FAQ'S - Life Insurance

Why use an insurance adviser or broker?

An insurance adviser or broker is essentially your trusted liaison to a variety of financial products and services. They are usually the ones on the front line, asking you the important, often never-thought-of questions, providing you with accurate answers and deciphering the often overwhelming stream of information and options. A broker must also gather the information you give him or her, then go out and find the perfect solutions to suit your particular goals and review them with you. Without one, you are often taking a uneducated risk with hard-earned savings.

How do I know which type of insurance works best for me?

It’s always best to seek out the advice of a trusted, insurance professional. That way, you can discuss all goals, short and long-term, and the best ways to accomplish them within your budget and time-frame.

Why should I do an annual policy review?

It’s like changing your motor oil every 3000 miles. If you don’t do it, you may discover your car no longer works when you need it most. Most people forget to do this until it’s too late. Your situation often changes throughout the course of life … especially in these times. A new home, car, job, family member, or the lose of any one of those, can change your entire financial position. It’s best to be on top of those issues than be a victim of them. Further, you may be paying too much or own an older policy that is about to expire. With that in mind, new, more comprehensive options are developed by insurers several times a year. In some cases, it may be wise to replace a current strategy with one that makes more sense for your current goals.

What’s the best way to purchase an insurance policy?

By carefully determining what your goals are. Insurance can be about cash-replacement due to unforeseen circumstances, but can also serve many other needs. Ideally, you’ll want to discuss this with a trusted advisor, who has experience with insurance planning.

What should I budget for my policy?

Again, it depends on what you want to accomplish. For example, if you’re buying insurance to protect a home loan, plan on budgeting at least 5% of your loan payments for premiums. For college savings and retirement income, 10% or more would be ideal. Try not to dwell on the added expenditure, since what you’re actually doing is securing your capital investments.

Are rates the same for each age group?

It varies from carrier to carrier, plus any special health conditions one might have.

What about the rates I see on television and in newspapers?

Be careful with these. Many people believe they’ll get these rates, but discover later they either don’t qualify for them or that they offer limited benefits.
Read the fine print carefully, and you’ll know exactly what those rates represent.

What will affect the rates I get?

Everything – including your age, the amount and length of coverage, your health, smoking, the carrier and a host of other factors. This is where an insurance advisor can help.

How do I know I can trust an insurance company?

Each carrier has a rating, usually A – F. Make sure your carrier has at least an A+ rating, which means it has excellent financial strength and claims paying ability.

What happens if I cancel my insurance policy, later?

Certain types of permanent insurance policies may carry a penalty, like a CD, so find out about this before you commit to it.
If you have a simple term policy, you may cancel at any time without penalty.

I just bought a home, and I already have life insurance. Should I consider mortgage insurance, as well?

First, if your mortgage is much more than the coverage on your existing policy, see if it’s practical to raise your coverage. If that doesn’t work, and you definitely want to pay off your mortgage when you die, do consider a term policy for the full amount of the new mortgage, or at least to make up the difference.

Should I buy term or permanent insurance?

Term, if you only want coverage for a temporary period. Permanent, if you want coverage until you die. Remember, permanent also builds cash value and can supply additional retirement income. Discuss all options with an insurance advisor.

I was recently turned down for coverage, but my doctor says I’m fine. What should I do?

You may feel fine, and your doctor may say you’re fine, but insurance carriers look for things that are likely to occur later on. For example, your cholesterol or blood sugar may be fine for your medical history, but higher than the carrier’s guideline. You may also be on a combination of medications which have, or may create, abnormal reactions. If you’ve ever been turned down for coverage, the best way to combat this, and get a good policy, is to openly discuss any and all medical concerns with your insurance advisor. If they know in advance what your situation is, they can direct you to special carriers which may accept you at reasonable rates.

Is my insurance tax-deductible?

Depends on how you structure it. Ask your accountant, or tax advisor.

I was considering an annuity. Is it true that annuities are not liquid?

Annuities should be established with funds not earmarked for emergencies, but for savings. Ideally, you’ll want your deposits to accumulate interest, safely and undisturbed, for at least ten or more years. The longer, the better. However, newer annuities do allow surrender-free withdrawals at yearly intervals. Find out the details of this before you commit to any annuity.