Title

Make sure the people who matter most in your life are protected with life insurance. Complete the form below for a free price quote.
- -
*All fields required to get quotes

INSURANCE PRODUCTS ARE NOT A DEPOSIT/NOT NCUA INSURED/NOT INSURED
BY ANY FEDERAL GOVERNMENT AGENCY/MAY LOSE VALUE
CALL 1-888-588-7451




Needs Calculator



Use the simple Needs Analysis calculator below to help you determine how much insurance coverage you need to adequately cover your family. The industry standard for the number of years to protect your family is between 8 and 12. In some cases it might be appropriate to go as high as 20. Enter numerical numbers only, no commas needed.




Insurance 101


Intro to Life Insurance


Life insurance is an important component of a sound financial plan. Buying insurance involves asking a variety of personal lifestyle and financial questions. If you are not already working with an insurance professional, you may want to consider the advice of a fee-for-service financial planner who can offer you an objective review of your insurance options. When you decide on what you want, there are many solid insurance companies to choose from. Consult your library or an independent insurance professional for companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor's, and Moody's. 


Summary

  • Term insurance is basic, inexpensive coverage with premiums that increase over time and have no cash value.
  • Consider a term policy that is renewable and convertible to whole life should your needs change.
  • Whole life provides level coverage with level premiums. A portion of those premiums goes into tax-deferred savings.
  • Check rates on whole life policies and compare them to other investment opportunities.
  • Variable life offers control over your investments.
  • Premiums on variable policies are fixed, but face value and the value of your investments can fluctuate.
  • Universal life offers more investment options, but is highly sensitive to interest rate changes. Universal variable life is highly flexible, but offers no guarantees beyond the original face value.
  • Insurance needs are based on income replacement and personal preferences.

Buying Life Insurance: What Kind and How Much?

  • Think about which members of your household should be covered by life insurance. (It's typically a good idea to insure anyone who earns income.)
  • Use a Financial Needs Calculator to determine an adequate amount of insurance coverage for your needs
  • Review the various types of life insurance policies available (see below), the most common being Term and Universal Life. Decide which type of policy will meet your financial goals.

Buying Life Insurance


Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient. 

Who needs life insurance? If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations. 


Types of Insurance


Term insurance is the most basic, and generally least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums increase at the end of each term and can become prohibitively expensive for older individuals. A level term policy locks in the annual premium for periods of up to 30 years. 

Non-Medical Term insurance is the same thing as normal term insurance, but the application process and underwriting time are much different. Non-medical insurance only requires a short application and the underwriting decision is usually made within minutes. This avoids the hassle of a large application, medical exams, urine samples and weeks of waiting for a decision. 

Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.

Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.

Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees. Drawbacks to this type of insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.

Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.

Universal Variable Life insurance is the most aggressive type of policy. Like variable life, you control your investment in mutual funds. However, there are no guarantees on universal variable policies beyond the original face value death benefit. These policies are probably best suited to affluent buyers who can afford the risks involved. 


Key Terms and Definitions

  • Face Value -- The original death benefit amount.
  • Convertibility -- Option to convert from one type of policy (term) to another (whole life), usually without a physical examination.
  • Cash Value -- The savings portion of a policy that can be borrowed against or cashed in.
  • Premiums -- Monthly, quarterly, or yearly payments required to maintain coverage.
  • Beneficiary -- The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
  • Paid Up -- A policy requiring no further premium payments due to prepayment or earnings.
  • Fully Underwritten -- A fully underwritten life insurance policy is typically the cheapest option for healthy individuals. Fully underwritten policies will take into consideration your height, weight, and blood pressure. These policies will also include a blood, urine, or saliva sample. The results are combined with your age and health history to calculate the rate you pay for coverage.
  • Simplified Issue -- Simplified Issue policies make applying for life insurance quick and easy. Simply answer a few questions about your medical history rather than undergoing a medical exam. These policies are typically cost effective and have an easy application process for healthier individuals.
  • Instant Issue -- Suited best for younger families, Instant Issue term life insurance can be thought of as a quick solution to your life insurance needs. This process allows you to get approval for term life insurance within minutes of completing the application. Getting instant coverage allows you to be protected ASAP, instead of having to go through the process of waiting to hear if you are approved.
  • Guaranteed Issue -- Guaranteed issue life insurance can be a great option for those who are unable to qualify for traditional life insurance that requires a medical exam and more stringent underwriting. This type of policy can also be helpful for those who want life insurance without the hassle of undergoing exams and filling out long questions. Regardless of your health you qualify for coverage.

How Much Insurance Do I Need?


A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs. 

Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt. 

Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment. 

Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.