Life Insurance help........?

Question

Hi I'm currently shopping for life insurance for my mom. This is my first time shopping for life insurance so I have no idea how life insurance works and do not know what I should look for. Can someone give me a few pointers? What kind of questions should I be asking when talking to an insurance agent? Also, I hear there's Term Life and Whole Life insurance. What are the difference between the two and which one is better? I'm actually looking for a policy that's around the 100K to 75K range, so what is the average rate? Which company are reputable and which company should I avoid? Any info, source, site, links, feedback are greatly appreciated. Thanks.

Answer 1

First you should contact a liscensed insurance BROKER in your area.  A Broker has access to multiple companies rather than just offering you whatever one brand they promote.  Find one that offers both term and whole life options.  Avoid any company that only offers one or the other becasue they will squeeze you into a mold to suit their product (not naming names or ragging on any one specific strategy, but promoters of the Buy Term and Invest the Rest fit into this category...it works in some cases but not all...let a broker determine what the best strategy is for you instead of settling for a "one trick pony" that doesn't know/understand any other strategies), rather than offering a product that suits your needs.  A broker will also be able to tell you the good companies from the bad ones.

The difference between Term and Whole Life comes down to your needs.  Both products are on the market for different needs.

First question to ask is what am I insuring mom for?  Are you covering debts?  Making sure you aren't stuck with a big ta bill on whatever she passes on to you?  Are you just looking at covering final expenses (IE: funeral, probate, etc) when she passes away?

Second, will these needs go away after a certain period of time or will the expenses still be there in some capacity whether she passes away tomorrow or 50 years form now?  Example:  IF you're covering debts, eventually that debt will be paid off in a certain period of time so you only need insurance for that specific period.  However, if you are covering funeral expenses, this is an expense that will never go away.

Basically, the differences are:  

Term insurance is for a temporary need.  It's very similar to renting a house.  You build no equity (or cash value), you're landlord (the company) can kick you out at some point (term eventually expires at age 80) and every few years they will increase the cost of the rent (premiums).  If you move out (cancel the policy), you get nothing back in return, you just hand back the keys and say thanks for helping me out for a couple years.

Whole Life insurance is more a perminent solution.  It's like buying a house.  Yes, it's a little more expensive than renting, but you'll have have something more sustainable for the long term.  You build up equity, the cost is the same and  likely won't increase, you have no land lord to kick you out unless you stop making payments for a long time and if you decide to go somewhere else, you'll get some thing back out of it (Cash Value).  Also, if you want to pay a little extra you can have it 'paid up' after a certain period of time (kind of like a mortgage...you can pay extra and pay it off in 15 years instead of 20...same thing applies on a "limited pay policy" if it's available in your area)

If you would like a suggestion on where you can go, check out www.customplanfinancial.com if you're in Canada.  It is run by top performers in the industry with the clients and advisors as their main focus, not profit margins and corporate growth.

Answer 2

You should talk with a Life Insurance Agent. The answers to your questions depends on what you are trying to achieve. Term Life Insurance is inexpensive when a person is young but becomes very expensive as a person ages. A whole life policy is more expensive because the premiums are set and the policy earns cash value.

Answer 3

Glad to hear you are taking care of your family.

You are right, there are two basic types of life insurance; Whole life (or any other type of policy with a cash value feature included) ie: Variable Life, Variable Universal Life, Flexible Premium Life ect.. And then there is Term Life.



From a agents point of view. (I hold a Life insurance License) Typically I would make a much bigger commission if I were to sell you a policy with a cash value feature, than if I sold you Term  Life insurance. If an agent starts to explain insurance with a savings attached, make sure they explain it clearly and that they are not talking over your head. And ask them about Term... And vice-versa.

Im not going to sell you your insurance, so take this for what it is worth please. And please do your research before you sign the dotted line. Any insurance with cash value is usually very complicated, or a tleast made out to be that way. Because it combines life insurance with "savings". They are known for low rates of return and expensive premiums.

Term is very simple. It is insurance for a specific amount of time, anywhere from 10 to 35 years. Typically more affordable than cash value insurance. And allows you to save, or invest any way you would like.

You should know that either way you go, Life insurance is more expensive the more seasoned the person is. And depending on their health, they may or may not qualify.

If you read or search anywhere that is an unbiased, third-party type site, that is not trying to sell you something. Most will agree Term is the way to go. In my opinion I would agree

Here is a list of of companies that have "achieved superior performance over the five years analyzed. "

http://www.insurancenewsnet.com/article....

Good luck.

Answer 4

You want to interview the sales person, like you would any other sales person.  Anyone can sell you a product, but you need to be sold on the service after the sale.

Some questions you should ask:

1.  How long have you been selling insurance?

2.  How long for this company?

3.  Do you have any current clients that we could contact as a reference?

4.  What types of products do you sell?

5.  What types don't you sell and why?

6.  Do you have the financial reports on XXXX company?

7.  Can you walk me through them?

8.  When is the best time to reach you throughout the day?  (What you are looking for is a schedule on how they handle there business.  If someone tells you anytime, then that probably isn't the person you want to do business with.  Because what he/she is telling you is that "I NEED YOUR BUSINESS SOOOOO," They will over promise and under deliver.

Now some things you need to know about life insurance.

The rates depend on the type of product, the s*x of the insured "women are less expensive then men", the health history, age and occupation could sometimes play an important role as well.

There are several different types, but what you need to do is not make a decision on one particular product nor sales person.  It's best to have them present there solutions, which isn't usually on the first appointment (unless they have all the statistical information they need), and let it all soak in.  Then goto the individuals and pitch the other products, or ask there opinions about a different policy.  Then let it all soak in.

Once you are finished, talk about it with each other.  Don't just do a Term policy, with an investment account because 3 agents told you to.  Don't go forward with a Universal Variable Life Policy, cause you like the investment side of it.  Keep in mind that life insurance is life insurance, investments are investments.  The person that normally benefits from the policy is the one living......

Just my two cents.

Answer 5

The number one pointer - clearly define the GOAL, of what you want the insurance to do.  

There's no average rate.  It's going to depend on her age and health.  

Term vs. whole, well, that's going to depend ENTIRELY on the goal.  Keep in mind, whole life costs about 10X as much as term.  And there are also hybrid policies, universal life, return of premium term, etc.  Whenever you are looking at one of these, and considering "investment" or "savings" components, RUN THE NUMBERS.  They have a crappy return, espeically if you compare the straight term premium , and look at investing the difference.  

Regarding companies, any company rated A or better, with AM Best, is solid.  

Regarding links:  

http://www.daveramsey.com/the_truth_abou...

Answer 6

I would recommend speaking with an independent agent who represents several life insurance companies.  He or she can explain the differences between term, whole, variable, and indexed life insurance.

You can learn a little more about life insurance at our site:

http://www.ohioinsureplan.com/index.php/...

Answer 7

MB has the best answer.  Take a term policy which is the cheapest.   It pays if you die and has nothing else.

It is like car insurance, the company pays if you use the policy and hopefully you never use it.   You just pay for the insurance and that's it.

If you want to invest, do not invest in life insurance.  It is a Rip Off.  Invest in something else.   If you want life insurance get some quotes for term life for 20 or 30 year policies.