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Life Insurance: Money When It's Needed Most

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The job market over the past few years has been worse. Paying insurance premiums during times like this can be challenging, but this is often the time when it’s most important to own your own life insurance. During the recent round of layoffs, many people who had coverage only through work lost their only insurance when they lost their jobs. According to a recent study by the financial research firm LIMRA, life insurance ownership is at a 50-year low with less than 45 percent of US families having individual coverage. The majority of time it’s purchased to take care of your family once you’re gone. Here are three ways to make life insurance more affordable.

Figure out how much coverage you really need.
Remember that life insurance has one purpose: to meet your financial responsibilities if you die. If no one depends on you financially, you likely don’t need it and shouldn’t pay for it.  Life insurance is not an investment.  Instead, it’s used to take care of your family once you’re gone.  Insurance death benefits provide income to replace the salary you used to earn and can also be used to pay one-time expenses like your funeral or your children’s college education costs. 
Sometimes, people own more coverage than they actually need.  For example, you may not want to pay off your mortgage if you have an especially low interest rate or you need the mortgage interest tax deduction on your tax returns.  There are some basic rules of thumb for determining how much coverage you need, but these are sometimes way off base.  
 
Shop for lower rates
Rates have come down dramatically since the 1990s.  You can evaluate rates with the help of an advisor. Working with an insurance advisor, is often the best way to review your term insurance.  While on-line vendors give you the ability to compare quotes, an advisor can often help you navigate the underwriting process. This is especially important if you have any medical issues that might disqualify you from low “preferred” rates – and not all companies have the same underwriting requirements.   
 
Cut costs with term insurance. 
Life insurance comes in two basic flavors: term and permanent.Term policies usually have a lower fixed cost and provide coverage for a specified period of time, often a term of 10 – 35 years (such as until your children graduate college).  Permanent insurance, like whole life is designed to build equity (cash value) and will last your entire life as long as you continue to pay premiums.  In the early years, the annual cost for permanent insurance tends to be substantially more than the premiums for term insurance.   Some people prefer the idea of buying permanent insurance and building equity, but this is a huge mistake if it means you end up with a lot less coverage than you need.  For the same cost, term insurance provides significantly more death benefit for your beneficiaries. Term insurance is usually the only type that most families need.
The reality is that my clients buy their insurance not because they feel sorry for me. They do it because they love their families.  
 
Benefits To Term Life Insurance At A Young Age
Obtaining term life insurance is a popular precaution taken by many people to protect their loved ones in the event of their untimely death. It is not pleasant to think about dying, especially while young. Things do happen that can cause death and it is always helpful to be prepared for that just in case. Life insurance protects people by providing money to a predetermined beneficiary in the event of the death of the policyholder. The money given out can be used at the discretion of the beneficiary, so it can provide for a family if the policyholder dies during the term of the policy. Young people should consider obtaining term life quotes to get an idea of the term life premiums and amounts of coverage they can purchase.

For young people, there are a few major benefits to obtaining term life quotes. The first major benefit for younger people who purchase term life insurance is the price. Term life premiums are much lower for younger policyholders because they are less likely to die during the term of the policy. Since they are less likely to die, the prices for set amounts of coverage are much lower because the life insurance company is less likely to pay out on the policy. This means that you can pay less for the same amount of coverage that would cost more at an older age and provide for your family if you do die during the term of the policy. Younger people tend to have fewer health problems that drive up the cost of life insurance.

The other major benefit of life insurance for young policyholders is that they typically have expenses that need to be covered. Young people may be freshly married or have a new baby to provide for. Expenses like children and a mortgage payment can be a heavy burden on a single person. People sign on to things like this assuming they will continue to make enough money to support the children or payments. If a young person with a mortgage or a child has life insurance when they die, the policy can help provide for the family they may leave behind.

Term life premiums are much lower for younger people that sign up for a policy. A term life insurance policy can provide financial security for the loved ones you leave behind by leaving money to put towards the house payments or help to raise young children. Since term life quotes are so low for young people, it is a good idea to protect your loved ones for such a minimal investment. Talking to an insurance agent can provide term life quotes and options available. 
 
At What Age Should You Consider Life Insurance Necessary
No matter how old you are, life insurance is something you should consider if you want to take care of your loved ones after you pass away. Whether you're 25 or 52, your life insurance age will help you determine how much you pay for your insurance, but it shouldn't determine whether or not you actually buy insurance. When you have term life insurance, your loved ones will receive a death benefit if you pass away, something that can help them continue to support themselves, as well as pay for any final expenses you leave behind. Although thinking about dying is never easy, it's best to be prepared. You don't want to leave your loved ones in poverty because they've had to pay off your debts and also handle your funeral costs. Getting life insurance--no matter how old you are--tends to be the smart thing to do.

A term life insurance quote can help you get started as you consider purchasing life insurance. And for a term life insurance quote, age tends to matter. Age is one of the factors that life insurers use to calculate insurance costs. Your life insurance age is considered a risk, just like smoking or chronic diseases. Many life insurance companies do not take individuals who have a high risk because they would lose money, as people with these kinds of conditions tend to die sooner. If you're younger, you may be able to pay a lower rate for life insurance, something that you can use as an investment in you and your family's future. With term life insurance, you can be sure that those who depend on you will be taken care of in the event of your death. This way, you protect your legacy.

Even young people who don't yet have families need to purchase term life insurance to protect those who will have to pay for their funerals. Upon death, people's debts don't just disappear. And funerals cost thousands of dollars. Whether it's your extended family or your friends who will have to pay these expenses, term life insurance can be the final way that you show those who care about you how much you care about them. Term life insurance covers you for a certain number of years--a term--and is generally renewable. Because of this, you can choose to cover your friends and family without the cost of whole life insurance, which is costly because it involves investment and life insurance, according to Smart Money. Since term life insurance can be very cost-effective, it is a good investment in your loved ones' futures, no matter how old you are.

About this column:
Tony Ngari is a local Independent Representative of Primerica Insurance Agency of Massachusetts, Inc who has been helping clients representing Primerica Life Insurance Company.  You can find out more about Tony and Primerica by calling 978-996-7579.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  The cost and availability of life insurance depend on factors such as age, health, and family medical history.  If replacing your insurance, never cancel a policy before your new coverage is in place.  Policies commonly have surrender charges and replacement may carry income tax implications. Any guarantees are contingent on the claims-paying ability of the issuing insurance company.  If you are considering the purchase of life insurance, consult a professional to explore your options.
Tony Ngari

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