Life Insurance: Should I Quit Smoking?

To your Greensboro life insurance provider, the most important concern when underwriting a life insurance policy is if you, the policyholder, are at risk of suffering a premature death.  Risk level is what determines the cost of any insurance policy and, where life insurance is concerned, whatever behaviors you exhibit may play into the formula used to determine whether you qualify for coverage from a particular insurer and at what price.

Following are some of the major factors that figure in to determining life insurance rates.  Some of these are criteria over which you have no control, such as age and gender, while others are lifestyle choices over which you have complete control:

• Age - you have no control over this main factor determining premium rates.  Older people are more at risk of dying sooner.  Young people are more likely to live longer and to pay premiums for a longer period of time.  
• Gender - statistically, females live longer than males and therefore have less risk to insurers of premature death.
• Smoking - any tobacco use, whether cigarettes, cigars, pipes or chew, has been shown to foster numerous health problems.  Smokers can sometimes pay twice as much for their coverage as nonsmokers.  This includes vaping and using nicotine gum, patches and even marijuana.  Quitting smoking not only saves on the cost of life insurance but also on the costs of buying all the smoking materials.
• Health - during most life insurance underwriting, a medical exam is required where certain vital information is recorded such as height, weight, cholesterol level, blood pressure, etc. While "no exam" policies may be available, coverage costs may be higher.
• Lifestyle - any risky pastimes such as motorcycle racing or mountain climbing will likely make a life insurance policy more expensive.  Dangerous occupations such as mining, fishing, or logging may also be considered risky by your Greensboro life insurance policy provider and will add to your cost.
• Family Medical History - if you have a family history (parents/siblings) of serious medical conditions which may have contributed to a premature death, this may factor into higher premium rates.
• Driving Record - insurers may look at your driving record to see if you exhibit any risky driving behavior.

Change What You Can

Not much you can do about several of the above factors, but smoking is something you can stop.  You should.  Save on insurance and prolong your life.

Converting from Term to Permanent Life Insurance

 

People buy life insurance for lots of good reasons and, if you're like most, your reason for carrying life insurance falls into one or more of about half a dozen categories, including:

1. The number one reason for your buying life insurance is to provide financial protection for your loved ones in the event you die prematurely.  
2. You want to meet your financial responsibilities even after your passing.
3. Life insurance benefits provide cash that can make up for your family's loss of your income.
4. Benefits can be used to pay off debts left behind such as a home mortgage.
5. Your children may have the tuition needed to attend college from your life insurance proceeds.
6. Insurance benefits may be used to pay for your burial/funeral expenses.

Kinds of Life Insurance

There are several types of life insurance that fall into two broad categories:

Term Insurance, which is the simplest, most basic form of life insurance.  It pays benefits to your beneficiary if you die during the term of the policy, which is normally from anywhere between one and thirty years.  Most term policies provide no other benefits besides the death benefit.

Permanent Life Insurance, also called Whole Life Insurance, provides a death benefit for your whole life.  In addition, these policies accumulate a cash value that you can access after a certain period of time.  Traditional whole life insurance policies usually have a level death benefit amount and level premium cost throughout the life of the policy.

Converting Your Term Life Coverage to a Greensboro Permanent Life Insurance Policy

Term life insurance is typically sold as being the most affordable way of providing financial safety to your loved ones in the event of your unexpected death.  Because term insurance is "pure protection," unlike whole life with its cash value provision, you can get a higher death benefit for a significantly lower premium.  This is most important when families are young, with limited resources but a large need for a family financial safety net.

When your resources have increased and the need for the safety net becomes less, you may be considering converting your term policy to a Greensboro permanent life insurance policy.  Term policies typically have a provision allowing for this conversion, as long as it's done within their accepted time frame.  Simply contact your insurance agent and request a conversion.  A medical exam and going through underwriting should not be needed.

Life Insurance: What Happens If There Are Co-Beneficiaries?

 

The purchase of life insurance is a common financial planning tactic for North Carolina families, providing financial protection for survivors when the family breadwinner has passed.  Your Greensboro life insurance coverage is something that can mean a world of difference to as husband or wife left behind as well as to children who may require financial support until they're able to support themselves.

A primary purpose of life insurance, whether it's whole life, term life or universal life, is to allow the beneficiary or beneficiaries to have continued financial support after they have lost the person who was previously providing that financial stability.  

The benefit received from a life insurance payout may be used wherever it's needed, whether that means paying off outstanding loans such as a home mortgage or taking care of funeral expenses.  As a father of small children, you may be taking out a Greensboro life insurance policy to ensure that, should you pass away unexpectedly, your family may continue living in a fashion to which they've become accustomed and have the funds needed to send the kids to college.

Beneficiaries

Part of taking out a life insurance policy is choosing and naming a beneficiary or beneficiaries.  This could be: 

• A person or persons
• Your estate 
• A charity
• A trust
• A business (as in key person life insurance)

The beneficiary is the person, persons or entity that will receive the proceeds of your life insurance policy when you pass.

There are two types of beneficiary designations:

Primary beneficiary - the person, persons or entity that will receive the proceeds of your life insurance policy at the death of the policyholder

Contingent (or secondary) beneficiary - only entitled to receive proceeds from the policy if the primary beneficiary dies before the policyholder

Multiple Beneficiaries

You may name more than one primary beneficiary if desired, in which case they will receive either equal portions or a stated specific percentage of the death benefit when you pass.  There are two ways to select multiple beneficiaries:

Per Stirpes - beneficiaries are designated by lineage, with policy proceeds being equally divided among beneficiaries and/or their surviving children

Per Capita - policy proceeds are equally divided among all beneficiary survivors.  Click here for a more detailed explanation of Per Stirpes and Per Capita designations.

If a beneficiary dies before the policyholder, he or she must be renamed as soon as possible.

5 Things to Know About Third-Party Life Insurance

Third-party insurance is nothing new, and though you may not be aware of it, you probably already carry some third-party coverage. Nearly every state in the country requires its drivers to maintain liability protection in case they cause bodily injury or property damage to a “third party” with their vehicle. Specific minimum amounts of that coverage are set and required by each state jurisdiction.

Third-party life insurance, however, is totally different than third-party vehicle liability (or any liability) coverage. Third-party life insurance is not something a policyholder buys for him or herself, but for a third party.

Third-Party Insurance Defined

In a third-party life insurance policy situation, there are three parties who are part of the agreement. The first is the policy owner, which is the entity (usually a person but not necessarily) that purchases the policy and is responsible for payment of the premiums. The second is the insurance company, and the third is the individual named in the policy, whose death would trigger payment of the death benefit to the named beneficiary or beneficiaries. Here are some other things to know about this type of policy:

1. As with almost all other insurance coverage, third-party life insurance requires that the policy owner have an insurable interest in the third party. Insurable interest regarding a life insurance policy means that the death of the third person (named in the policy) would cause material loss or financial hardship to the policy owner. An example of this would be an individual taking out a policy on his wife or child.
2. While the first party in the 3-party life insurance policy is often a person, it may also be an entity such as a company for whom the insured is a key employee or officer.
3. The person being insured in a third-party life insurance policy must be aware of and consent to this arrangement. An exception to this rule exists when a parent buys a policy to cover his or her newborn child, who is too young to provide consent. Buying coverage for a child may seem unusual, however, if the child becomes ill and passes away, the medical bills left behind would cause financial hardship to the parents.
4. The first and third parties to a third-party life insurance policy cannot be the same.
5. The beneficiary need not be a person but could be a company, a trust, charity or some other entity.

How Much Life Insurance Does a Single Parent Need?

A 2011 study found that approximately 70% of single parents are living without life insurance coverage (University of Virginia's Darden School of Business). This is in spite of the fact that single parents are possibly the one group that's most in need of this type of insurance coverage due to the vulnerability of their children's welfare in the event of an untimely parental passing. Whether you currently have no life insurance coverage or you're wondering if the coverage you have is adequate for your requirements, we have some information that can help determine just how much life insurance you likely need.

How Much Income Must Be Replaced?

As a single parent, if you were to be taken away from your family through a premature passing, the amount of income you're currently producing may need to be replaced in order to allow your kids to continue their lives in some semblance of financial normalcy. The current age of your children should be considered as well as the financial condition of your chosen guardian.

If the kids will be going to a family member who is relatively financially secure, the amount of life insurance you now carry won't need to be as much as if they'll be going with a guardian for care without enough current income to deal with the additional expense associated with taking care of your children. A commonly accepted rule of thumb says the face amount of your insurance policy should be equal to at least half the amount of your current annual salary for the total number of years until your children reach adulthood and are able to financially fend for themselves.

If you see college in their futures, this amount would need to be increased. You'll also have to factor in an amount equal to your funeral and burial costs and all of your outstanding debts, since creditors will likely go after your estate to recoup this money, and this will happen before any death benefit payouts go to your beneficiaries.

How Much and What Type of Insurance  

                                       

For a single parent, a balance must be made between the need for X amount of life insurance coverage versus the ability to pay the premium on this amount of protection. The best option is to buy term insurance, which is more affordable than whole life, and to take on a premium payment you know you can handle.

Is it the Right Time to Buy Life Insurance?

Life insurance is a funny thing. You don't really want it until you need it, but if you wait until you need it to buy, then you've waited too long. Let's talk a little bit about the right time to buy life insurance.

Technically speaking, the very best time to buy life insurance is shortly after birth. The cost of a life insurance policy is directly tied to your age, becoming more expensive as each year goes by, so "the sooner the better," from a cost perspective, is the answer to when it's the right time to buy life insurance.

Insurance for Infants

While there are arguments both for and against a parent or relative buying life insurance for an infant, a whole life policy with accumulating cash value could, over the first 18 years of the child's life, amount to a substantial amount for someone graduating high school and about to go to college. At 18 years old, ownership of the policy can either be transferred to the insured or he/she can opt to cash out any accumulated equity. That policy, which may have been funded with a lump sum payment 18 years previously, could prove to be a very welcome source of income at an important time.

Insurance and Debt

A 20-something just out of college and just going into the workforce may, if without the needed savings, get a credit card to help with relocation expenses to and housing expenses for his/her new location. Anything charged on this new card is what's considered unsecured debt which, in the event of the cardholder's death, must be paid off by his or her estate. While it would be ideal for this person to take out an affordable term life insurance policy to cover the amount of this debt, the fact is that most individuals at this age are more concerned with the payment of current bills rather than taking on new ones. Plus, if you have no dependents for whom you're responsible, leaving behind a credit card debt may not be a big deal in your mind.

Spouse and Family

Once you've gotten married and started a family, things may change drastically in your mind regarding your financial responsibilities. With others now depending on your financial support for their standard of living, you'll likely feel obligated to take out insurance if you haven't already. The best time is now!