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Do You Need Life Insurance?

is term life insurance worth it?

At IBUSA, we believe life insurance is worth it. In fact, we go above and beyond to research the best life insurance companies in the marketplace to help everyone that needs it, get it is quickly and efficiently as possible.

Which is why we focus our attention on the top no exam life insurance policies available, so you can get the coverage you want, as quickly as possible.

Now, typically, when an individual finds themselves asking…

“Do I need Life Insurance?”

It’s usually because they assume that they aren’t going to die for many years to come, or they don’t believe they will die before the term life insurance policy they’re considering will expire.  

Which is why…

They think for these people, choosing when to buy life insurance is a complete waste of time because the idea of dying is so far fetched!

And while…

It may be tempting to think this way; we always like to encourage anyone who could benefit by owning a life insurance policy to honestly ask themselves a few questions before they immediately reject the idea of getting insured.  

But, what would happen to those around you if you passed away tomorrow?

  • Would they be “OK” financially?
  • Would they be able to stay in the home you provided?
  • Would they be able to replace your income?
  • Would they be able to continue their education?
  • Would they even be able to afford your burial?

Because…

At the end of the day, choosing to purchase a life insurance policy can often allow one to answer “YES” to all of these questions. This is why, for many, choosing to purchase a life insurance policy is absolutely worth it!

But let’ face it…

Choosing to purchase a life insurance policy is a bit like going to the dentist. Sure, it’s worth doing, but that doesn’t make it any fun or easier to do!  

This is why we…

Wanted to take a moment and discuss some of the most common objections people have about purchasing a life insurance policy as well as provide a few tips on how they can choose a policy that will be more “valuable” to them personally.

Topics which we will discuss here in this article will include:

  • Which “types” of life insurance policies are the most affordable?
  • What are living benefits?
  • What happens if you “outlive” a term life insurance policy?
  • Is buying a term life insurance policy ALWAYS the best idea?
  • When isn’t purchasing a life insurance policy a ripoff?
  • How can one improve their chances of finding the “best” life insurance policy for them?

So, without further ado, let’s dive right in.

Which “types” of life insurance policies are the most affordable?

One of the easiest ways to “convince” someone that life insurance is worth it is to make sure that the policy you’re suggesting isn’t all that expensive.  

“After all, if life insurance were free, wouldn’t everyone want it?”

Unfortunately…

Life insurance isn’t free. However, it doesn’t always have to be all that expensive either! So, let’s now take a moment and discuss just a few ways to find the most affordable policy out there.

The first way that we do is this…

Is by first taking a look at what it might cost you to purchase a term life insurance policy. This is because, generally speaking, a traditional term life insurance policy (which would require one to take a medical exam) will be the most affordable life insurance option for those that can qualify.

From there…

We’ll want to take a look at some of the most competitive price points for your insurance, including a 100,000 dollar policy, a 250,000 dollar policy, and a 500,000 dollar life insurance policy.  

Now, if you believe…

That you need more than 500,000 dollars in life insurance coverage, we really shouldn’t be discussing whether or not a life insurance policy is worth it or not because if you need that much insurance, there isn’t any excuse for not having it! 

Lastly…

We’ll then want to compare traditional life insurance policy options with policies that won’t require you to take a medical exam.

This is because sometimes a no medical exam life insurance policy will be competitively priced and they will often allow us to avoid any “unnecessary” diagnoses that could cause you to have to pay more for your coverage than otherwise expected.

OK, so now that we understand that a term life insurance policy will probably be the most affordable option let’s now “shift gears” a little bit and discuss how life insurance doesn’t always have to “JUST” help your loved ones after you die.

You see…

It is possible to purchase a life insurance policy that contains “living benefits,” which can help the insured while he or she is alive. Creating a whole new way in which someone might “value” owning a life insurance policy.

What are living benefits?

Living benefits are additional features that one can choose to “purchase” or “add to” a new term or whole life insurance policy, which will provide additional benefits to an insured that they can use while alive!

So…

Let’s now take a moment and consider some of the most common living benefits available to those who can qualify. Living benefits such as:

A Disability income rider.

A disability income rider is an add-on that can potentially replace the need to have to purchase a different type of insurance, AKA: Disability Insurance. Granted, most disability income rider options will tend to be a bit more “strict” than a disability insurance policy on its own. However, given their low price and the accompanying life insurance element, purchasing one can often make a lot of sense to some folks.

Terminal Illness rider.

A terminal illness rider is an add-on that is available on some term or whole life insurance policies that will allow an insured to access some of their “death benefit” funds while still alive and battling their disease. It’s important to understand that qualifying medical conditions will vary from carrier to carrier, however, this “benefit” can be extremely beneficial to those who find themselves in this situation.

Critical Illness rider.

A critical Illness rider would allow a living insured to receive a portion of their life insurance policy to pay for unexpected medical expenses that may result from a “medical emergency”. A medical emergency in which one is expected to survive, such as in cases where someone experiences a heart attack, a stroke or perhaps suffers from some type of SEVERE injury.

We should point out that…

Each insurance company will have its own qualifications as to what actually qualifies as a “critical” illness, and in some cases, injuries won’t be eligible.

A Chronic illness rider.

A chronic illness rider will provide many of the same benefits as a critical care rider, only in this situation, the qualifying event would make one “eligible” to utilize their benefit is designed only apply when someone is suffering from a “chronic” illness which is unlikely to be cured or cause one to die in the near future.

Now…

As one can see, there are a variety of different living benefits that one can potentially be quite beneficial to an insured if he or she were to suffer from a “qualifying event” that would allow them to take advantage of their benefit, which brings us to the next topic that we want to discuss which is…

“What happens if you “outlive” a term life insurance policy?”

Because the answer to this question would not only apply to one’s death benefit, it would also apply to any and all living benefits that may be attached to one’s life insurance policy as well!

What happens if you “outlive” a term life insurance policy?

Unlike whole life insurance policies, which are designed to last one’s entire life, term life insurance policies will have a set “end date” or “term.” Generally, term life insurance policies will be offered in 10, 20, 25, and 30-year terms. 

However, there are a few life insurance companies that will offer more “individualized options and even a few that will go beyond 30 years (with certain age requirements).

Which means that…

For a life insurance company to remain profitable, more people will need to “outlive” their term life insurance policy than NOT. Otherwise, the insurance company would go out of business! 

Which begs the question…

“What happens if you “outlive” a term life insurance policy?”

Now for most situations…

When a term life insurance policy meets its end, the insurance will just stop. The insured will no longer have coverage, and the insurance company will no longer be responsible for providing any kind of death benefit or living benefits to the insured.  

Or in other words…

The insured will have paid for their insurance for years and years, and now the insurance company is free to keep all of this money “risk-free” of ever having to make any kind of payments to the insured or his or her beneficiaries.

This is the main…

Reason why a lot of folks won’t think that a life insurance policy is “worth it” because in this situation, the insured will have paid for their insurance for years and years and never receive a benefit from it (yet, we would argue that they were insured for all of that time, which was a benefit).

In situations like this…

The insured may decide that they don’t need any insurance any longer since they purchased their insurance to:

  • Take care of dependent children who are now grown and independent.
  • Cover the cost of a mortgage, which has now been paid in full.
  • Reduce the effects of any lost wages which would have occurred had you died prematurely.
  • Etc…

Or the insured may decide that they still some insurance, but not nearly as much as they once owned, in which case, they may choose to apply for a new, smaller life insurance policy.

The only problem is…

Sometimes it’s not so easy to qualify for a new term or whole life insurance policy. It is not so easy because they are too old (over the age of 85+), or because they have been diagnosed with a pre-existing medical condition that may make qualifying for a new term or whole life insurance policy impossible.

In cases like these…

It may still be possible to keep an “expiring” term life insurance policy in place by utilizing a “guaranteed renewable” clause written into many existing term life insurance policies.  

Now, this may seem…

Like a great option at first, but we want to take a moment and explain how these work so that you can understand how these “clauses” can be a “blessing” while at the same time, be something that could cause someone to purchase the “wrong” type of term life insurance policy because they didn’t fully understand how guaranteed renewable options work.

So, let’s take a look at a few examples real quick so that we can get an idea about how a guaranteed renewable option can be both a blessing and a curse.

 Example #1.  

In our first example, let’s look at someone who’s 20-year term life insurance policy is set to expire in just a few weeks and has recently been admitted into an assisted living facility due to their widespread metastatic cancer.

In this example, were their term life insurance policy not renewable, this family would face the horrible dilemma of caring for their loved one while simultaneously knowing that their loved one’s insurance was ending soon.

Fortunately…

Once the original term expired for this family, they would be able to keep their loved one’s insurance in place by simply taking advantage of the guaranteed renewable clause.

“Which is great!”

The only problem is…

That this family is likely to get a pretty big surprise when the get the first monthly bill. Surprised because the price of their beloved’s insurance is about to get ASTRONOMICALLY higher than before the original term expired.

Which is bad…

But only “sort of bad” because in this scenario, it’s unlikely that our “theoretical patient” is going to be paying this elevated premium for years to years. Instead, this family will probably only have to pay this “new price” for a few months or maybe a year due to their current condition.

Example #2.

In this example, we’re going to want you to consider a 54-year-old woman who has recently gone into remission after battling stage 4 breast cancer. Her treatment consisted of a single mastectomy, and she is now considered “cancer-free”.

The only problem is that her 20-year term life insurance policy that she purchased when she was 34 is set to expire in two weeks, and her new guaranteed renewable rate is expected to triple!

The main reason why…

This is going to be a major issue is because, in this situation, this individual isn’t going to be able to qualify for a new life insurance policy for at least 5 to 10 years, meaning that if she wishes to continue to be insured, she will need to pay this new “increased rate”.

Which sadly will continue to increase year after year until she either can’t afford her coverage any more or decides she can qualify for a new life insurance policy after years and years in remission.

You see…

This is an example that many life insurance agents don’t like to talk about when they mention that a life insurance policy has a “guaranteed renewable” clause.

“Sure, it’s renewable, but at what cost?”

It’s also one of the reasons why…

Some folks will elect to purchase a more expensive whole life insurance policy instead of a term life insurance policy, especially if they REALLY want to make sure that their family will receive a death benefit from their insurance. This brings us to our next topic, which is…

Is buying a term life insurance policy ALWAYS the best idea?

OK, so now that we’ve covered what can happen at the end of one’s term life insurance policy, you may be thinking to yourself…

“OK, if this is what happens when you buy a term life insurance policy, then maybe I should buy a whole life insurance policy instead.”

Which may be a good idea…

The only problem with this idea is that a whole life insurance policy will cost anywhere from 7 to 10 times the amount that a typical 30-year term life insurance policy would. But, as the saying goes, you do get what you pay for!

Which begs the question…

“Why do most financial advisors tell their clients to buy term life insurance vs. whole life?”

The answer to this question is because most financial advisors are going to make 3 assumptions about their clients, which may or may not be true.

The first assumption is that most financial advisors are going to ASSUME that their client’s “insurance needs” will decline as they get older. The second assumption…

That many financial advisors will make about their clients is that if they purchase a life insurance policy that is less expensive than a whole life insurance policy, they can and WILL use these savings to invest and spend elsewhere, which will benefit their family more than a whole life insurance policy.

And the last assumption…

Is that people only purchase life insurance to provide their loved ones with a “death benefit” when they die.

This sadly ignores the fact that many individuals choose to purchase life insurance for a wide variety of reasons, including living benefits and many tax savings benefits as well (not to mention the concept of infinite banking).

Which is why…

Even though the vast majority of our clients here at IBUSA will choose to purchase a term life insurance policy for their family, we will still present the idea of purchase a whole life insurance policy as well because, in the right situations, these “types” of life insurance policies are definitely the right choose to buy. This brings us to the last topic that we want to discuss here, which is…

When isn’t buying a life insurance policy a rip off?

If the only reason why an individual chooses to purchase a life insurance policy is to make sure that their family is financially protected should they die prematurely, one could argue that it’s always a rip off unless the insured dies while their policy is in place.

“Which, one could argue as being true!”

Especially if…

One doesn’t see the value of having the peace of mind that they were “insured” while the policy was in place and that their family would have been protected financially had they died.

Which leaves us…

Where we started, which is debating whether or not life insurance is worth it or not, so, now one must ask him or herself, is taking the risk of spending some amount of money each month or year for the next couple of decades worth it to make sure that their family would be taken care of financially should they pass away prematurely?

If so, then buying a life insurance policy isn’t a rip-off. 

If not, then going uninsured is the way to go.

Either way, if you’re not 100% sure whether or not purchasing a life insurance policy is right for you, feel free to give us a call; we’d be more than happy to answer any questions you may have and provide you with a quote to help you decide for yourself.

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