing it’s 3 times more expensive than it really is. The truth – while there are expensive policies available, life insurance doesn’t have to destroy your budget. Start out with an affordable policy, and purchase additional coverage as your needs and financial situation evolve.

Myth #4: I’m overweight; I’ll never qualify for a policy

To qualify for a life insurance policy, you will be required to answer some questions about your physical and mental health, including how much you weigh. While obesity will likely result in a higher rate class, it doesn’t necessarily disqualify you from a policy. If you’re concerned, open up a dialogue with your agent; they’ll be able to recommend the best policy for your unique situation.

Myth #5: I'm a stay-at-home parent with no income coming in; I don't need life insurance

Whether you're a stay-at-home parent or the primary breadwinner, life insurance is still an important component in planning for your family’s future. Consider all that you do for your family, day-in-and-day-out. If something were to happen to you, how much would it cost to replace those services annually? Life insurance could help cover these expenses, ensuring the household runs smoothly after you’re gone.

Myth #6: Buying a term policy and investing the rest is always the best option

While this is a great option for some families, it’s not for everyone. There are a number of factors to consider when deciding between term and permanent insurance. Your agent can help identify which type of policy will best meet your family’s needs, both now and into the future.

Myth #7: My employer provides me with a life insurance policy; that’s all I need

Many consumers are under the impression they can take their employer-offered life policy with them when they leave or are laid off. Unfortunately, this policy is non-transferrable, leaving you with no life insurance protection. Additionally, these policies are typically limited in coverage, with barely enough to cover funeral expenses.

Myth #8: The face value of my policy should be twice my annual salary

While there are a few formulas you can use to determine how much coverage you need, there’s no set rule that applies to everyone. Careful consideration of your family’s financial situation is necessary to determine the amount of insurance that should be purchased.

Myth #9: If I purchase a term life insurance policy, I’m stuck with it for life

Many term policies offer the option to convert to a permanent policy at a later date. When reviewing options with your agent, ask about the available riders for each policy you’re considering; and be sure you understand the terms of conversion upfront, as most policies require term conversion within a specified period of time.

Myth #10 My life insurance death benefit is only payable upon my death  

As mentioned above, most policies offer rider options for an additional premium. One rider, called the “Acceleration of Death Benefit Rider,” allows insureds access to the policy’s death benefit under certain circumstances. Qualifying injuries and illnesses vary from policy to policy, so be sure to ask your agent for details on the policies you’re considering.

Are you considering life insurance, but feeling hesitant? What’s holding you back? Please share your reservations below; who knows, maybe we can “bust” another popular myth.

11 Things You Should Consider Before Purchasing Life Insurance

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For most American families, purchasing life insurance is an important financial purchase. Upon the named insured’s death, the beneficiaries will receive a death benefit that will, hopefully, ensure their financial security for years to come. With over 2,000 life insurance companies to choose from, and a myriad of policies to sift through, choosing the right coverage can prove to be a daunting task. With that in mind, we’ve put together some tips to ensure you get the best value for your money.

1) Evaluate Your Insurance Needs

Most consumers are under the impression they only need life insurance if they have dependents. The truth is, most of us stand to benefit from owning a life insurance policy. Whether you’re young and single, the primary breadwinner, or a stay-at-home mom, you should consider all the facts before making such an important decision. If you’re unsure, meet with an insurance agent. He or she can assist you in evaluating both current and future needs and provide you with the information necessary to make a decision that helps you rest easy at night.

2) Take the Time to Really Consider How Much Coverage You Need

How many individuals depend on you financially? Are you the primary source of income for your family? If you’re a stay-at-home-mom, what does the family depend upon you for from day-to-day? What does your family’s financial portfolio currently look like? How will your loved ones pay for final expenses and outstanding debts upon your death? These are all questions you should consider when determining how much coverage you need.

3) If You Have a Current Life Insurance Policy, Assess it Carefully

Do you currently have a life insurance policy through your employer? Or perhaps your parents purchased one for you when you were a child? Speak with your agent first before canceling anything. There may be an option to change your policy to fit your current needs. Or, it could have hidden coverage that adds significant value to your portfolio.

4) Term vs Permanent

There are currently two basic types of life insurance: term insurance and permanent insurance. A term policy typically offers you more coverage for a lower premium. Coverage is offered for a set time period and the policy does not build up cash value. Permanent policies come with a higher price tag, but remain in place for as long as premiums are paid. They also build up cash value, which can be borrowed against at any time. Each policy has its own set of pros and cons that should be considered carefully before purchasing.

5) Evaluate the Future of Your Policy Before Purchasing

When evaluating potential policies, ask your agent to generate a year-to-year display of values and benefits for each. How quickly does the cash value grow? Does one beat out the other over time? These comparisons will assist you in determining which policy offers the most value for your dollar.

6) Discuss Your Rider Options

Most policies offer additional coverage in the form of riders. Some offer access to your death benefit before you die, while another allows you to use the policy’s cash value to pay for long-term care expenses. When considering policy options, be sure to inquire about these riders, as many are very low in cost compared to the benefit they provide.

7) Get to Know the Companies You’re Considering

When applying for a policy, you’ll be asked several questions regarding your health. It only makes sense then, that you should do the same. Research the companies you’re considering. How financially stable are they? How long have they been in business? Hopefully your insurance policy won’t be needed for quite some time, so it’s important that you partner with a company that is in it for the long haul. A.M. Best is a great resource, as is your state insurance department.

8) Understand the Policy Before Purchasing

It’s important that you read the fine print before signing on the dotted line. Are there certain instances where death benefits can be denied? If so, what are they? Are premiums level, or do they vary from year to year? How long before cash value starts to build? What portion of the benefits or premiums isn’t guaranteed? Meet with your agent to clear up any confusion before making your final purchase.

9) Consider Your Beneficiary Carefully

Choosing a beneficiary sounds simple, right? While it’s pretty straightforward most of the time, you do want to consider it carefully, as there are instances where the wording could result in unexpected tax or legal issues. Check out our blog Tips for Choosing a Life Insurance Beneficiary for some helpful advice.

10) If You’re Turned Down for a Policy, Don’t Give Up

Don’t get discouraged if you’re turned down for a policy; there are plenty of other options out there. In fact, the Vista Life team specializes in finding a policy for consumers who’ve been turned down in the past. While there are some instances where an individual is uninsurable, this is not the norm.

11) Review Your Policy Every Few Years

Life happens and family dynamics change. If you’ve had any major changes occur, meet with your agent to discuss. This will help ensure the policy serves it’s purpose should the unexpected occur.

6 Items to Consider About Life Insurance Over 50

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It’s a common misconception that life insurance is only necessary for young, married adults with small children. The reality is, life insurance policies can prove beneficial at any age. As our lifespan continues to grow, people are having children later in life, further increasing the need for a policy that can take you to retirement age and beyond.

Are you over 50 and considering a life insurance policy? If so, read on for some expert advice to consider as you navigate through the decision-making process.

1) Do I Really Need Life Insurance at This Age?

This is a question only you can answer. Take a moment to consider who might be affected by your death. Who relies on you financially and how far into the future will they require your assistance? If you’re currently working, how would the loss of your income affect your family if something were to happen? What assets would your spouse or children have access to and what kind of debt are you still working to pay off?

Would a death benefit be helpful in covering the following once you’re gone:

Funeral costs –The average funeral costs more than $7,000. Have you set aside a portion of your budget to cover these expenses? Losing a loved one is emotionally taxing; adding the financial stress of paying for a funeral makes the process that much more difficult.

Medical bills –If your death is a result of an illness, you could leave behind a mountain of medical bills. An insurance policy could help relieve that pressure. When comparing policies and rates, ask your agent about the acceleration of death benefit rider. This is offered as a rider on many policies today and could help alleviate the financial pressures of an illness before passing on.

Estate taxes –Life insurance policies can help cover the costs associated with settling your estate.

Funding an education or providing a legacy – Do you have a loved one you plan on helping through college? Many consumers invest in a life insurance policy to ensure their family’s plan for a higher education isn’t derailed early. Policies are also purchased to ensure a donation is made in their honor to their favorite cause or charity.

2) How Much Coverage Should I Purchase?

While there’s no way to determine exactly how much life insurance your family will need, there are a few formulas you can utilize to determine the face value of your policy. Prior to shopping for life insurance, it’s important to consider your current financial, as well as your long and short-term goals. If your primary goal is to cover funeral expenses, you’ll require a lot less protection than the individual with a grandchild’s education to pay for or a mortgage to pay off.

3) What Kind of Policy Is Best?

There are multiple types of policies available, each with their own set of pros and cons. First, you’ll need to consider the two main types of plans and how each would help in accomplishing your life insurance goals.

Term insurance – Term policies offer a guaranteed death benefit of a specified amount, valid until the end of the policy term or until you stop paying your premiums. There is no cash value associated with term policies.

Permanent insurance – This works as a sort of savings account. A portion of your paid premium goes towards the policy’s death benefit, while the rest adds cash value. There are a number of different permanent policies available, so it’s best to speak with an insurance professional or your financial adviser before making your selection.

4) What About the Medical Exam?

The underwriting process varies from policy to policy. Some policies require you to submit blood work and undergo a medical exam, while others simply require the answers to a few questions. Once you’ve determined the amount of coverage and type of policy you need, your agent should be able to provide a clearer picture as to what will be required of you.

5) How Do I Choose the Right Company?

No matter what age you decide to purchase a life insurance policy, it’s important you select a company that will be there for you long-term. When considering your options, research the ratings of each company. A.M. Best Rating Services and Moody’s both offer a financial analysis rating that can help in identifying which company is the most stable. If you use more than one rating source, pay close attention to their rating system, as they do vary from site to site.

In addition to their financial stability, conduct some research to understand the organization’s history. A company that’s been around since the 1800’s has a proven track record that far exceeds one established 20 years ago. Additionally, visit the National Association of Insurance Commissioners’ searchable database to view any complaints lodged against the insurance company. This can provide invaluable insight into how an enterprise does business and how they might treat you or your family in the future.

6) Where do I start?

While much of the information you need is available online, it’s a good idea to discuss your family’s unique situation with an agent before making any purchases. They can help ensure you purchase the right amount of life insurance, without going overboard, and that you get the most bang for your buck. Navigating through the process is generally quick and painless; the hard part is getting started.

9 Advantages of Term Insurance

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Ushering in the New Year fills us with hope and promise. It’s a time to reflect on all the great memories and lessons learned. Whether you make annual resolutions or continuously add to your list of goals, we start with a clean slate – 365 days to build the next chapter in your life’s book. For many, getting more financially fit is part of their goals moving forward. Investing in term life insurance is a wonderful and affordable way to ensure financial security for you and your family for years to come.

Navigating the ins and outs of life insurance options can be disconcerting, which can cause many to “save it for another day.” If you’re considering your first life insurance policy, there are a number of things to consider. Before making your final decision, we recommend speaking with a knowledgeable professional about your unique needs.

Term life insurance offers many advantages over permanent life products.

More Coverage for Less Money

Term life insurance policies allow for the largest death benefit at the lowest price, particularly in your youth. Some premiums increase at each renewal, however, so be sure to review the policy’s illustration with your agent before making a commitment.

Flexibility

The great thing about term life insurance is that it comes with many options. Coverage is offered for as little as one year, or as many as thirty years.

Simplicity

Unlike permanent insurance, term life is easy to understand. Because it’s simple in nature, shopping for quotes is both quick and easy, as is the decision-making process. You have just three decisions to make – length of term, coverage amount needed, and favored insurance company.

Added Riders for Broader Coverage

None of us can predict the future, making it that much more difficult to commit to a life insurance policy long-term. Insurance providers understand this and offer a number of riders to accommodate your evolving needs. If you’re unfamiliar with these riders, our blog Hidden Value: 8 Term Life Insurance Riders You Should Consider offers details on term insurance riders and their advantages.

Not Part of Probate

Unless the estate is named as the beneficiary of the estate, life insurance death benefits are not included as part of the probate estate. Thus, beneficiaries are paid without any of the typical delays cause by administration of the estate.

Often Exempt from Taxes

Term life death benefits are typically exempt from federal income taxes, as well as from state inheritance taxes.

Meets Short-Term Life Insurance Needs

If you’re looking to fulfill temporary life insurance needs, term life insurance is typically your best option. This is particularly true for consumers under forty-five and for terms of less than ten years. If term of protection needed is between ten and fifteen years, or if you’re older than forty-five, it’s best to meet with an insurance professional to discuss your options.

Convertible

We all know how difficult it is to make a decision now that can affect you for years to come. Most term policies have an option to convert to permanent insurance at a later date. This allows policyholders to have the best of both worlds – higher death protection during the younger years and locked-in premiums later in life, as they build up cash value.

Affordable for Those Just Embarking on Their Careers

Many young professionals realize the value of purchasing life insurance, yet don’t have the funds to commit to permanent policies. Because term insurance doesn’t build cash value, insurance carriers are able to offer higher coverage at a fraction of the cost of a permanent policy. This affords young families the peace of mind of knowing their loved ones are cared for should something happen, without breaking the budget.

While our life insurance needs vary, depending upon each unique situation, term insurance is a viable option for many. Vista Life Plan’s term life insurance tool can help you easily compare rates.

5 Reasons to Convert Your Term Life Insurance Policy

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Despite their advantages, many consumers forgo permanent life insurance policies for term life, instead. Term policies are often viewed as an affordable option for satisfying an immediate need for coverage. Some financial advisors even recommend purchasing term policies and investing any additional monies in the stock market for higher overall gains.

Most term policies come with a Term Conversion Rider, which allows the policyholder to convert their term policy to a permanent policy, should their family’s needs change. If you’re in the market for a policy, be sure to discuss this option with your agent.

Already have a term policy in place? Read on to find out the top reasons why you might benefit from converting your term policy to a whole life product.

1) Your Family Could be Deeply Impacted Financially Following Your Loss

Anyone who’s faced the financial challenges that come with caring for a terminally ill or developmentally challenged family member understands its far-reaching effects. While it comes with a higher price tag, a whole life policy offers additional financial security through accumulated cash value. This can be borrowed upon at any time, adding another layer to peace of mind.

2) You’ll Likely Outlive Your Term Insurance

Term insurance has the advantage of being the most affordable option. But affordability comes with a price – you could pay years of premium, only to outlive the policy term. In fact, only about 2% of term life policies actually pay out. Once the term has expired, you lose all invested premiums, unless the policy is converted. While your family was protected in the event of your death throughout the term, you’ve made an investment that resulted in zero gains.

3) Restructuring of Your Estate

Unlike term policies, whole life insurance policies are a more effective strategy for estate-planning. Not only will they carry more security and value, they’re an effective way to ensure your family doesn’t suffer a devastating blow from incurred estate taxes.

4) Restructuring of Retirement Income

If retirement is no longer in your too distant future, you might want to consider converting your term life policy. The principal of a whole life policy is tax exempt, making it the ideal savings tool. These tax-sheltered policies can help ensure a consistent retirement income, so you can fully enjoy the fruits of your labor.

5) Financial Priorities Change

If you purchased your term policy 15 years ago, you were likely in a different position, both financially and health-wise. It was difficult to anticipate what might happen next week, much less 10 years down the road. If you feel a continuation of coverage might be necessary once the term expires, conversion could be your most affordable option. A new policy means another application and medical exam. Depending upon the outcome, this could result in higher premiums or, depending upon any health setbacks you’ve experienced, a declination in coverage. Fortunately, policy conversion allows you exemption from that medical exam.

Assuming your term policy has the necessary riders, you can convert some or all of your term life insurance policy anytime before the conversion expiration date. If you’re positive this is the avenue you wish to take, the earlier the better, as permanent policy premiums increase with age. It’s a good idea to review your life insurance policy with your insurance agent annually to ensure it still fits your family’s needs. After all, what’s the point in making such an investment if your family will still be left financially exposed?

Young, Single, and Childless? Why You Still Need Life Insurance

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So, you’re officially embarking on the next chapter of your life. You’re fresh out of college, just started a new job, and are on the hunt for your first home. Congratulations, you’ve officially entered adulthood. Your twenties are a special time and you should enjoy every moment to its fullest. But, that doesn’t mean you shouldn’t make some “adult decisions” during this period. And purchasing life insurance should be one of those decisions.

Traditionally, people don’t start thinking about life insurance until they get married or welcome a baby into the world. What could you possibly need life insurance for before that? Who would you be protecting before that? Well, there are still a number of great reasons to consider purchasing life insurance above and beyond what your employer offers. Let’s look at a few reasons why your twenties or early thirties is a smart time to purchase.

Younger = Lower Premiums

The insurance company’s revenue is determined by the amount of premiums collected, minus the death benefits paid out for that specific risk group. Another words, every year that the insureds don’t die, their revenue goes up. The life insurance underwriter’s job is to identify the likelihood of an early payout for each applicant and the premium is adjusted accordingly. The risk of them paying out when you’re young is significantly lower. As a rule, that decreased risk is transferred to you through lower premiums.

Good Health = Lower Premiums

The other primary factor in determining your premium is your health. While it’s possible for any one of us to die at any time, you’re statistically less likely to meet an early death if you’re young and healthy. As each birthday passes, the risk of you developing a health condition rises. Once you reach your 30s, the chance of you developing a chronic condition like heart disease or high cholesterol rises considerably. So, for most consumers, the ideal time to purchase life insurance is in your twenties. Your health, coupled with your age, equates to the best possible premium.

Insurability Later in Life

A permanent life policy is recommended over a term policy, as this is a great opportunity to build a little nest egg through the cash value on your policy. Depending upon your financial situation, however, this might not be an affordable option for you. If you decide a term policy is best for your budget, don’t fret; you’re setting yourself up for a later date.

Most term life insurance policies include a term conversion rider standard on every policy. This rider allows you to convert your term policy into a permanent life policy without submitting to another medical exam. While your converted policy premium will reflect your age and overall health, this rider comes in handy for people who have developed medical conditions since the original policy’s inception. It makes the entire process smoother and more affordable.

While this rider comes standard on most policies, some companies require the benefit to be requested on the application. Be sure to check with your agent to ensure you don’t miss out on this valuable opportunity.

Living Benefits

Most people equate life insurance to death. And rightfully so. That is it’s intended purpose, right? While this is true, many people use their life insurance for living benefits as well.

Your whole life policy has the added benefit of accumulating cash value. This builds slowly at first, as there are policy set-up fees that must be paid down at its initially. But as time goes on, you’ll start to see the cash value really grow. This is your money that can be borrowed against at any time, for any reason. Many insureds use this money to help pay off student loans, offset the costs of their wedding, or even supplement their income when they get to retirement age.

When purchasing your policy, be sure to speak with your life insurance agent about the Acceleration of Death Benefit Rider. Should you become terminally ill, this rider allows you to collect on your death benefit early. This can help ease the pain of paying for medical bills or provide you with the funds to check some things off your bucket list before your death. It’s a living benefit none of us envision ourselves ever needing, but are grateful for if and when the time comes.

Your twenties are a time to celebrate. You’re officially out on your own, enjoying the wonderful gifts that life has to offer. It’s also a time to start considering financial priorities and setting yourself up for long-term success. The best time to purchase life insurance is when you’re young and healthy. If you invest in your future now, it’s one less thing you have to think about later, when you’re celebrating the growth of your family or a new home purchase. So don’t delay; speak with an insurance professional about your options today.

Hidden Value: 8 Term Life Insurance Riders You Should Consider

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So, you’ve done your homework regarding how much life insurance you need and what type of policy best fits into your current financial situation. Congratulations! You’ve tackled the most challenging part of the decision-making process. There are, however, a few more things you need to decide on – does the policy you’re leaning towards offer life insurance policy riders and, if so, which ones fit into your unique position?

If you’ve been completing online quotes or discussing your options with an agent, you’ve probably heard the term “rider” before. Before we get started discussing your options, let’s begin with a brief introduction into life insurance riders and their benefits.

What is an Insurance Rider?

A rider is an add-on provision to your basic life insurance policy which provides additional benefits for an additional premium. An amendment to the original contract, if you will. It allows you to customize your life insurance policy in order to prepare for specific, unforeseen circumstances, as defined within the rider.

The options available to you will vary by insurance company and policy, as will the parameters regarding how each one works. The add-on premium price will also fluctuate, depending upon factors such as your age, health, and policy type. While we cannot list every available rider, we’ve compiled a list of those we feel are the most useful. When discussing life insurance options with your agent, be sure to include these in your discussion.

1) Disability Income Rider

This rider’s benefits are exactly as they sound – if you were to become disabled and unable to work, the policy would pay you a monthly stipend, as defined by the parameters of your policy. The pay-out specifics vary from policy to policy: some will only pay out if you’re disabled from an accident, while others pay out for either an accident or sickness. Some policies provide income for the length of the disability, while others limit your benefits to a defined length of time.

While many consumers choose to purchase disability insurance through their employer, the policy ends, once employment has terminated. By purchasing the disability income rider, you have peace of mind of knowing exactly when the offer expires, as it runs congruently with your life insurance policy.

2) Waiver of Premium Rider

Even if you choose not to purchase the disability income rider, you might want to consider the waiver of premium rider, which ensures that, should you become disabled, the parameters of your policy will remain the same, even if you cannot pay your premium.

If this rider is important to you, be sure to compare the fine print on each policy you’re considering, as every life insurance company defines disability a little differently. Your insurance agent can help you read between the lines to ensure you invest in a policy that meets your needs.

3) Term Conversion Rider

This rider comes standard on most life insurance policies. It allows you to convert your term policy into a permanent life policy without submitting to another medical exam. If the policy you’re considering does not include this rider automatically, inquire further with your agent as to why and how much it costs to add it on.

Most of us would still find value in a life policy for years after the term limit has expired. This rider will make the entire process easier and more affordable.

4) Acceleration of Death Benefit Rider

Imagine you’ve been diagnosed with cancer and the doctors have given you 6 months to live. A grim thought, but a daily reality for many. During that time, you’ll likely incur thousands of dollars in medical expenses. With this life insurance rider, you can start receiving your death benefit pay-out now, to assist with those medical bills.

Some life insurance policies come with this rider built-in, but if yours doesn’t, we suggest adding it to your policy. A terminal illness can become expensive quickly; this is a great way to ensure your family isn’t stifled with those bills long after your passing.

5) Long-term Care Rider

A long-term care rider is often compared to a long-term care insurance policy. It takes money out of your death benefit to pay for your long-term care expenses, such as a nursing home or a private nurse.

Some insurance companies lump this coverage in with the accelerated death benefit rider, so you will want to inquire further, when discussing these benefits with your agent, to ensure you receive the coverage you need.

6) Critical Illness Rider

With this rider, your insurer will pay you a lump sum should you be diagnosed with an illness or condition, such as cancer, stroke, kidney failure, or heart attack. The list varies from policy to policy, but the benefit remains the same – the rider provides your family with the money needed during the course of your illness’ treatment.

7) Guaranteed Insurability

Let’s face it; life can change in an instant. Because we never know how our health could change, this rider is a great addition to any life insurance policy. It allows for you to purchase additional coverage at a later date, without submitting to another medical exam or evidence about your insurability. The option to purchase more coverage typically comes up at different intervals, such as every four years, or at certain ages. When determining the additional cost, the insurance company considers your age and not your health.

8) Child Protection Rider

While the death of a child is something none of us ever want to think about, it is a possibility that should be considered. Most of the time, losing a child does not result in a loss of income, but there are other factors to think about. How will you pay for final expenses? How will you be able to handle the emotional tragedy? Will you be able to go back to work right away or will you need to take time off? If the child’s death is due to illness, how will you pay for the medical bills that have accumulated?

This term life insurance rider offers coverage for those final expenses, should the unthinkable happen. You can purchase coverage in increments, typically of $1,000, and the premiums are typically reasonable in price.

Every family’s situation is unique, so there is no one-size-fits-all answer as to which riders should be included in your term policy. When shopping for the policy that best fits your short and long-term needs, it’s best to speak with an experienced and knowledgable life insurance agent. They can help you make an informed decision and identify the right policy package, at the right price. Shopping for insurance is never fun, but your agent should help take some of the guesswork out of the process.