One of the most common reasons for purchasing life Insurance is to provide for your family if you are no longer around.
In addition to replacing an income, the death benefit from a life insurance Policy can also be used to pay off major bills like a mortgage, credit card debt, car loans, or unexpected medical expenses.
In this guide we’ve explained how an affordable life insurance policy can provide a safety net for your family to pay off bills if you are no longer around. We’ve also included some actual life insurance rates by age to help you estimate the cost of a policy for you or your spouse.
Quick Article Guide:
1. The Event That Got Me Thinking About Life Insurance
2. Preparing to Pay Bills and the Mortgage with Life Insurance
3. Is the “Cheapest” Life Insurance Policy the Best Choice for Your Family?
4. Actual Life Insurance Rates For Males and Females (Ages 40 to 75)
5. Buying Permanent Life Insurance to Leave Money Behind or Pay for Final Expenses
6. Using Life Insurance for Pension Maximization
7. Health Considerations when Purchasing Life Insurance
8. How Much Life Insurance Coverage is Enough?
The Event That Got Me Thinking About Life Insurance
I didn’t have a cell phone case for some time, years even. I wanted something with style but nothing that cost too much.
Then, out of nowhere, the little voice inside my head kept telling me to get a case. I meant to – really, as soon as I found some time, I was going to get one.
But instead, I kept coming up with excuses and found any reason to procrastinate. And sure enough…it happened.
I was coming home from work and couldn’t wait to get inside to see my children. I had a lot of stuff to carry in with me and didn’t want to make two trips, so I carried it all at once.
When I got to the door, I fumbled to find my keys and just as I put my key in the lock, you guessed it, I dropped my cell phone. I can still see it now, it’s like it happened in slow motion. I saw it going down, but I couldn’t do anything to stop it. It hit the corner just right, and the face of my cell phone was shattered.
In the grand scheme of things, sure a cell phone is pretty insignificant, but this got me thinking about the other things I wanted to protect – especially my family and the people that matter to me the most. What would they do without my financial contributions to the household each month, and what would happen to our home?
Preparing to Pay Bills and the Mortgage with Life Insurance
Are you prepared to deal with the untimely loss of a loved one? How would major bills and debts be paid if the major income provider of the house suddenly passed away?
I know many men and women have asked themselves these questions, but few have decided to do something about it. Unlike my cell phone, this decision matters, and properly insuring the family can make all the difference when life throws you a curve ball.
Preparing for the worst case scenario is the only way to insure your family’s well-being. That’s what life insurance does for you. It’s the cell phone case to your family’s financial security.
With so many things to consider, how do you determine how much coverage is needed and for how long? This is the ultimate question. Proper thought and consideration must be taken when purchasing a policy, but don’t worry, we’ve broken down the basics for you.
Is the “Cheapest” Life Insurance Policy the Best Choice for Your Family?
So many people take the first step to get insured, only to purchase a policy that does not meet their needs. Some coverage is better than no coverage, but one of the things to consider is the term length of your policy.
The “term” of your life insurance policy is the amount of time that your rates and coverage are guaranteed for. Life insurance terms are typically 10, 15, 20, 25, or 30 years in length. Many young insurance shoppers are attracted to the low premiums of a short term policy, but this strategy often backfires.
Let me explain why.
First, life insurance gets more expensive with age. Generally speaking, you will never be healthier than you are at an early age. You certainly will not get any younger. Life insurance is based off your mortality risk, and as we get older, this increases.
Age, overall health, and weight are major factors in determining insurance premiums. Locking in a guaranteed renewable insurance policy early in life guarantees your insurability for life, and locks in low premiums for the term of the policy.
The majority of life insurance companies offer fixed rates for up to 30 years on their term polices. This means that once the policy is established, your premiums will be fixed for 30 years, regardless of any changes to your health or lifestyle. If you pass away during the term, your beneficiaries will receive the full face amount of the policy, tax-free. A 30-year term might cost you a few more bucks now, but in the long run, it will certainly save you money even if your health does not change.
We often receive calls from clients who intend to buy a new policy every ten years. At the age of 50, if you are in excellent health, you can probably secure $250,000 of coverage for 10 years at a cost of less than $25.00/month, but what happens when you are 60 and you still have 10-20 years left on your mortgage? You can expect your rates to be about 3x more than when you were 50, and this assumes that you are still in excellent health.
Monthly Life Insurance Rates for 40 to 75-Year-Olds in Excellent Health
Below we’ve provided some actual life insurance rates for qualifying applicants between the ages of 40 and 65 who are in great health.
10-Year Term Life Insurance Quotes
| Age | $100,000 (Male) | $100,000 (Female) | $250,000 (Male) | $250,000 (Female) | $500,000 (Male) | $500,000 (Female) |
|---|---|---|---|---|---|---|
| 40 | ||||||
| 45 | ||||||
| 55 | ||||||
| 60 | ||||||
| 65 | ||||||
| 70 | ||||||
| 75 |
20-Year Term Life Insurance Quotes
| Age | $100,000 (Male) | $100,000 (Female) | $250,000 (Male) | $250,000 (Female) | $500,000 (Male) | $500,000 (Female) |
|---|---|---|---|---|---|---|
| 40 | ||||||
| 45 | ||||||
| 50 | ||||||
| 55 | ||||||
| 60 | ||||||
| 65 |
30-Year Term Life Insurance Quotes
| Age | $100,000 (Male) | $100,000 (Female) | $250,000 (Male) | $250,000 (Female) | $500,000 (Male) | $500,000 (Female) |
|---|---|---|---|---|---|---|
| 40 | ||||||
| 45 | ||||||
| 50 | ||||||
| 55 |
If affordability is an issue, or if you are a cigarette smoker set on quitting in the next 10 years, buying a shorter term policy might make more sense. Term life insurance is extremely flexible with fixed rate periods as short as one-year (annual renewable term), or five-years. However, the most cost effective term policies tend to be at 10 years. Insurance companies typically offer terms of 10, 15, 20, 25, and 30 years.
Buying Permanent Life Insurance for Final Expenses or to Leave Money Behind
Someone with a special needs child might want a permanent policy since the child may not ever be able to support himself or herself financially. Buying a permanent policy is also ideal for anyone who wants to leave money behind for an inheritance, to pay for final expenses, or reduce their estate taxes for future generations.
Permanent life insurance without a cash value is the best choice for anyone who needs to reduce or avoid estate taxes for their heirs. If you have a large estate, life insurance is commonly purchased to pay for estate taxes. As of 2018, if your estate is worth more than $11.2 million (or $22.4 million for couples), your heirs will likely owe estate taxes and inheritance taxes on the assets you leave behind.
By purchasing life insurance, the death benefits of your policy can be used to settle these taxes with the IRS, leaving your entire estate intact. This prevents your loved ones from selling the belonging you left behind for them. We have created a guide to help you determine if you should purchase life insurance to protect your estate.
A few life insurance carriers also offer 35-year policies, but these are not as common. We often find that our clients can save money by buying a permanent policy instead, and they will also get a longer period of time with guaranteed coverage and rates.
The most popular permanent policies do not tie up your money or require an investment value; you pay for the coverage only, just like term life insurance.
The majority of these permanent policies are customizable to fit your needs too. Permanent policies like Guaranteed Universal Life Insurance offer rates and coverage that are guaranteed until the age of 85, 90, 95, 100, 105, 110, and even up to age 121.
Life Insurance for Pension Maximization
Most of the applicants we work with need to purchase a life insurance policy until their early retirement years. Those lucky enough to still be offered a pension may want to forgo the survivor benefit and buy life insurance instead.
This strategy is commonly known as pension maximization, and it is designed to maximize your retirement income. Pension maximization involves taking the single pension payout, instead of the joint survivorship option, and purchasing life insurance.
A lot of the clients we work with can save at least a few hundred dollars a month with pension maximization. It usually allows you to have more money to enjoy your retirement, while still providing your spouse with enough money to pay the bills when you pass away. Please read our article on pension maximization if you want to learn more about this option. Everyone’s situation is different and no matter what your need for the life insurance coverage is, there is a product that is perfectly suited for you.
That’s why you should call your friends at JRC Insurance Group and speak to an experienced agent who can make sure you have the term length that will meet your needs.
What if your term ends and you still have debt? Although we try, not everything goes according to plan. Luckily, there’s normally a few options to extend your coverage before your term ends. Or, if you’re young enough and still healthy, you can simply buy a new policy that better fits your current situation.
Health Considerations when Purchasing Life Insurance
What if your health takes an unfortunate nosedive?
This is why it’s so crucial to make sure your term policy allows you to convert to permanent coverage if needed. The conversion option allows you to extend your coverage without proving your health or insurability.
Most term life policies have a conversion option allowing you to convert the entire policy, or a portion of it, to permanent insurance. This conversion must be done before the term of your policy ends, or the maximum age allowed by your policy, whichever comes first.
The maximum conversion age I’ve seen for a conversion is age 75, but with most carriers, it’s either 65 or 70. This may seem unimportant when you’re young and healthy, but I’ve converted lots of term policies into permanent policies. In these instances, the cost of a new policy was either too expensive, or no insurance company wanted the business.
What if financially, you’re in a much better place than you expected, and debt-free before the term runs out? You might ask – what happens to your life insurance once all debt is paid off?
Term Life Insurance Offers Better Flexibility
Term policies are great because if the policy is no longer needed, you can simply cancel it without any penalty. That’s why term life policies are so popular – they offer unmatched flexibility being that there are no setup or cancellation fees, only the ongoing premium while the policy is active or, in force.
Why term life insurance and not mortgage, or credit life insurance?
With all the different types of life insurance products out there, it can be difficult to find the right product. Credit and mortgage life insurance are usually some type of guaranteed issue product, which doesn’t require a medical exam. This puts far more risk on the insurance company and therefore must charge higher premiums than term life insurance. Also, with mortgage and credit life insurance, only the bank receives the payout if you die.
With term life insurance, your beneficiary will use the proceeds to pay off your debt, and can keep whatever is leftover to pay for final expenses and other miscellaneous bills.
While there are many cons to credit life and mortgage insurance, the main perk about them is that someone in poor health generally can’t be declined. However, this guaranteed acceptance comes with a heavy price tag, and there might be holes in your coverage that you didn’t consider.
This article explains a lot of the pros and cons of credit insurance. Unless you are terminally ill, term life insurance is the obvious choice for most people. If you are considering mortgage life insurance, we recommend reading this article first – you might be shocked to learn that the majority of these policies only provide you protection if you die in an accident. In other words, if you pass away from a health-related issue, your mortgage is not protected.
How Much Life Insurance Coverage is Enough?
This is a very tough question, and this decision is where most people get stuck, especially if life insurance is a foreign language to you. Everyone’s lifestyles and situations are different, but there are a few key things that many of us are looking to take care of, such as: a mortgage, credit card debt, car payments, loans from family members or friends, college expenses or student loans, loss of income, funeral costs, etc.
Most young insurance shoppers ranging from the age of 20 to 40 can get anywhere from 25 to 35 times their annual income. This life insurance can be used to replace their income until retirement age. The idea is that if you were to die today, all the years of income you would have made will be available to your family. Death of a family member is hard enough, no one should have to deal with the grief of losing a spouse and the stress of financial hardship.
By getting the correct policy, every day living costs, debts, and long term expenses can be covered. Maybe you have some insurance now but know that it’s not enough, or maybe you don’t have any insurance but you know that you need it. At JRC Insurance Group, we have experienced agents that have helped people just like you. We will walk you through the entire process, and with so many companies to choose from, we’ll make sure you get the best rates.
You can get all kinds of quotes online but depending on your health, they may or may not be accurate. If you want to get a most accurate quote, give us a call.
We’re Here to Help with Your Insurance Needs
At JRC Insurance Group, we’ll make sure you get a policy that fits your family’s needs with a reputable company and competitive rates! Life is short, and life insurance is one of those things that is easy to keep putting on the back burner. We know we should have it, but then life gets in the way.
When we’re young and healthy and raising our family, life is crazy. Maybe first it’s soccer practice, basketball or football practice, ballet. Then there’s dinner, homework, baths and bedtime stories. And once the kids are raised, we may not be as healthy as we once were, and this affects the rates of a life insurance policy.
There will never be the perfect time. So why not bite the bullet and get it done now?
Let JRC Insurance Group help you find your policy so you can get back to living your life with peace of mind. Give us a call today toll free at 855-247-9555 or request a free quote online here. We provide a no-pressure and consultative approach to life insurance.
This post first appeared on JRC Insurance Group: Term Life Insurance Quotes, please read the originial post: here
