Five Things You Should Know about Life Insurance
- Your Health Conditions Matter
The biggest determining factor when applying for Life Insurance is the applicant’s health. Your medical condition will determine how much coverage you can get approved for, how much you pay for coverage, and also which insurers will take on the risk of insuring you. In the Life Insurance world, there’s nothing more important than your health condition.
- The Longer You Wait, the More you will Pay
One of the factors taken into account when reviewing an application for Life Insurance is the applicant’s age. The younger you are, the lower your rates will be. Also, as you age, the likelihood of developing some kind of health condition increases (see #1) and that will certainly result in you paying more for coverage.
- You Should Always Consult an Independent Agent
- Lying on Your Application Can Cause Big Problems
- Life Insurance May not be as Expensive as You Might Think
Using Life Insurance to Create Wealth
A 2017 study revealed 57% of Americans have less than $1,000 in savings. We have known for quite some time that the majority of Americans don’t save enough money. This is why life insurance is so important in order for us to pass on wealth to future generations. Below I list a few ways Life Insurance can be used to create wealth.
Life Insurance creates an immediate estate
It takes years to save a portion of our income and grow it through investment returns and compound interest, but life insurance creates an immediate estate upon the passing of the insured. If an appropriate amount of insurance coverage is owned by the insured, his/her beneficiaries would reap a significant financial windfall that can be used to payoff debts, fund education, start businesses, or be invested for the benefit of future generations.
Life Insurance Proceeds are not taxable
Investment income earned from stocks, bonds, real estate, etc. will usually be subject to tax payments at some point in time, but life insurance proceeds are not. This means your beneficiaries will have access to those proceeds without any tax liability.
You Can determine when your beneficiaries have access to life insurance settlement funds
Surprisingly, most insureds aren’t aware of the fact that they can arrange when the beneficiaries get access to the funds have been made available. The most common settlement option is a lump sum payment upon the death of the insured, but there are options to pay a limited amount immediately to take care of final expenses and the rest can be held in escrow to be paid out at a future date. This is beneficial when the insured is concerned that money may be squandered quickly by their heirs because they lack financial discipline. The insured can also direct specifically how those funds can be used and can assign a custodian to carry out their wishes. Yes, the insured can still control certain aspects of how this money is used even after their death!
There are many other options that are available, but the point of this article is to make clear the idea that life insurance can be a very valuable tool in creating wealth and improving the financial condition of future generations. If you would like to discuss the options available to you, feel free to call (205) 705-7482.
I need life insurance, but I have health problems. What should I do?
It’s no secret, the healthier a person is, the more options they have when deciding to purchase life insurance. But what if you’ve had a major illness? Is there a way to get the coverage you need? In many cases, the answer is yes! Each insurance company has different health underwriting guidelines. Some insurers are willing to take on certain risks and others aren’t. That means they’re willing to insure individuals with certain medical conditions and they’ll decline others. How do you determine which insurer is willing to cover your condition? Working with an independent agent who is knowledgeable about health underwriting will most often help with this determination.
There are a few conditions that will cause an individual to be uninsurable. If you’re terminally ill or live in a nursing home are 2 examples, but many other medical conditions could be covered. Advancements in our healthcare system have increased life expectancies and increased the likelihood of an individual surviving certain illnesses. As a result, many life insurers are willing to cover conditions they would’ve declined a few years ago. If you were diagnosed with cancer but have since been in remission, there’s a good chance you may qualify for coverage.
What kind of medical condition do you have? How long have you been receiving treatment for the condition? Are you currently taking any medications? These are some of the questions your agent will ask when trying to find the right life insurance coverage to fit your needs. It’s important to be honest and forthcoming with your agent to avoid problems. If you withhold information, that could cause the insurance company to deny your claim. Be willing to disclose your medical history and a review of your medical history to determine what kind of rates you would qualify for. It’s not uncommon for the insurance company to request medical records from your doctor, but they’ll need your permission to obtain those records.
Dealing with these kinds of cases can be complicated, but oftentimes people are shocked to find out they can get the coverage they are seeking; it just requires a little more work. The key is working with a competent agent who understands your health situation, will respect your privacy, and has the ability to work with a portfolio of different insurance carriers to get your case approved.
If you have questions about your coverage needs, don’t hesitate to call (205) 705-7482.