By on | Posted in: Life Insurance Basics

Life Insurance Terms You Should Know picture

Life insurance can be a complicated thing if you don’t know what you’re talking about. The industry has terminology that they have been using for years upon years. This confusing terminology has often times prevented many people from making decisions about getting life insurance.

What’s shocking is that most people who purchase life insurance policies have no idea what they bought. And most times, if they don’t understand what they bought, they might not have got the proper coverage.

So, here’s a way to help you understand a little bit more about the life insurance world and it’s terminology:

Life Insurance Terms You Should Know:

  1. Term Life Insurance

    This kind of policy lasts for only a specific number of years. You have the ability to choose from 10, 20, 25 or 30 years of coverage.

  2. Permanent Life Insurance

    This kind of policy lasts for the span of your entire life and it also factors in cash value. Whole life or Universal life is a type of permanent life insurance.

  3. Policy Owner

    This is the person who buys your policy and also has control of it. This person may or may not be the one who is insured on the policy. Example – a husband could own a policy on his wife. The policy owner is the only person who can change the beneficiary and get policy details from the insurer.

  4. Insured Person

    Kind of self-explanatory, the person whose life is getting insured.

  5. Premium

    Amount of money you pay for insurance. Typically, you get quoted per month or annually, as these are the two most popular options.

  6. Beneficiary

    On your policy, this will be the person who receives the life insurance payout. You may have more than one beneficiary, but by doing so, you will need to split up the percentages to equal 100%. Example: Naming your spouse and child as beneficiaries – your spouse would get 50% and your child would receive the other half.

  7. Death Benefit

    Life insurance money which is paid to the beneficiary.

  8. Accelerated Death Benefit

    As mentioned above, this policy feature lets you receive some of the life insurance payout early if you are terminally ill. Some insurers will often times call this a “living benefit.” It is typically a free feature on your policy, so make sure it has it!

  9. Cash Value

    If you purchase permanent life insurance, a part of your payment goes into what’s called a “cash value” account. This account grows in value over time. You could take a loan against the cash value and use the money for whatever you want.

  10. Underwriting

    This process happens once you send your application (and most times, medical exam) in to the company you’ve applied for life insurance with. During this time, the insurance company will evaluate the risk of insuring you and will determine your life insurance rate. During this process, the underwriter of your policy may or may not ask you questions regarding your medical records, prescription history and driving record.

 

It’s always important to be educated in everything you decide to do. Especially when making such crucial decisions such as buying a life insurance policy. Hopefully these terms will help you understand the life insurance industry some more and you can take these with you going into the process of buying a policy! If you’re still confused, don’t worry: your agent here at 1st Option Insurance will be more than happy to assist you with all of your questions. Don’t hesitate to ask. We’re here for you.

Ena Kalkan is a staff writer at 1st Option Insurance for Insurance News, a personal finance website.

1stOptionInsuance.com. The source for life insurance

By on | Posted in: Buying a Policy

Woman thinking about life insurance picture

When buying a life insurance policy, it’s important to recognize that they are very serious commitments. There are two main types of life insurance policies, term and whole life. Does having a single policy mean that it will fulfill your needs for the rest of your life? No. You can buy term and later think that having whole life is a better option. Or, you could decide to buy a brand new policy to stack on top of the policy you already have.

 

 

The Differences: Term and Whole Policies

Whole life and term life insurance policies work very different from each other. Whole life is what many will refer to it as a permanent life insurance, where they will pay a guaranteed death benefit no matter when you pass away, so long as your premiums are paid on time. Whole life is great for covering long-lasting financial responsibilities, such as estate taxes, that are left behind for your heirs.

Looking at term policies, they however only pay a death benefit if you die during your term – however many years you wanted your policy covered for which is usually 30 years or less. Term is usually good for helping your spouse and/or children if you’re no longer around to help provide an income. They are pretty inexpensive though, as most times, people are expected to live longer than the term of the policy. On the flip side, whole life can cost up to almost ten times the amount of the term policy for the same exact coverage.

 

When To Buy Both?

  • When you want more coverage over time: If you upgrade to a bigger house or have another child, you should most likely start considering adding additional life insurance. If you already have a whole life policy, maybe adding a term policy on top would be better and less expensive then adding another whole life policy.
  • When you can’t afford to get as much coverage as you want: Many people will put together both whole and term policies to save money without compromising coverage. Say you want a $500k whole life policy but are only able to afford half of it at $250k currently. You could add another $250k worth of term on top of the whole life to maintain the benefit level at a lower premium.
  • When you’re able to afford more coverage: Most families will start off with term life insurance because it was cheaper at the time but would have preferred whole life. If you and your family are still interested in buying a permanent policy, you can always do so by stacking on top of the term policy you currently have.
  • When you want to make sure you’re covered: This doesn’t happen very often, but life insurance companies can go broke and if it does happen, your coverage might be at risk.  Most states insure up to 300k in life insurance if an insurance becomes insolvent. It’s very important to make sure you research financial ratings before you buy. However, at 1stOptionInsurance.com, we shop the market of A (Excellent) or higher rated companies to ensure this could never happen to our clients. We want to make sure you and your family stays protected! They will shop over 50 companies when you are considering both whole and term life insurance.

 

Problems Possibly Encountered With Buying Two Policies

There is no strict limit on the number of life insurance policies you can have, it’s completely legal to get both term and whole life. If you want two term policies and one whole life policy, you can apply for them! When applying and going through the underwriting process for your policy, keep in mind that the insurer will ask about the coverage you currently have. They could decide to not issue the policy to you if they don’t see fit that you are able to pay for it, or that you do not have enough income/assets to justify the additional policy. Be ready to explain why you need more!

At 1stOptionInsurance.com, your agent will help you with any of your life insurance needs! What your agent will do is shop the market for A (Excellent) or higher rated companies to ensure that you and your family are covered and help you see the comparisons of the companies that are best fit for you as the best rate!

By on | Posted in: Lifestyle Choices

Questions picture

Life insurance companies can be picky at times. But something they will all agree on is their smoking policies. While you may not think of yourself as a smoker, they might disagree! How is that, you might ask? Well, they won’t consider you a non-smoker until you have been without tobacco or nicotine for at least a year. And even at that, you probably will not receive better rates until several years after being completely tobacco and nicotine free.

So, suppose that you are a 35 year old male looking for a $500,000 20-year term life policy in the “Preferred” risk class as a smoker. You are looking at about $900 a year. That’s more than double the non-smoker rate of about $300! Being said, if you are still using tobacco or nicotine and are looking to get life insurance, it’s in your best interest to make your best attempt at quitting the habit. Take a look at how life insurance companies take on various tobacco or nicotine products.

Currently smoking cigarettes?

Unfortunately, you’re definitely looking at higher rates.

Nicotine Patches/Gum

These can be pretty iffy… Reason being is because nicotine, regardless of how it’s consumed, could increase a person’s risk of having heart disease. Taking a life insurance carrier such as Prudential, for example, they will give a non-smoker plus rate to people who use nicotine patches or gum. But, other carriers may or may not piece these in with cigarettes. It’s pretty important to do your research with the many different life insurance companies before sticking to one.

Cigars, Pipes & Chewing Tobacco

AIG, another life insurance company, considers cigars a “non-factor” if: you smoke no more than one a week, haven’t used any other tobacco products for at least five years and have no nicotine in your urine when you’re tested. Transamerica, on the other hand, has comparable guidelines, but allows only one cigar a month. So, what about the occasional ‘celebratory’ cigar? These count as well. Good news is that some companies will list you as non-tobacco in a rating class even though you advise your agent on your cigar use. When it comes to cigars, pipes and chewing tobacco, you can even test positive for nicotine on your exam, you are looking at the non-smoker plus rates through some life insurance companies, such as Prudential and standard non-smoker with Lincoln National.

Electronic Cigarettes

Not many life insurance companies have underwriting guidelines for electronic cigarettes but those that do, such as MetLife and AIG, have them classified with the regular, old-fashioned cigarette. This is simply due to the fact that there isn’t enough information or research to show the long-term effects that e-cigarettes have. Life insurance companies do not take too many risks on a lot of different issues, and this ends up being one of those where they’re still uncertain about. One company, Prudential will give a non-smoker plus rate to people using electronic cigarettes.

Own Up To Your Habits

Do not lie about anything on your life insurance application! Especially tobacco usage. Eventually the truth will come out when you take the tests or when it shows up on your medical records! Most of the substances they are looking for can take days – weeks to leave your system depending on how much you used. Best case scenario, you will end up getting the higher rates which line up to what other tobacco users typically pay. Worst case scenario, you’ll be refused coverage. If you do not lie to your agent they can shop the market and find you the best and lowest price based on respective companies guidelines. You can use 1st Option Insurance quoting tool to find the best rate. Click Here

Quit Using Tobacco!

Make a solid attempt at quitting your tobacco or nicotine use. You’ll get rewarded for it (eventually!) and it will make you a better person.
At 1st Option Insurance, we have agents ready to help you with your life insurance quote! They will guide you through the process and will find you the best rate on the market through over 50 life insurance companies, rated A Excellent or higher.

 

By on | Posted in: Buying a Policy

Things That Could Affect Your Life Insurance Rate tight rope picture

Most people would know that your overall health and how old you are play a massive role in life insurance. It determines how much you pay or if you even qualify for the coverage you want. There are many reasons why you don’t get approved for your life insurance policy. Many of them sound pretty unusual but these are things to take into consideration when applying for life insurance.

  1. Your Occupation

If you have a desk job, you don’t need to fret yourself over this one! But, if you have what’s considered a “risky” job, you’ll be looking at a higher premium with life insurance. If you’re a pilot, commercial underwater diver, or prison guard you are placed among those who, depending on which carrier you go with, could end up paying more for coverage than a bank teller or administrative assistant would. Police Officers, Firefighters, Military personal (not deployed) most life insurance companies will give you the best rate available based on your health.

  1. A Recent Bankruptcy

Credit history generally stays out of life insurance premiums, unlike with home and auto insurance. But having a recent chapter 7 bankruptcy in your credit report could make it tougher to qualify. According to several different life insurance companies underwriting guidelines, take AIG for example, they will not even consider offering term life coverage until your bankruptcy has been discharged for a minimum of two years. Now, if you have filed for bankruptcy more than once before, you will not be considered for any coverage until the most recent bankruptcy has been discharged for five years minimum. If you filed chapter 13 recently you will be ok with some companies as long as you are in a court approved payment plan.

  1. Driving Record

If you have a not so clean driving record, you might be looking at higher premiums. You might not even qualify if you have a recent conviction for a serious violation, like a DUI for instance. But this all really depends on the insurance company and the amount of coverage you get through them. Mutual of Omaha, for example, checks motor vehicle records for people ages 18 to 45 who apply for $100k+ of life insurance, and for people who are 46 to 70 who have applied for more than $1 million. But, again, this is just one insurance company from many others who all have very different guidelines.

  1. “Dangerous” Hobbies

Do you like to scuba dive, hang glide, skydive, or rock climb? These are all hobbies that life insurance companies have deemed as pretty risky activities. Shouldn’t come as a surprised when the life insurance company you decide to go with will want to know specifics about your hobby! They is why it is smart to find an agency that shops every company and finds you the lowest rate!

  1. Your Gender

Statistics show that many consumers don’t know that gender affects life insurance rates! For example, a 30 year old male who does not smoke would pay $250/year or more for a $500k, 20 year term life policy whereas a 20 year old female who doesn’t smoke could end up paying as little as $215/year for the same policy. But don’t get upset! Women live longer than men and it’s just the way life works!

Above are just a few things that could affect your life insurance rate but don’t worry.

We have you covered at 1st Option Insurance. We have the best agents readily available to help guide you through any of these problems and many more! Having the right agent really makes buying life insurance so much easier. We shop each and every life insurance company that is A Excellent, A+ or A++ rated by AM Best to find the best rate on the market! CLICK HERE to shop now

By on | Posted in: Buying a Policy

Term Insurance pic woman holding baby

Term life insurance pays a death benefit to your loved ones if you die during the policy. What is term life insurance? It’s easy to understand: Pick a policy amount and time period for coverage, and then you’re ready to shop around.
Buyers usually pick policy terms that cover the years in which their families most need financial support — often while their kids are growing up and they’re paying off a mortgage and other debts or until retirement. You can choose terms of 10, 15, 20, 25 or 30 years.
Term life insurance has no investment component or cash value, unlike permanent life insurance, which covers you for your entire life. You can’t borrow money from a term life policy or cancel it and receive cash value. If you stop paying your premiums before the term ends, your policy lapses and you’ll no longer have coverage. Your insurance also expires when the term ends. If you still need term life insurance, you’ll need to buy another policy.
There are a few varieties of term life:
Level-premium term life is the most common type of term life insurance. If you have it, you’ll pay the same premium every year and your beneficiaries will receive the guaranteed death benefit if you pass away. According to the Insurance Information Institute, 20-year policies are the most popular length.
Annual renewable term life is just like the name implies: You can choose to renew every year, but your premium could increase. Your policy will spell out the possible increases. It’s for people who have a very short life insurance need. Typically, you’ll save money by locking in a rate with a level-term policy.
Decreasing term life policies have a death benefit that decreases over time, with level premiums. People may choose this type of policy if they want to cover a specific debt, like a mortgage.
Return of premium term life provides a refund of premiums for people who don’t die within the term. It’s for customers who don’t like the idea of paying for life insurance that could expire without a payout. Because of the refund feature it costs more than a comparable amount of standard term life insurance.

Why term life insurance could be right for you

If other people, such as a spouse or young children, depend on your income, and you don’t have plenty of money socked away, you probably need life insurance.
Term life insurance is intended to cover your risk of dying during those years when your dependents still need your support. Your family could use the death benefit to pay off debts, fund day-to-day expenses and save for your kids’ college educations.
Term life is probably a better fit for you than permanent life insurance if:
⦁ You don’t have any dependents who will need financial support for the rest of your life and beyond, such as a special needs child.
⦁ You don’t plan to use life insurance to leave a legacy for family members or charity.
⦁ You don’t expect to die with an estate that would leave your heirs with an estate tax burden. (In 2015, federal estate taxes apply only to estates worth $5.43 million per person and $10.86 million per married couple. The values change each year depending on the inflation rate.)
For most life insurance shoppers, term life is the best option, says Todd Juliano of 1st Option Insurance in Jacksonville, FL.
“For the overwhelming majority of situations, a 10- to 30-year level-premium term policy is sufficient,” he says. “Term policies give the maximum coverage for the least amount of money.”

The cost of term life insurance

Cost is the biggest advantage of term life over permanent life insurance.
If you’re young and healthy, you should get really low rates. Letting yourself be talked into an expensive whole life policy when what you really need is term life is a big mistake. Because of whole life’s high costs, some customers afford their premiums by buying too little coverage, leaving their families vulnerable.
The cost of term life depends largely on the amount of coverage you buy, your age, your health and whether you smoke.
Looking at rates for a $500,000, 20-year term life policy and found that a healthy 30-year-old man can buy one for less than $250 a year; a healthy 30-year-old woman could buy the same coverage for less than $220 a year. Shopping around pays off. The male could also pay $400, and the female $350, for the same coverage. By contrast, a $500,000 whole life policy can be about $5,000 a year for a man and $4,400 for a woman. Because new policies become more expensive as you age, it’s a good idea to buy life insurance as soon as you need it.

Waiting also increases the risk that you’ll develop a health condition, which would drive rates even higher or make qualifying for coverage difficult. If you lock in rates now, your premiums won’t go up, even if your health suffers later.
Why put off securing financial protection and leave your family at risk? 1st Option Insurance tool can help you find the best rates.

Ena Kalkan is a staff writer at 1st Option Insurance a personal finance website.