Every year, we get dozens and dozens of different questions from applicants about life insurance. All of the questions that we get are very important and we are happy to answer those questions. We’ve noticed that we continue to get very similar questions, which led us to create this article which will answer all of the most common questions that we get.
Here’s a look at some of the common life insurance questions that will come up when it comes to purchasing term life insurance.
1. How Much Life Insurance Should You Buy?
This is a common question that I get all the time. If somebody asks me if they’re concerned about buying too much life insurance, that’s typically only an issue if they just flat out can’t afford it. It’s pretty hard to have too much life insurance. There are several rules of thumb that you can follow and probably the most common is to take ten times your annual salary. For some individuals this might not be enough, but at least it’s somewhere to get going. Another way to look at it is to think of how much you expect to be making in the next five years, especially for the Gen X or Gen Y generation.
To get started, add up your unpaid expenses. Combine your mortgage, student loans, car loans, and any other major expenses. All of those big bills are going straight to your family. The total is your starting block.
The next number that you should account for is your paycheck. Not only will your loved ones have to pay off your debts, If you’re the source of income in your home, make sure they can replace your paycheck with the insurance policy.
2. How Long Of A Term Should You Purchase On Your Life Insurance?
If you are in your mid-30s or younger, then I think you absolutely should purchase a 30 Year Term life insurance at the bare minimum. Some could argue that you only need it for as long as you have your home mortgage and if you pay your house off early, then life insurance is an unneeded expense. If that’s the case and you really do think that you don’t need it, then just stop making the payments. For myself, even though I plan on having my house paid off well before 30 years, it still made since for me to buy a 30 year term policy. Why? For what I’m paying per month, it won’t be that much of an expense in my later 50 or early 60s so that in the event something does happen to me, my family is still taken care of, even more so.
3. Where Should You Buy Your Life Insurance From?
There are so many different options nowadays on where to buy your term life insurance. Many people buy directly from their life insurance agent. Some people buy it online. The one piece of advice I can give you is to make sure to shop around. You can even use the free quote engine on this site that will give you a quick and accurate life insurance quote so you can see how much out of pocket expense you’re looking forward to.
Each insurance company is different, and every company is going to give you drastically different rates depending on how they view your health and their rating system.
Instead of having to wade through all the weeds of the life insurance world, let us do the dirty work for you. Work can bring over 50 insurance quotes to you directly.
4. How Difficult Is It To Pass A Life Insurance Exam?
If you’re in good health, then you should have no worries whatsoever. Make sure to drink plenty of water a few days before the medical exam and follow the nurse’s instructions, especially if they tell you not to eat the morning of.
If you just cannot go through with it then there is always no medical exam policies. You will pay more for these than if you qualify under standard underwriting but the process is faster and can be a good option for the right person.
If you’ve heard that the medical exams are difficult to pass, or if you’ve ever been declined in the past. Don’t assume that a no medical exam plan is your only option.
Each company is going to have different hoops to jump through. If one insurance company declines you, it doesn’t mean that every company is going to. It’s important that you find a company that is going to accept your plan.
5. Should You Buy Term Or Whole Life?
This is a common question that I often get from people who are not sure about how the two different types of insurance policies work. If you’re more concerned about protecting your family with the right amount of coverage, the term life insurance policy is going to be the most affordable. A whole life policy will continue to cover you for the rest of your life, but the cost of whole life insurance is much more than term and you probably won’t be able to afford a whole life policy that gives you the amount of coverage you really need.
6. Should You Buy Return Of Premium Life Insurance?
From what I can tell return of premium insurance seems like it’s much more expensive than what it’s worth. That being said, I am a believer in the markets and that someone could take the difference, invest it and make much more over the next 20 or 30 years. For people that aren’t as confident in the market as I may be, then the return of premium insurance might make sense for them.
7. Should You Buy Life Insurance On Your Child?
Personally I don’t see the value of buying life insurance for your child. I think your child could have much more money if you opened up a custodial account that is invested into good mutual funds. That being said, there are many policies out there that only cost about $7 a month. If it’s not a huge out of pocket expense, then it’s hard for me to argue that you’re wasting your money, but if you’re putting in several hundred dollars a month into the life insurance policy for your child you might want to consider other options.
8. How Can You Check The Ratings On Your Life Insurance Company?
When you’re deciding what carrier to purchase your life insurance from, it’s best to know if they have a solid rating. You can go to websites like Moody’s or AM BEST that will show you the ratings of the life insurance company that makes sure that they are in good standing with the creditors. If you use the form on this page we will make sure you are only working with the top life insurance carriers. It will cut your time and allow you to focus on the type of policy you want instead of the company reliability.
9. What Happens When A Life Insurance Policy Lapses?
A few years ago I had made the mistake of letting one of my term life insurance policies lapse. I had three separate term policies and having a conversation with my wife, I had told her that we were going to let one lapse. Unfortunately, there was some miscommunication and the wrong policy lapsed. It had already been over a month since we realized our error and I was fearful that I’d have to go through the entire life insurance exam process. After making a quick call to life insurance company realized that that was not the case. All we had to do was send a check for the next year and the policy was back in force.
10. When Is A Good Idea To Purchase More Life Insurance?
You always think that you might have enough life insurance until another life event happens. For me, this has happened on three occasions, after I got married, after I had my first son and then after I had my second son. After each life event, I questioned myself whether I had taken out enough life insurance on myself and each time I wasn’t confident in my feeling so, I decided to up the amount of term coverage that I had.
These are just some of the common life insurance questions that people might have when purchasing it. If you have questions before buying life insurance, be sure to speak to an independent life insurance agent prior to purchasing. Be informed and make sure to take care of your loved ones.