- Personal Finance»
Best Way to Shop for Term Life Insurance
A Sudden Unexpected Death Can Cause An Immediate Family Financial Crisis
Determine How Much Insurance You Need
Step 1. Begin by determining how much insurance you need.
- How much money do you need to replace the breadwinner's income and for how long?
- How much to pay off the mortgage in full?
- How much to pay off other bills, loans and expenses to give your family a fresh start?
- How much money to establish an education fund or other legacy?
An Independent Insurance Agent can help you with this. An Income replacement calculator is a big help in calculating the amount of insurance needed, adjusted for different inflation and investment return scenarios.
$838,151 of Insurance Proceeds Needed to Replace $50,000 a year of taxable income
In order to replace $50,000 of taxable income for 20 years, increasing this amount by 3% inflation each year, you would need:
- $913,715 today, earning 4% a year
- $838,151 today, earning 5% a year.
- $771,761 today, earning 6% a year.
Income Replacement Schedule
Step 2. Next get a Term Insurance Quote Online.
Choose a comparative quoting service that does not make money by selling your personal information over and over again, otherwise you will be bombarded with phone calls. You should be able to see the quotes online or have them emailed to you.
Step 3. Work with an independent Life Insurance Agent
The best way to shop for term life insurance is to get a quote online and to work with an independent agent. All life insurance policies must be purchased from a licensed insurance agent. Independent agents represent multiple insurance companies and they can shop the best policies and rates for you. Captive agents are locked into one insurance company and can only offer the policies of that company. More choices mean better premiums. You can apply directly to the Insurance company, but you won't save any additional money. Rates are the same so you might as well use an independent licensed agent.
Life Insurance Solves Many Financial Problems
Most people turn to Life Insurance to solve many of the financial problems discussed below. They find it very cost effective. Make the first premium payment, and you will have immediate coverage far in excess of the initial premium. Life Insurance can provide peace of mind and financial security.
Why Most People Turn to Life Insurance
Most people turn to Life Insurance. Life Insurance proceeds are paid income tax-free directly to your named beneficiaries. The death benefits can be paid in a lump-sum or over a period of years.
The proceeds pass outside of Probate and out of the reach of your creditors, such as credit card companies. The beneficiaries can use the tax-free money anyway they see fit. For example: To replace your income and maintain their lifestyle; to payoff the mortgage or to qualify for a new mortgage; as a college, wedding fund; to keep or buy a business; to give them a financial head start going forward.
Term Life Provides Immediate Cash to Your Beneficiaries When You Die Suddenly, Unexpectedly
Your family will need cash as they deal with your untimely death. Term Life Insurance, Whole Life Insurance and Universal Life Insurance can all provide the necessary cash. Term Life is the most affordable option for most people, but Whole Life and Universal Life Insurance might be the better choice. Your agent can discuss the costs, benefits and differences with you.
How to Leave The Family Financially Secure
You want to protect your family, and leave them financially secure if you were to suddenly, unexpectedly die. Many families would immediately plunge into a financial crisis and a life of poverty that would be hard to overcome
Think about it. How would they replace your lost income? How would they pay the rent, mortgage, car payment other bills and expenses, including your funeral expenses? Could they maintain their lifestyle, go to college and fulfill other dreams and expectations? Would their future be limited?
Term Insurance is the Most Affordable Option for Most People
The most affordable option for most people is term life insurance, which pays an income tax-free death benefit to your named beneficiaries if you die during the term of the policy. Most policies are issued for a fixed period of time, typically 10, 20 or 30 years. The benefits of life insurance cost pennies on the dollar.
Flexible premium payment options. Most people choose level monthly premiums which are the same over the term of the policy. Quarterly, semi-annual and annual payments options are offered too.
Limitations of Term Life Insurance
Term policies do not build up cash values like whole life or universal life policies. Term policies are for a specific period time. If you die outside the period covered, no death benefit is paid as the policy has expired.
Return of Premium Term Life Policies are offered by some Life Insurance Companies. If you are still living at the end of the term, all or some of your premiums are returned to you. The premiums are higher than the premiums for regular term insurance. Ask your agent about this option. This is an option that smokers, who are paying higher premiums, might want to consider. The agent can prepare an illustration showing the rate of return on the additional premium charged on return of premium policies, if you are living at the end of the term. If you die during the term, the face amount of the policy is paid to your beneficiaries, and this option would have cost more than a straight term policy.
How an Act of Love Avoided a Family Financial Crisis
The Benefits of Using and Independent Life Agent
An Independent Life Insurance Agent Represents Multiple Insurance Companies compared to a captive agent who only represents one.
The COMPULIFE ® Software Inc. comparison software includes the rates of over 100 Life Insurance Companies. The Independent Life Agent can represent all of these companies.
How to Run a Comparison Quote Without Providing Personal Information
We use The COMPULIFE ® Software Inc. comparison software that includes the rates of over 100 Life Insurance Companies.
Unlike other popular quoting sites, we do not sell your information. Your name, phone number and email address are only collected after you request an application. You can run a quote without providing any information. You can call us or any other life insurance agent. Other sites make money by selling your information over and over again and you get bombarded with phone calls.
You run the quote first. If you see something you like you call and we will help you choose the best policy for your situation.
It is Easy to Get an Instant Term Insurance Quote
Example of Comparison Quote Page
Spreadsheet View of Term Life Quotes
Additional Things to Consider
Option to Renew
Renewal period. Most level term policies have the ability to renew the policy beyond the initial level premium period. However, the renewal premiums could be substantially higher than the initial level term period premiums.
Annual renewable term policies are also available. The cost of the insurance goes up every year and might be unaffordable in later years. If you run a quote on Annual Renewable term, view the spreadsheet view which shows how the premiums go up each year. Premiums jump dramatically in year 11, which is why most people choose level premium term life. Makes sense, because a 50 year old has a greater chance of dying next year than a 21 year old.
Financial Strength of the Insurance Company
When running the quote, make note of the AM Best rating in the comparison. This measures the Company’s Financial Strength. Not all life insurance companies are the same. Some are very large financially, some are small. Some companies are in better financial condition than others. The longer the level term period, the more important it is to consider how healthy and strong the life insurance company is.
Is the Premium quoted guaranteed for the entire period?
Also, make note of the Premium guarantees. Are the premiums for the policy fully guaranteed? Not all companies fully guarantee the initial premium for the entire level period. If two products have the same price, but one is guaranteed while the other is not, the guaranteed product would be better. The COMPULIFE ® Software Inc. comparison software will show if the premiums are guaranteed (gtd next to the monthly premium).
Each life insurance company establishes its own health and lifestyle requirements to determine what premiums you may qualify for. Slightly high blood pressure may disqualify you for one company's preferred health premium, but might be acceptable to obtain another company's preferred health premium. Your agent will be able to give you more guidance.
Smoking Considerations - Not all life companies define smoking the same way. If you have never smoked or used tobacco products in any way, then a non-smoking comparison will include products that you can qualify for based upon non-smoking. If you were a smoker and later quit, then how long ago that you quit may limit your choices. If you do smoke, some companies may offer products with better premiums depending on how little you smoke, or whether you smoke cigars or pipe rather than cigarettes. You will need to discuss all of this with your agent.
The healthier and younger you are the lower your premiums.
Get a Term Insurance Quote Now
A Better Option than Term Insurance?
Cash value whole life or universal life might be a better option for you. These policies cost more than term life insurance policies but they build cash values which can be accessed tax-free via policy loans. These policies can provide living benefits in addition to death benefits. The cash values can be accessed for emergencies, college funding and to supplement retirement income.
The Indexed Universal LIfe (IUL) minimizes death benefits and maximizes living benefits. Term Life and Whole Life focus more on the death benefits. A knowledgeable agent can explain this to you.