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If you don’t already own a policy, there’s no better time than the present to get one.
Unless you’re freelancing as a side gig, you’re probably self-employed — which means you’re more than likely responsible for your own life insurance coverage. You may not have given it much thought, especially if you’re young and just starting your career. Life insurance doesn’t have to be a priority for everyone. But there are some circumstances that make having a life insurance policy a really good idea.
Maybe you have family members who depend on your income, whether you’re the primary breadwinner in the family or not. Or maybe you have debt that someone else would be responsible for paying back if you were no longer in the picture. These are both good examples of situations where you should consider having life insurance.
People have lots of reasons for not buying life insurance. Some people think they can’t afford it or don’t need it. Others intend to get coverage “one of these days,” but they have other priorities. And some are intimidated at the mere thought of trying to buy a life insurance policy. The prospect can be kind of daunting.
The truth is you can get life insurance quickly and easily, especially with some assistance from an independent insurance agent or a financial planner, and it’s probably more affordable than you think.
In this article, we’ll offer three strong arguments in favor of having life insurance and why now is the time to look into getting a policy.
1. The people you care about will be protected
Life insurance isn’t something that most people enjoy thinking or talking about, but having a life insurance policy can give you peace of mind. Knowing that the people you care about are protected financially, in case something happens to you, can be a big relief.
That’s the whole purpose of life insurance, really. Life is unpredictable, and an unexpected event can upend everything. Life insurance is a way to be prepared — and if the past year has taught us anything, it’s the importance of being prepared.
Some life insurance policies go beyond providing death benefits, with coverage for accidental dismemberment and early payouts to cover medical expenses in the case of a terminal illness. Again, it’s not pleasant to think about these things, but if you’re prepared, then you can put them out of mind.
2. Life insurance will never cost you less
One of the fundamentals of life insurance is this: The younger and healthier you are, the lower your premiums will be.
If you think about it, it’s not hard to see why. Insurance companies are in business to make money, and one way they do that is by collecting more money in premiums than they have to pay out in benefits.
The older you are when you apply for a life insurance policy, the less time the insurance company will likely have to collect premiums from you — which means the company has to charge you more each month to make up for having less time.
And, the older you are when you apply, the more likely you are to have a chronic illness or a history of illness. Either of these will increase the cost of your premiums.
The table below shows examples of how the cost of coverage increases with age.
|AGE & GENDER||$50,000||$250,000||$500,000||$1,000,000|
|25 – Male||$8.61||$12.35||$19.11||$31.16|
|25 – Female||$7.83||$10.89||$15.72||$23.47|
|35 – Male||$9.48||$13.38||$21.28||$35.06|
|35 – Female||$8.66||$12.12||$17.87||$29.91|
|45 – Male||$15.27||$26.31||$46.27||$88.85|
|45 – Female||$12.83||$21.22||$37.20||$69.10|
|55 – Male||$31.97||$64.81||$119.13||$227.85|
|55 – Female||$24.71||$48.87||$88.73||$166.17|
|65 – Male||$81.61||$201.35||$387.35||$748.10|
|65 – Female||$63.12||$142.47||$264.22||$508.99|
*These rates are calculated for a 20-year term life insurance policy.
For people younger than 55 who are in relatively good health, term life insurance is a good option. It’s more affordable than whole life, and although term life policies usually have lower maximum coverage limits than whole life policies do, you can buy multiple policies for more coverage.
When buying term life insurance, the best strategy is to buy as much as you can afford now, to lock in the lower rate while you can. As noted previously, the older you are when you apply for coverage, the higher your premium will be.
One thing to keep in mind if you’re going to buy a term life policy is that it’s cost prohibitive to renew a term policy when the term expires. One solution is to make sure that the policy you buy has a conversion option. That way you can convert it to a permanent policy before the term is up and you’ll still have coverage — but you won’t have to pay an arm and a leg for it.
Other coverage possibilities
If you’re older, or if you can’t qualify for term life insurance (because of your health history or your driving record or financial history, for example), you do have other coverage options, including:
Guaranteed issue. This is a type of whole life insurance. It’s expensive, and typically there’s a relatively low maximum face value, or coverage amount (usually $2,500 to $40,000). But, as the name implies, you can’t be turned down when you apply for a guaranteed issue policy.
Final expense. This is also a type of whole life insurance. It’s a popular choice for people who are at least 55 years old and is intended to cover funeral expenses. As with guaranteed issue insurance, you don’t have to take a medical exam, but you will need to answer some health questions when you apply and the insurance company will check your public records to make sure you qualify for coverage.
Accidental death. This type of coverage is very affordable and is a good choice for high-risk individuals of any age. Bear in mind, though, that the insurance company will only pay the death benefit if the cause of death is determined to be an accident.
Group life insurance. This is the kind of coverage employers offer. Even if you’re self-employed, though, you may still be able to get group life insurance through a trade group or some other organization. Group coverage is inexpensive and it’s easy to qualify for this type of life insurance. The main drawback is you’ll most likely lose your coverage if and when you leave the group.
Estimating your cost of coverage
By now, you might be wondering how much it would cost you to buy life insurance. That ultimately is up to the insurance company that issues your policy, but there are ways to get a general idea of what you can expect to pay.
Many insurance agencies offer an online calculator you can use to estimate your cost.
If you work with an independent agency, you can get free quotes online or an agent can help you with that. Some agencies also offer an online health quiz to help you narrow down your possibilities.
3. It’s easier than ever to buy life insurance
Many insurance companies now let you complete at least most of your application online. Some even offer what are called “instant issue” policies, which means you can apply for coverage online and get an approval decision within minutes. In some cases, you don’t even have to speak with an agent during the process.
Instant issue policies can be a good option for people who are young and healthy. Be aware, though, that if you apply for an instant issue policy and are turned down, it could make it more difficult to get coverage elsewhere.
No medical exam life insurance
With an instant issue policy and some other types of term life policies, you can skip the medical exam that traditional underwriting requires.
In the past, insurance companies charged quite a bit more for a no exam policy because they took on more risk for this type of coverage. But in recent years, the cost of no exam life insurance has come down, making this type of life insurance more competitive with policies that do require an exam during the underwriting process.
Last year, because the pandemic increased competition among insurers to attract new buyers and the risk of contracting COVID-19 made getting an exam more challenging, many insurance companies lowered their premiums for no exam policies. Eventually, premiums may go back up again, especially if insurers find that they have had to pay out more death benefits on these policies than they anticipated, but prices most likely won’t increase substantially this year.
Some people think they can sidestep a potentially problematic health history by applying for a no exam policy. That strategy isn’t wise, though. You’ll still need to answer health questions on the application, and the insurance company will check your public records, including a database that contains information about any prescription drugs you are taking or have taken.
You should be completely honest when applying for a policy. If you fail to disclose information and the insurance company finds out about it later, the company could refuse to pay the death benefit.
How the pandemic changed buying life insurance
The paramedic exam that is normally part of the application process generally involves recording your height, weight, blood pressure and pulse. It might also include collecting a blood, urine and/or saliva sample, and an EKG. In some instances, X-rays may also be required.
During the early months of the pandemic, and to some extent even today, fewer professionals were available to conduct these exams, and fewer people were willing to undergo them because of the increased risk of contracting COVID-19.
As a result, some insurers dropped the exam as part of the underwriting process. Others began to offer what they called a “maybe no exam” policy — which isn’t really any different from the standard application process for a no exam policy, since insurers always reserve the right to request a medical exam if something in your application gives them cause for concern.
As noted earlier, many insurers made their no exam policies more affordable just to remain competitive. Whether prices go up on these policies after the pandemic is no longer an issue depends on how profitable the policies are.
There is one change that probably won’t go away anytime soon. Insurance companies have added questions about COVID-19 to their applications, and as long as there’s uncertainty about the long-term effects associated with COVID-19, people who’ve tested positive for the disease, even if they’re asymptomatic, might not qualify for the best rates.
Advantages of working with an independent agent
Unless you know for sure that you want to buy your life insurance policy from a specific company, you may want to consider working with an independent agent to help you choose and apply for coverage. Independent agents:
- Work with multiple insurers, so they aren’t limited to offering you only a few products (whereas a “captive” agent — one who works for a specific insurer — can only offer you policies issued by that company)
- Have broad expertise and can help you find the best policy for your unique circumstances (In other words, they know which insurers are most likely to work with you if you have any of the following: a chronic health condition, an imperfect health history or family health history, a less than desirable driving record or a bankruptcy in your financial records.)
- Can shop different insurance companies to find you the best rate
- Don’t earn a higher commission if you buy a certain insurer’s product, so they have no incentive for pushing you into buying something you don’t want or need
- Can explain the ins and outs of life insurance and make unbiased recommendations, so you can make an informed decision when buying a policy
- Will gladly walk you through the steps of choosing, applying for and getting the right policy, which makes the whole process a lot less intimidating
- Don’t charge you a fee, so you have nothing to lose by working with an independent agent and a whole lot to gain
True Blue Life Insurance is an independent life insurance agency that works with dozens of different insurance companies. Our friendly and knowledgeable agents are licensed in all 50 states and can work with you to make sure you get the right policy at the best price.
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