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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.

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.

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.