Key Takeaways:

Term Life Insurance – Richmond VA

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Term Life Insurance is the most cost effective, and easily processed and approved life insurance product on the market. “Term” refers to a period of time where you are guaranteed to be covered in exchange for the payment of premiums, which are typically in the form of monthly payments to the insurer. However, the younger and healthier you are, and the lower the perceived risk, the easier it is to be approved and the cheaper the product will be. The average cost for this type of insurance is under $30 per month, and women can expect to pay slightly less than a man of the same age. Unlike a “whole life policy” (link), this type of policy will only cover you for a period of some years. Plans for 10 to 20 years are very typical, but there are products lasting as few as five years, and some can go more than 40 years. There are even policies that allow you to add time to your plan at an additional cost. What happens to the money you’ve spent on life insurance if you outlive your policy? Unfortunately, if you outlive your policy term, you do not receive any refunds for your premium payments. On the brighter side, it means that you’re still healthy and well and you have an option to create a new policy.

Sadly, most Americans are underinsured, and many don’t have any form of life insurance beyond employer sponsored group plans that can rarely be ported to another job. Term insurance is not the same as “final expense” or “burial” insurance, and explaining the difference to the client, as well as discussing the best and most cost-effective solution, is a very important responsibility for an independent insurance advisor.

Life Insurance Companies

All life insurance companies are not equally reputable. Just like personal credit-scores, each insurer will have a rating, typically from one of four rating agencies: A.M. Best, Moody’s, Standard & Poor's and Fitch. The worthiness, or financial stability, of the insurer and their products is publically available data. Never consider doing business with a non-rated, or poorly rated company. At Partners Richmond we exclusively use source plans from the top 20% to guarantee you the best experience, and the highest level of personal security.

Your overall credit worthiness, or credit rating, is not technically a deciding factor in the cost of life insurance. You should be aware that insurance companies will check your credit history to further determine the amount of risk they believe you represent, and that this can impact your insurability. We work with each of our clients in advance so that we can modify our request to the insurer (when necessary) to avoid any potential obstacles to obtaining coverage. This is a very important part of the process, since every time you apply for life insurance a record is created that other insurers can view. (link)

Underwriting Life Insurance Policies

Since the average life expectancy in the United States is approximately 78 years, it is not common for insurers to agree to underwrite a policy after the age of 67 for most kinds of insurance, including term-life. If you are looking to purchase term life insurance, doing so before the age of 50 is going to be the most cost effective. However, we have worked with clients in their 80’s to achieve superior hybrid solutions.

There are, surprisingly, a variety of reasons an insurance policy may not cover you in the event of your death. Each policy is different and special attention should be given to the “fine-print” prior to signing up for the policy. A capable insurance advisor will guide you to a highly rated policy that covers you for the most situations possible. Earthquakes, tsunamis, pandemics and other so-called “force-majeure” events are often exempt from coverage on some policies, or only available with a separate provision. This means should you die in a less than conventional way, your estate will not receive funds from the policy. Frequently “accidental” death and suicide, some diseases, victims of assassinations, and even accidental drug overdoses have been reasons for companies to not pay a claim. Not unlike flood insurance on a home, many policies have the ability to add provisions known as a “rider” (link to separate rider article?) to the primary policy, to cover less conventional loss of life.

How Much Life Insurance?

You might ask, “How much life insurance do I need?” This is a very personal question that deserves a very personal answer. While there is no practical limit to the amount of insurance you may purchase, there are plenty of practical considerations. Often, people consider what their family, spouse or children may need to live in the unlikely, but possible, scenario where they are no longer there to provide for them. If you have elderly relatives, or parents that you have committed to taking care of, a policy covering you that will ensure there are always funds available is a valuable consideration. Many business owners purchase policies that will cover their liability, responsibility or exposure to their own companies. There are additional forms of insurance that specialize in filling this particular business need, such as “key person insurance”, so it is less common in a standard “term” policy. Also uncommon, is purchasing a shorter term policy, with the intent of making a charitable cause the beneficiary. Although, for whole life and universal life policies this is done regularly.

We would be honored to consult you on a new or existing policy at no cost.

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