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LIFE INSURANCE 101

Having the correct life insurance can save you and your family from financial disaster. At HealthCare Affairs, we shop all available life insurance plans based on your needs and budget. Most life insurance brokers will sell you a policy where they make the most commission.
 

We at HealthCare Affairs DO NOT work that way. We will find you the right plan regardless we get paid or not because it is the right thing to do. Insurance rates are fixed by law, meaning you WILL NOT find a better price elsewhere.
 

There are many reasons to get life insurance. Some primary reason customers obtain life insurance to protect the following life events financially:
 

 

  • Getting Married

  • Having A Baby

  • Buying A Home

  • Dealing with Debt

  • Changing Jobs

  • Supporting Aging Parents

  • Changes in Your Business

  • Changes in Marital Status

  • Planning for College

  • Planning for Retirement

  • Other

     

One of the most common questions people have about life insurance is “term or permanent?”

Well, it depends on several factors, including how long you need the coverage, how much you can afford, how much risk you can tolerate, and how much flexibility you need.
 

To help you better understand which type of insurance might be right for you, speak with one of our licensed agents at (720) 744-0065.


Click here to download the official “Life Insurance Buyers Guide” by the National Association of Insurance Commissioners.

Optional Life Insurance Riders
 

  • Return on Premium (ROP) Rider: A life insurance policy with an ROP rider provides you with peace of mind. Under ROP rider, if you never die during the policy term, you get all your paid premiums back.
     

  • Living Benefits Rider: Life insurance with a Living Benefits rider policy pays out if you become permanently disable or get diagnosed with a terminal illness.
     

  • Long-Term Care (LTC) Rider: Life insurance policy with LTC rider provides lump sum or monthly cash benefit if you need LTC.

 

NO MEDICAL EXAM LIFE INSURANCE

Many people purchase life insurance to help secure the financial stability of their loved ones after their death. In most cases, you must submit to a medical exam to buy a life insurance policy because the insurance
 

company wants to assess the risks involved with insuring you. But some insurance companies offer life insurance policies without a medical exam.
 

Medical Exam: An applicant to undergo a medical examination as a part of the underwriting process. Typically, when applying for most life insurance types, an applicant must meet with a paramedical professional (or “paramed”). During this meeting, the paramed will usually ask some in-depth health questions. They will also usually take blood and a urine sample from the applicant for life insurance. These samples are then tested for various health conditions that could be deemed risky for the insurance carrier. Because of this, those who have health issues such as diabetes and other severe conditions may not qualify for what is referred to as “medically underwritten” life insurance coverage. But, without having to take a medical exam, qualification for coverage can be much more comfortable.

Also, because there is no medical underwriting to contend with, a no medical exam life insurance policy can often be approved more quickly than a medically underwritten policy. Therefore, someone who applies for no medical exam coverage may have his or her policy approved in as little as 48 hours – or possibly even sooner.

 

WHEN TO BUY NO MEDICAL EXAM LIFE INSURANCE?

No medical exam life insurance is often marketed as affordable, convenient, and fast. While this is somewhat true, it is still not the right solution for everyone. Only certain people will genuinely benefit from purchasing no exam life insurance.
 

If you have a chronic health condition like diabetes that is not under control, purchasing life insurance can be expensive or impossible. You may be able to purchase guaranteed issue life insurance in these cases.
 

If you cannot wait to purchase a fully underwritten policy, no exam life insurance may be a good option. These policies can sometimes be issued in as little as a few days. Suppose you have a risky occupation or participate in a dangerous hobby. In that case, you might have a tough time getting life insurance that utilizes a complete underwriting process, even if

you are healthy.
 

If you are older or have a severe health condition and want to help your loved ones pay for funeral or final expenses, a no medical exam life insurance policy may help give you peace of mind.

If you have health problems and your employer does not offer group life insurance, no exam life insurance may be a good option for you. Employer-provided life insurance is usually obtainable even for those with health problems, and it is generally very affordable for lesser amounts of coverage. But if you lose your job or your employer stops offering the coverage, you may be a suitable candidate for no medical exam life insurance if you have no other options. If these circumstances do not apply to you, and you want to provide for more than just final expenses, no medical exam life insurance is probably not for you. Young, healthy individuals with families typically need enough life insurance coverage to pay off a home mortgage and other outstanding debt and provide some income replacement for their spouse and children.

You may also want life insurance to fund your children’s education and other future. Under most circumstances, submitting to the medical tests and underwriting process will be the best option for obtaining appropriate life insurance to achieve your goals and give you peace of mind.

 

LIFE INSURANCE FAQ

What is life insurance?

Life insurance is a contract between an insurance policyholder (you) and an insurer where the insurer will pay a designated beneficiary a sum of money upon the insured person’s death. Diverse life insurance types depend on your specific needs, including term life insurance, permanent life insurance, accidental death insurance, and more. 


 

Why do I need life insurance?
 

A death in the family is not only emotionally tragic; it can also take a tremendous toll on future financial security. Suddenly, paying the mortgage or providing for a child’s college education may become much more difficult.  Those who decide to buy life insurance do so to help ensure their loved ones are financially cared for.

 

What if I already have insurance coverage?
 

If you already have a life insurance policy, it’s a smart idea to review it every few years to make sure it still meets your needs.
 

Check to make sure all beneficiaries and other information are current. It might be time to speak to a licensed agent if you:
 

 

  • Were recently married or divorced.

  • Have a child or grandchild who was recently born or adopted.

  • Provide care or financial help to a child or parent.

  • Need to help or long-term care for a loved one. 

  • Purchased a new home recently. 

  • Have children or grandchildren who are about to enter college. 

  • You refinanced your home mortgage in the past six months. 

  • Received an inheritance. 

  • Retired or your spouse has retired.

  • Started a business.

     

STANDARD LIFE INSURANCE TERMS
 

Term Life Insurance:
 

Term Insurance is the simplest form of life insurance. It pays only if death occurs during the policy term, usually from one to 30 years. Most term policies have no other benefit provisions. There are two basic types of term life insurance policies: level term and decreasing term.
 

Level term means that the death benefit stays the same throughout the policy.
 

Decreasing term means that the death benefit drops, usually in one-year increments, over the policy’s term.

 

Whole Life/Permanent Life Insurance:
 

Whole life or permanent insurance pays a death benefit whenever you die—even if you live to 100! There are three major types of whole life or permanent life insurance—whole traditional life, universal life, and variable universal life, and there are variations within each type.
 

In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the policy’s life. The cost per $1,000 of benefit increases as the insured person ages, and it gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what’s needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.
 

By law, when these “overpayments” reach a certain amount, they must be available to the policyholder as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional benefit under the policy.
 

 

What are the benefits of term life insurance?

 

Term life insurance is life insurance coverage designed to be purchased for a specific time, typically between 10 and 30 years. Term life insurance is an affordable way to get maximum coverage throughout that time frame. It is so excellent for covering specific financial responsibilities, such as paying for a mortgage or saving for college expenses.


 

How much life insurance do I need?

 

Consider what your spouse and dependents need to cover day-to-day bills and more considerable expenses, live comfortably, and have financial stability. Don’t forget to include savings for college and retirement. Also, consider the effect of inflation over time; the amount needed for college, say, twenty years from now, is likely to be significantly higher than today. Please speak with one of our licensed agents for a complete evaluation of your needs.

 

To keep your premiums as low as possible and save money in the long run, buy it now. Premiums for the same coverage generally increase the older you become. And the longer you wait, the more you risk developing a health condition that could increase your premium further or make you uninsurable.

 

If you want permanent life, but you’re on a budget, consider some terms for now. You can save money initially by buying some term life in combination with permanent life. Then later, if your budget increases, consider converting the term policy to permanent life.

 

Consider group life insurance offered through your employer. It may be available at a relatively low cost. But keep in mind that your group coverage may end or become more expensive when you leave your job or as you get older. 


 

How many years should I choose for my policy?

 

It depends. The period you’ll need coverage for should be the main factor. For example, if you have young children, you may want to consider 20 or 30 years of term life coverage to help your children for college or other future financial endeavors. On the other hand, if your children are out of college and supporting themselves, a shorter coverage period might suit your needs better.


 

Can my health affect the price of my life insurance policy?

 

It depends on the type of life insurance policy. Some plans offer Guaranteed Acceptance Whole Life Insurance, which is guaranteed acceptance-no medical questions or health exams. Depending on your health status, we will provide you with a fair price for the risk that they take on when providing you with coverage (assuming you qualify for coverage). For example, there will be a difference in a heavy smoker’s policies than the same person who has never smoked.


 

Who can I contact to learn more about life insurance?

 

Speak with one of our agents at (720) 744-0065. As an independent broker, it is our job to explore your needs and budget and find the best available Life Insurance policy.

 

Source: Insurance Information Institute



 

OTHER LIFE INSURANCE TERMS


Policy Owner:

The policy owner is the person who owns the life insurance policy. In many cases, the policy owner is also the person who is insured by the policy. However, the policy owner may also be a relative of the insured, a trust, partnership, or a corporation.


 

Beneficiary:

A beneficiary is a person(s) selected by the policy owner to receive the life insurance payments upon the insured’s death.

 


Premium:

Premiums are the payments made to the insurance company to purchase and keep a policy active.

Death Benefit: A death benefit is an amount paid to the beneficiary at the time of the insured’s death.

Face Amount: The policy’s face amount is the death benefit, as stated in the policy. This does not include additional amounts that the policy may provide.

 

Insured/insured life:

Insurability refers to how likely an applicant is to be offered coverage based on current health, medical background, family history, and other factors.

 
 

FINAL EXPENSE INSURANCE

Final Expense Insurance FAQ

What is Final Expense / Burial / Funeral Insurance?

Life insurance is a contract between an insurance policyholder (you) and an insurer where the insurer will pay a designated beneficiary a sum of money upon the insured person’s death. Diverse life insurance types depend on your specific needs, including term life insurance, permanent life insurance, accidental death insurance, and more.
  

  

Who Needs Final Expense Insurance?
 

It depends on person to person. Both individuals with or without life insurance can benefit from Final Expense Insurance. If you are 40+ years old and don’t have any life insurance, you probably consider final expense insurance.  Even if you have life insurance, you still run the risk of outliving your life insurance policy, in which case you should consider final expense insurance.  If your family has plenty of assets (money) to work with, you can self-insurance and don’t need final expense insurance.   

 

Can I Pre-pay for My Funeral?       
 

You certainly can, and some people do. This approach does have its advantages and disadvantages. When you pre-pay for your funeral, you get to personalize it. Plus, pre-paying will more likely prompt you to talk to your loved ones about your choices. This may give both parties more peace of mind. States have varying guidelines on funeral pre-payment. These guidelines work to prevent you from paying unscrupulous folks who can take your money and run. It helps protect you or your family from overpaying on top of what you pre-pay. Before you pre-pay, check your state guidelines for how the money will be held until your death. 
 

Make sure you know what you’re paying for. Also, check whether you get to lock in the rate for your funeral. That way, your family won’t be surprised by an up-charge later. When pre-planning or making any pre-payments, be sure to keep documentation. That way, you and your loved ones will have records of what you want and what you did. 
 

The disadvantage of pre-payment is that it’s less flexible than burial insurance. If your funeral plans change or you move, you and your family may not get that money back. Even worse, the funeral parlor could go out of business, and you may lose that money entirely. Final expense insurance provides your surviving relatives with a payout they can spend anywhere. You have less control, but your family has more flexibility. 



 

MORTGAGE PROTECTION INSURANCE (MPI)
 

Buying a home is a significant financial commitment. Depending on the loan you choose, you might commit yourself to 30 years of payments. But what will happen to your home if you suddenly die or become too disabled to work? Mortgage protection insurance (MPI) protects homeowners from health issues, disability, job loss, and death.

 

MPI Death Benefit:

The mortgage company or lender is usually the beneficiary in a mortgage protection insurance policy. That means the death benefit goes straight to the mortgage lender to pay off the mortgage. As the death benefit is used to pay off your mortgage balance, in most cases, it usually decreases after the first five years of coverage to match your remaining mortgage payments. Unlike term life insurance policies, in which the death benefit stays constant unless you make changes to the policy.

 

MPI Term Length:

The term lengths for term life insurance policies are relatively flexible; you can usually choose term lengths in five- or ten-year intervals. Some carriers even allow custom term lengths. However, mortgage protection insurance is generally locked in at the same length of time as your mortgage itself: 15 years or 30 years. Your age may also limit your term length; for instance, some carriers’ mortgage protection insurance limits you to a 15-year term if you’re above age 45.

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