You may not think you need life insurance now, but if you wait too long to take out a policy, it could hurt you in the long run. Waiting until you feel you really need a policy means you will be older and the odds of having health problems increases. This can mean higher premiums or worse, being completely denied for a policy. Starting a life insurance policy earlier in life is a smart decision all around.
Age And Health Issues
It’s a simple equation: as we age our odds of having health problems increase. You will also be paying the premium on the policy for a shorter time period while being more likely to pass away. Insurance companies take all of these factors into consideration when they determine your premiums. Every year that you wait to take out a life insurance policy assures your premiums will be higher. It also increases the risk that some health issue will develop that will cause the insurance company to see you as a higher risk. The higher the risk they see of having to pay out on the policy before they have received sufficient premium payments from you, the more they are going to charge you to protect their interests. So, the longer you wait to get a policy, the more you are going to pay for it.
You Could Be Denied
If you are young and healthy you will be approved for a policy relatively quickly. But as you age, health problems can crop up that might disqualify you for a life insurance policy altogether. Heart issues, high cholesterol and diabetes are all problems more likely to appear with age, and could result in a denial of coverage. If you take out a policy before issues like these occur, the insurance company can’t take it away due to changes in your health status.
Taking out a life insurance policy before you really need one is a smart choice and an investment in your future. Once you have a policy in force your premiums won’t increase, and as long as you continue to pay them you will be covered for the duration of the policy. Even if you don’t have a family to protect now, you will already be prepared for that with an affordable policy to cover them in the future.
Insurance agents hear the same story over and over again: I know I need life insurance; I just can’t afford the premiums. The trouble is that those who feel they can’t afford to have life insurance are likely the people who need it the most. Here are a few of the reasons why the argument that you can’t afford life insurance coverage likely means you really need it..
You Have No Savings
If you live paycheck to paycheck and have no savings or other backup to cover yourself in case something goes wrong, then you also have no way to provide your family with what they need should you pass away. The less you have in the way of assets and savings, the more a life insurance policy will be needed by your loved ones in the event of a tragedy. How will they pay the mortgage and utilities, buy food, or handle all the other costs of everyday life? Without a life insurance policy, you will be leaving your family in a seriously difficult situation, dependent on charity or family members for help.
There’s No Extra Room In The Budget
When your budget is tight, which it is for many people today, you probably need every dollar that is coming in right now to cover the bills and make ends meet. What happens if some or all of that income is taken away? The family members left behind certainly won’t have a chance of finding income to replace what is gone quickly enough to avoid losing their home and more. While it can be difficult to fit the premium for a life insurance policy into a tight monthly budget, the cost of not fitting that policy in can be a lot higher if something unexpected happens.
If you really think you can’t afford to have life insurance, then the truth is you need to find a way. Talk to your insurance agent about ways to take out a policy affordably, and look at your budget to see if there is a way you can make room. The more you think you can’t pay for life insurance, the more you need that coverage to protect your family from losing everything if something happens to you. Knowing your loved ones will be okay if you are gone is well worth stretching the budget just a little more.
Life insurance is one of the most important purchases you can make to keep your loved ones protected, but is life insurance only for those who are married with children? Whether you fall into this category or not, there are a lot of factors that make purchasing life insurance a wise choice. Here are some things to consider when deciding whether it is time to purchase life insurance, and information on what type of policy you will need to keep those you love safe.
When Do I Need Life Insurance?
There are a number of factors that affect whether life insurance is or is not is a good idea. In general, if you have any responsibilities that would still need to be fulfilled should you pass away suddenly, getting life insurance to protect those who would be left behind is a good idea. If you have any of the following responsibilities you may want to consider life insurance.
You have children and/or a spouse.
You have outstanding debts.
Your income is essential to the maintenance of your family’s lifestyle.
You own a home on which there is still an outstanding mortgage.
Life insurance is meant to protect your loved ones should anything happen to you, your financial responsibilities could become an enormous burden on your family should you pass away unexpectedly.
What Type Of Life Insurance Is Best For Me?
There are a number of different types of life insurance policies available on the market, and finding the one that is best for you may seem like a difficult task. Essentially there are two types of life insurance: term and permanent. These types of policies offer you different benefits depending on your personal circumstances. In most cases your first life insurance policy should be purchased when you are young and in good health. A term policy is also a good idea for a first life insurance policy as it will give you the most coverage for the lowest premiums. Permanent insurance can offer you a return on your investment. For some people, other types of investments might be a better idea.
In general, no matter what your situation, life insurance is a smart purchase. Contacting an insurance agent to get professional advice on which type of life insurance is right for you will give the information you need to make that choice.
Once you apply for a life insurance policy, there are some steps that might be required in order to have the policy issued. In many cases a health exam will be done to ensure you don’t have any serious illnesses or other issues that could affect your eligibility for the policy. Some insurance companies will send someone out to your home to perform the exam, while others will have you visit an approved doctor’s office to have it completed. Here are a few of the things you should expect when the test is performed.
A Questionnaire About Your Health History
You will probably start by filling out a questionnaire regarding your current health and history. This will include things like whether you have ever had certain types of illness, your current state of health and recent illnesses, as well as questions about your lifestyle. These lifestyle questions might include whether you smoke, drink, or use drugs, either illegal or prescription, and your exercise habits. There may also be questions about your family history, including illnesses such as cancer or heart disease in the family. All of these questions help the examiner to develop a picture of your general state of health and what can be expected in the future.
A General Exam
The examiner will do most of the things involved in a basic checkup, such as listening to your lungs and heart, taking your blood pressure and temperature, and checking your ears, eyes, and throat. They may ask you some more questions which were not included on the questionnaire. You will also be weighed and your height measured to determine whether you are at a healthy weight for your height.
Blood and Urine Tests
Generally a blood test, and in some cases a urine sample, will be taken in order to check for a long list of problems. They will check your cholesterol levels, watch for any signs of infection or disease, and test for drugs or alcohol in the bloodstream. All of these procedures are again similar to what you might have at the average checkup.
As long as everything looks good, you probably won’t receive the results of your exam. However, if something is discovered that affects your premiums or eligibility for the policy, you will be notified. At that point you will be able to either accept a policy at a higher rate, or decline it. If anything serious is discovered, you should contact your own doctor immediately for further examination.
The life insurance health exam is usually fairly quick and simple. In most cases, no problems are found that you didn’t already know about, and the policy is issued as requested.
If you have decided on term life insurance, you will next have to choose a term length. What you choose depends on several factors ranging from your budget to your life insurance needs.
What Does Term Length Mean?
Term length describes the period of time for which the life insurance policy will be in force. A term policy is an affordable choice for life insurance because there is an end date to the policy, reducing the insurance company’s risk of having to pay out on the policy. The shorter the term, the lower the risk taken on by the insurer, resulting in lower premiums. Term life policies start with lengths as short as five years and usually go up to thirty years, depending on the company.
How To Choose a Term
The biggest deciding factor in how long your term life policy should be is the length of time you will require the policy coverage. Why are you taking out the policy? Do you want coverage to be in force until your children are adults? Are you looking for coverage for the length of your mortgage? These are two of the most common factors in determining the term life policy. If your children are very young and you want to ensure there is a policy in force at least until they are old enough to care for themselves, then a 20 year term is probably the minimum you want to consider. If you just bought your house and want to cover the mortgage, consider a 30 year term-but remember that the amount owed on the mortgage will decrease as you pay it off. This means you might be able to choose a shorter term.
What About Short Terms?
The shortest of policy terms, five and ten year for example, are generally selected when the premium amount is too high due to age or health concerns for the insured to afford a longer term. In some cases a short term may be taken out because a previous term policy has expired and a few more years of coverage are needed. For the majority of people, spending a little more money every month on a longer term policy in the first place would be a wise choice to avoid overpaying on a short term policy later on.
When choosing a term length, it is always a good idea to take out the longest term at the highest coverage amount that you can afford. Sometimes a shorter term with higher coverage is desirable; find the right balance between the coverage amount, the length of the term, and the premium by discussing it with your insurance agent.
Figuring out how much life insurance you need to carry can be confusing. It depends on a few factors, and there are a few simple methods you can use to determine how much you should carry. At the most basic, there is a minimum amount of life insurance you should carry if you want those left behind to avoid a struggle. Beyond that, you really can’t have too much insurance, so add more as you can afford it. But remember, the younger you are when you take out your policy, the more affordable it will be.
Who Will Be Left Behind?
Who will be left behind when you pass away is one of the biggest considerations determining how much life insurance you need. If you are married but have no children, and your spouse has a good source of income, you might not need as much insurance as someone who is the primary breadwinner. Each child you add to the mix means more insurance you will need to ensure they are cared for if you are gone. You also need to consider whether you want to provide for college educations for your children or if you are simply aiming to meet their basic needs.
Your Annual Income
How much you make every year is a good starting point to determine how much your family will actually need to survive without you. If you are the sole earner in the family, then you know that your income is enough to maintain the family at their current lifestyle. Many agents recommend that you provide at least 5 times your annual income in life insurance, which provides your family with approximately 5 years of income to recover and find a new source of funds.
Mortgage Protection Coverage
Will your family be able to pay the mortgage on your home after you are gone? If you don’t want them to lose their home, providing enough life insurance to pay off the mortgage is a good idea. This is often recommended on top of the annual income you will provide to your family.
Life Insurance Calculators
There are a number of excellent life insurance calculators available online (ie, http://www.lifehappens.org/insurance-overview/life-insurance/calculate-your-needs/ ) and your insurance agent can also provide this service. With a small amount of information regarding your finances and income, these calculators make it easy to determine just how much insurance you should take out. Remember that while life insurance may seem like an unnecessary expense, your family’s future may depend on it. Make sure you have enough so that you will be prepared for an unexpected tragedy.
You might never have really thought about what it takes to qualify for a life insurance policy or what affects the premiums you pay. By the time you get around to figuring it out it could be too late. Here are the most important factors that go into determining what you will pay for your life insurance coverage as well as whether or not you will even qualify.
The older you are, the more you will pay for life insurance. When you take out a policy at a younger age, the company expects that you will be paying the premiums for a much longer time period, and therefore your monthly payments will be smaller. The older you get, the shorter the time period during which they can expect to receive payments from you. This means they will increase the premiums accordingly. Your age also has an impact on your health. The older you are the more likely it becomes that you will develop a serious health condition that could make it even more likely the company will pay out on the policy.
Everything about your health will be taken into consideration when you apply for a policy. Most companies will require at least a questionnaire filled out, if not a visit from a doctor or nurse to check up on your overall health. This includes things like your weight to height ratio to determine if you are overweight, blood tests to check cholesterol and look for serious illness, and sometimes more. They will ask about your lifestyle as well as smoking, drug, and alcohol use. Even what seems like a minor health issue can result in a higher premium amount, because it could develop into something more serious later on.
Your Occupation and Hobbies
If you have a dangerous occupation such as a firefighter, or engage in potentially dangerous activities like certain sports, this can affect your eligibility for life insurance as well as your premiums. When you put your life in danger either at work or at play, the insurance company sees a higher risk of paying out on the policy. In some cases they may deny you altogether simply based on the activities you engage in regularly.
These are some of the major factors leading to insurance company decisions regarding life insurance premiums and whether or not you qualify. Some of them can’t be changed, while others can-and you should take them all into consideration if you want to get the best rate on your policy.