“One million dollars…..baawaahahahahah!”

One million dollars...

I can’t help but chuckle when I think of Dr. Evil saying that in the classic series Austin Powers.

For many people, one million dollars sounds like a lot of money – and it is!

But a common misconception is that one million dollars of term life insurance is very expense.

That couldn’t be further from the truth.

To demonstrate, I attained quotes from the top insurance carriers using my new handy dandy free life insurance quoter.

Yes, I realize you could have entered the info yourself and found it on your own. I thought I would be a nice guy and find out for you.

About The Term Life Quotes

As you’ll notice, each table has a wide array of information.  Knowing that everybody is in a different situation, I wanted to make sure that I offered quotes for almost situation.  I’ve included quotes for 30 year term, 20 year term, and 10 year term.   If you’re a tobacco user, I’ve also included some quotes on life insurance for smokers.

30 Year Term Life Quote One Million Dollars

For those that think that a million dollar term policy is expensive, you’ll quickly notice that for a 25 year old male in good health only costs $645 per year with a 35 year old costing $795.   On a monthly basis that’s almost next to nothing!

20 Year Term Life Quote One Million Dollars

10 Year Term Life Quote One Million Dollars

Smoker Term Life Quote One Million Dollars

For all you smokers out there – beware!  The cost of of your life insurance balloons and you’ll see here.  If you’re considering kicking the habit, now is as good time as any.

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Most Americans have some form of life insurance. Knowing that ones loved ones will be take care of should sudden tragedy strike, or natural death occur, gives peace of mind to individuals. Others want to know they have money saved should they need it for an emergency in later years, regardless of the payout to beneficiaries. Many people get confused when trying to decide what type of life insurance to purchase.  But is whole life insurance really a good investment?

First, what is it…

Whole Life Insurance

Whole life insurance is a permanent life insurance policy. It lasts throughout the policy holders life or until the policy holder decides to end or cash in the policy. As long a premiums are paid, whole life insurance continues. Payments are made monthly and the rate always stays the same.

Benefits

With whole life insurance, policy holders can just leave the policy alone, keeping it active and collecting interest until they pass away. Upon the policy holders death, whomever was named as the beneficiary of the policy, will collect the pay out benefits.

However, there are other options and benefits to having a whole life insurance policy. Policy holders of whole life insurance, can cash in parts or all of the value of their policy at any time. Because whole life policies earn interest, policy holders often cash in on the interest alone. Thus they essentially leave the original value of the policy the same, only collecting the interest payments to help supplement their income or help pay expenses.

Policy holders can also choose to cash in all or part of their policy if they wish. Should an individual face a financial emergency or just want to go on a fun vacation, they may take out some of the money from their policy. The policy would remain active but would just have a lower pay out value. If one chooses to cash out the whole value of the policy, the policy would be closed and there would be no benefit payout upon death.

Another benefit is that policy holders can borrow from their whole life insurance policy. They can use the money that they take from the policy as they wish, temporarily reducing the pay out amount. However, once they pay the money back, the benefit amount would return to what it was before the money was borrowed.

Drawbacks

Because whole life insurance policies are meant to be paid on for a long period of time, they do not typically benefit the elderly. The premiums would be very high on a whole life policy for someone of retirement age and this is where a term policy might be better.

Another drawback to a whole life policy is that if one chooses to withdraw money from the policy, they reduce the payout amount to the beneficiary. One may borrow money from the policy, with the intention of paying it back, but never get the chance, thus leaving the beneficiary with less of a pay out.

My Experience With Whole Life Insurance

First, let me say that I have never owned whole life insurance.  I’m more the firm believer that term life insurance makes more sense for me and my family.  Hence, why I have 3 individual term life policies on myself.

How I have experienced whole life insurance is through my clients.   I have several clients that took out a whole life insurance policy many years ago (ranging from 5 years to 20 years).  They were sold on the idea of having some life insurance with an underlying investment attached to it.   Heck, it’s a good story for anyone to consider.

What has actually happened is this:   They have paid on this policy for an extended period of time and while the life insurance is there, the investment portion is not.   At least it’s not as much as the illustrations that were run by the insurance agent that sold them the policy.

The funny thing is that most of these clients continue to pay on their policies even though they really don’t need the insurance.   If this is you, I strongly encourage to review your whole life insurance policy and see if it still makes sense in your overall financial plan.

Get your free life insurance quote here.

photo credit: h.koppdelaney

Most people want to know their families will have a secure financial future. When you start planning for how you’ll care for your family years from now, it’s likely that you will consider a variety of options. Life insurance should be among the possibilities you study.

Life insurance protects your assets and offers you a chance to help keep your family in a comfortable lifestyle after you’re gone, or even assist a grandchild with paying for a college education. Depending on the life insurance you choose, you could even draw cash from the policy in the event of an emergency or a promising opportunity.

There are two basic types of life insurance: term life and whole life. People value the two for different reasons, and they offer diverse benefits. Here’s a little more about the differences.

Term Life Insurance

Term life insurance is life insurance for a set amount of time, or term (10, 20 or 30 years). If you die before this time is up, your beneficiaries will be paid the face value of your policy. This investment option comes at a lower premium cost because the cash value of the policy does not increase with time, and is often more in tune with a person’s budgetary restrictions.

Whole Life Insurance

A whole life policy lasts for as long as you live. Your beneficiaries will receive a payout equivalent to the value of the policy you purchased, plus interest and other cash-deferred amounts. Life insurance rates are more expensive for whole life policies, but the returns can be much greater if you have the time and financial resources to devote to building this resource. You can also use the savings you build here for other purposes if you choose, and while you are still alive.

What should you choose?

The right form of life insurance depends on your needs and goals for your future. Those with money available to spend might benefit from a whole life policy and the effects it can have on their estate planning. Term life policies are a little more flexible if your budget changes, or if you have other changes you encounter with the passing of time.

Ultimately, you may find that a financial advisor or other professional will be best suited to help you choose the right policy to help fulfill your goals. A trained individual will know how to look at your needs, assets, and other factors to appropriately counsel you as you map out your future.

photo credit: LuieRRe

Recently I was asked to be on our local news channel to give my monthly “money talk”. The country had been recently been bombarded with one horrible storm after another. So I thought it was only fitting to tie that in to our financial life. Here’s what I came up in disaster proofing your investment portfolio.

All small business owners need to make sure they carry enough insurance to help protect their families, employees, and assets. With the right strategic plan in place, the small business owner can help protect his or her business against financial loss due to illness, disability, death, and other calamities. There are many different types of insurance small business owners need to consider.

Business Insurance

To help protect your overall business investment, the purchase of business insurance should be considered. This type of insurance can help protect you and your company in the following unforeseeable situations:

Do your homework before purchasing business insurance. Shop around. Remember that sometimes you get what you pay for – the least expensive policy may not always be the one you want. There are many kinds of business insurance including general liability, workers’ compensation, commercial auto, and umbrella. Be sure to get the one that makes sense for you and your company. Find out the deductible and exactly what is covered under the policy you choose.

Life and Disability Insurance

It is recommended that you purchase adequate life and disability insurance coverage on the business owner. Often individuals take out personal loans to start or grow their business. In case of untimely death or a disabling accident, it is crucial that all assets are covered. The loss of the business owner can have a significant effect on the value of the business. Obtaining an individual life insurance policy can help protect the family in this situation, providing funds to cover debts, ongoing living expenses, and future plans.

Many small business owners also provide life insurance plans for their employees. Benefit packages can be costly and employers will often decide to offer modest packages to the majority of their workers, while rewarding top executives with bonus plans. Under this arrangement, top employees can buy cash rich insurance policies and name themselves as owners. The employer pays the premiums, which are often fully tax deductible, directly to the insurance company. There are also supplemental executive retirement plans that can be offered to star employees.

Health Insurance

As important as it is for the owner of a small business to have sufficient health insurance, it is also a good idea to offer health insurance to employees. Often people consider employee benefits a priority when deciding whether or not to accept a job. Benefits may include health, dental, and vision, as well as voluntary options that enable employees to purchase or increase benefits on their own.

Retirement Plan

Small business owners help themselves, their business, and their employees by offering retirement savings plans. Such plans often help attract (and keep) excellent employees, as well as providing tax advantages for the business. A retirement plan also helps the small business owner secure his or her own retirement.

photo credit: secretpizzas

For anyone with children there comes a new fear. What you would do to provide for them if something happened to you? Naturally, that is why many people get life insurance; that’s why I did.

Others start planning their burial arrangements or they take other measure to ensure their final expenses are covered and they have something to give their children, too. Personally, I haven’t done the pre-funeral arrangements yet; just a bit too morbid for me since I’m still only in my 30′s.

Of course, there is one social benefit for minors that is often overlooked by concerned parents and one that I forget. It is the Social Security Death Benefit. This benefit is actually a type of fund that can set up to automatically garnish your wages for a certain amount. This money is then turned into credits that are deposited in a Social Security-operated fund. If something were to happen to you or your spouse, your dependents, including children, would be eligible to collect the funds so they can meet their basic living needs.

Social Security Survival Benefits

Known also as Survivors Benefits, this money is awarded both to surviving spouses and children (as well as parents in certain instances). You would have to earn a minimum amount of social security credits during the time you worked. The number of years you may need for your family to be eligible may depend on your age at the time of death. For younger people, the fewer years you will have needed to work. Of course, if you do not have more than ten years (the equivalent of forty credits) to ensure total benefits.

These death benefits can be collected in two forms. The first is a lump sum death benefit check. It is issued from The Social Security Administration. The other takes the form of monthly payments. This second option is more likely to be used to provide for minors who use both parents but need some additional supervision of the funds.

Advantages of Social Security Death Benefits

Let’s take a closer look at the advantages of the Social Security Death Benefit for children. First, the dependent children of a parent who died would be able to receive the aforementioned benefit. The child must meet certain criteria. They must be unmarried, under the age of 18 unless in college then it’s 19 or younger, they are a dependent grandchild under 18, or they are older than 18 but are otherwise disabled in some way.

As with other types of social benefits for minors, it must be properly administrated until that child is of legal age. This may take the form of some sort of guardianship or trust fund. Once the child is 18, the Social Security Death Benefit may no longer be used in most cases. This means that the Social Security Administration should be contacted to cease further payments. There legal ramifications for continuing payments and keeping the aid so be advised.

Call Your Local Social Security Office For Help

If you have more questions about social benefits for minors like the Social Security Death Benefit it is best to do further research to find the right option for your situation. Your best resource is to call your local Social Security office and they can give you the exact benefit that your children are entitled to.

A couple years ago I learned this is helping a recent evaluate the benefit that here children were entitled to. I tried using the knowledge that I gained from the CFP exam, but quickly learned that a simple phone call to SSA office gave my client the exact info they needed.

I always assumed that life insurance for tobacco users was more expensive than those that don’t use it, but I never realized how much more.  A younger client of mine in their 30′s was interested in purchasing term life insurance and what I didn’t know is that he used chewing tobacco.  Once I found that out, I warned him that the potential cost could be more – which ended up being WAY much more.  In his case, his premium more than doubled.  I was astonished.

That prompted  me to do a little experiment the other day. I wanted to see how using tobacco affects your coverage premiums for life insurance – for males and females. . In some ways, I wasn’t surprised at what I discovered, based on what I discovered with my previous client.  What I was astonished was the percentage increase.

Term Life Insurance for the Average Joe or the Average Jane

Just to set the stage, let’s talk about Term Life Insurance for a moment. Wikipedia defines it as:

“Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments and/or conditions. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.”

In plain English, it’s a form of life insurance that covers a specific term, or period of time. If the insured person passes away during this term, the death benefit is paid to the beneficiary. In contrast, things like Whole Life Insurance cover an individual for his or her entire life.

Term life is a solid fit for many people, and being the original kind of life insurance, it’s what many people are used to.

Why Being a Tobacco User will Kill More Than Your Lungs

That’s right – it will also kill you with insurance premiums.

It’s no secret that health insurance premiums are higher for smokers. And when you think about it from the insurance company’s point of view, it makes a lot of sense. Smokers are way, way more likely to have health issues. On top of all the issues that smoking itself creates, smokers are more likely to have poor diets, exercise less, and suffer from many illnesses and diseases related to their inactive lifestyle. To an insurance agency, a smoker is one of the highest risk people.

What Would You Guess The Difference Is?

Take a crack at it. What do you think the cost difference is for someone to get term life insurance who’s not a smoker, versus the cost of term life insurance for a smoker? Twice as much? Three times?

Try almost four times as much!

I ran term life quotes for a male and female at 30 year term $250,000 preferred non-tobacco and preferred tobacco. In some of those numbers I ran the other day, I found differences up the 3.8 times as high for smokers versus non-smokers.

Check out these numbers for insurance premiums of tobacco users vs. non-users:

Here are some numbers for a 20 year term at $250,000 for a 40 year old

I ran these numbers since I figured a 40 year old probably wouldn’t want to have a life insurance premium payment until they were 70 years old.

These numbers are just to be used as examples. Please consult an insurance professional to see what type of insurance would be best suited for you.

Tobacco Use Affects All Kind of Life Insurance

Don’t just think that smoking or using chewing tobacco will just affect your term life insurance premiums.  I also had another case where an older client was looking to use their built up cash value in their whole policy to buy a paid up permanent policy.  The initial interview seemed like he was a good candidate for the process.  That is, until the client had a bit of a brain lapse.  The client who doesn’t typically use tobacco, decided to have some chewing tobacco while he drove his tractor on his little farm.  It might not have been a big deal, except for the fact, it was 3 days before his medical exam! Needless to say, it came back that he had tobacco in his system and it ruined the chances of us moving forward.

Moral Of The Story

What am I getting at here? Exactly this: if you want to be a Soldier of Finance like me, quit smoking or using chewing tobacco.

Next time you buy a pack of cigarettes for about $10.00 and think “These things are expensive” remember these numbers. And realize that those cigarettes are costing you way more in insurance premiums than they cost you at the store.

photo credit: Jillian Stewart

Tips For Medical Exam

When you apply for life insurance, you typically will be asked to have a medical examination performed by a licensed health professional.  The insurance company will order the exam on your behalf and you will receive a call to schedule the appointment.

When I got my term life insurance policy, I had a traveling nurse come to my home and do my blood work and the rest of the tests.  Since you’re not supposed to eat before the exam, I had scheduled for her to come early in the morning.  There was no way that I can go too long without eating.

Top 10 Tips Before the Medical Exam

In order to obtain the most favorable results, you should prepare for this exam.  The following 10 tips can have a significant impact on the examination results, with the potential to lower your rating and thus lower the cost of your life insurance policy.

1. Limit salt and high cholesterol foods 24 hours prior to the exam
2. Refrain from drinking alcoholic beverages for at least 24 hours prior to the exam
3. Limit caffeine and nicotine 24 hours prior to the exam
4. Smokers:  Do not smoke 30 minutes prior to the exam
5. Fast for 4-8 hours prior to the exam and try to schedule the exam for first thing in the morning
6. Drink a glass of water one hour prior to the exam
7. Get at least 8 hours of sleep the night before the exam
8. Limit strenuous physical activities 24 hours prior to the exam
9. Be prepared to provide names and dosages of current medications and a photo ID
10. Have names, addresses and phone numbers of any doctors or clinics visited in the last 5 years

Additional Considerations

If you suffer from one of the following conditions, please follow these additional guidelines:

Hypertension

• Avoid stimulants (caffeine, alcohol, cigarettes)
• Have the examiner take your blood pressure after you have had a change to relax – preferably 3 attempts at 10 minute intervals
• Take your usual medications before the medical exam

Diabetes

• Schedule the exam for 2 ½ hours after a meal (no sweets/sugars after the meal)
• Empty bladder right after eating

Save Money On your Life Insurance Premiums

By following these guidelines, you have a good chance of reducing your cost of insurance. I’ve always tried to be conscious of my health and doing so helped me get the highest rating by the insurance company. I’ve done several policies for clients and have seen significant increases in the premiums because of health related problems. A majority of the problems could have been avoided such as: being overweight, high cholesterol, or smoking. Being healthy is not just about getting cheaper insurance. It’s about being able to enjoy your life for years to come.

Holding my son for the first time

I thought this post was fitting since a pretty close friend of mine just recently found that they are having their first child.  You can never prepare for being a first time parent.  Diapers, baby crib, strollers…..it can be overwhelming.  Here’s another guest post of Joe Plemon of Plemon Financial Coaching offering some basic tips on preparing financially for your first child. And yes, that is my little buddy up top. Go ahead.  You know you want to…..Ahhhhh. Now to the post.

Q: We are going to have our first baby in a few months.  What things should we be thinking about that will help us be wise with our finances?

A: The following ideas should help:

Have a budget

I realize that everyone needs a budget, but if you don’t have one in place, now is the time to get it working.  The good news is that babies don’t cost as much as society tells you.  The not so good news is that, as money grows tighter with a little one in the house, not having a written cash flow plan in place can get you in trouble.  Turn the TV off and plan an evening with your spouse to prepare a budget.  You will be glad that you controlled your life instead of letting it control you.  Here’s a good budget read at Free From Broke.

Have proper life and disability insurance in place.

Ask yourself this question:  “If something happens to my spouse or me,  how will the remaining spouse be able to care for our child and continue to pay the bills?”   You probably spend more eating out in a month than life insurance and disability insurance premiums would cost, so you absolutely can’t afford to not have them. Here’s some other personal finance essentials from Patrick @ Cash Money Life.

Make retirement investing a higher priority than college savings.

You may be tempted to start a college fund right away, but don’t sacrifice your retirement investments.  Junior has lots of options to cover college expenses, such as scholarships, work  and attending community college and state universities.  What alternatives to retirement do you have?  Think Your Way To Wealth has the basics on 529 Plans and ESA’s.

Make a will.

If both of you die without a will, the courts will decide who cares for your child.  Is this what you want?  Make a will so you can name  the guardian that you want.  Not having a will is just plain irresponsible.  Do it today.

Securities offered through LPL Financial, Member FINRA, SIPC