Which insurance would be best for my mom?

Question

My mom is looking for life insurance. She is 49 years old. Her income is around $35,000/yr. What kind of insurance and which company would best suit her needs?

Thanks in advance.

Answer 1

Find an insurance agent who is a part of his/her professional association. You wouldn't use a Dr who was not a member of the AMA. The National Association of Insurance and Financial Advisors has over 70,000 members in the US. Go their website and search for an advisor by zip code. (link below) Phone three and interview. Schedule an appt with the one you like. Do not do this over the phone or online. You might have to go their office. Hope that hleps.

Answer 2

find an insurance broker in your area.  They will do all the shopping around for you and find a policy that will best suit your needs.

About fees....Any good advisor doesn't charge anything to see his/her clients.  They should be confident in their service that they don't need to nickel and dime clients with fees whether they do a good job or not.  Just my opinion.

Answer 3

I would find an agent.  He or she can get several quotes for you and guide you through the process.  

You will want to use a reputable company that is well rated by agencies such as Moodys or Standard & Poors (the agent will help you with this).

The agent can help your mom determine how much life insurance is needed.  In short she would want enough life insurance to:

1.  Enough to replace her annual income so that any dependents (husband, dependent children) would not have a change in lifestyle if she were to pass away and no longer be able to provide the $49k per year

2.  To cover any outstanding debts

3.  Pay for a funeral

Answer 4

I'm a financial representative and providing life insurance is one of the things I do for clients. God forbids if the breadwinner dies, where would the family be without life insurance? Life insurance can't protect you against harm or death, but it can replace your income. The problem is that many families that own life insurance don't have adequate coverage, but they pay lots of premiums for it. That's because they own the wrong type of life insurance. Take a look at the facts and you decide which product is the best:

Whole life insurance

1) Its level term to around age 100 that builds cash value.

2) Since it builds cash value, premiums are higher than term insurance that doesn't build cash value.

3) There is no cash value growth in the first 2 years because premiums are used to pay for the insurance and commissions to the agent.

4) After first 2 years, you are guarantee a rate of anywhere between 1-4% (varies between companies)

5) If you wish to take money out from the cash value, you have to borrow it and pay loan interest of 6% to 8%.

6) If you die someday, the insurance company keeps your cash value, but pays the death benefit. Death benefit will be reduced by any loans you taken from the cash value.

Universal life insurance

1) Annual renewable term until around the age of 100 that builds cash value.

2) Flexible premiums as long as there's enough cash value to pay for the insurance.

3) While premiums may remain level in the beginning, the internal cost of the insurance goes up every year. That means less and less of your premiums goes into the cash value. Eventually, the premiums you pay will be insufficient in the future to pay for the cost. What would happen is that you would either have to pay more premiums or a portion of your cash value will be used to pay for it.

4) Same cash value features as whole life.

Term insurance

1) Various of level term products to choose from (from 1 year to 35 years).

2) It does not build cash value, so premiums are initially lower than whole life and universal life.

3) Most term insurance are guaranteed renewable to around the age of 95 to 100 without providing a proof of insurability. If your health was to decline because of old age, you can renew your policy without any hassle.

4) When you renew, premiums will be based on your current age. So premiums will go up after the initial level term.

Those are the facts.

Personally, I have sold term insurance 100% of the time. Why? Its because my clients can get lots of coverage for low amount of premiums. Since premiums are low, I help setup investment accounts for my clients so that they can build wealth. If you had lots of money saved right now, would you still need life insurance? Probably not. But you probably don't have lots of money saved right now and if something were to happen to you, would your family be financially ok? As you get older and continue to invest, you may or may not need life insurance when it is time to renew the term insurance. If you were to invest $200/month for the next 30 years and the average rate of return in your portfolio was 12%, you would have about $700k saved for retirement. That's probably not enough to live on, but at least its better than having money sitting in a life insurance policy. If you were to die during the term, your family gets the death benefit and all your savings and investments. If you die after the term, at least you will leave money behind to your family. With the cash value life insurance, in most policies, your beneficiary will only get the death benefit, but the insurance company keeps the cash value.

Answer 5

It's not based on income - it's based on how old she is, what her health is, what kind of policy she wants, and for how much coverage.

The first step, is to clearly establish an exact goal that you want the insurance to acheive.  Then, she goes to a local, independent agent, who can get her quotes to about 20 different companies.  

ANY A rated company is going to be good.  The question is, which has the product that meets her needs, at the best price.