Life insurance is an insurance that will pay out a sum of money to a beneficiary of the insured—usually a family member—upon the death of the insured. The price for life insurance is normally based on the age, health, and expected longevity of the person applying for life insurance. In exchange for a fixed monthly or annual payment, that policy is a promise from the insurance carrier that they will pay your beneficiaries a set amount if you pass away before the end of the term.
The goal of insuring one’s life is to ensure that loved ones do not financially struggle as a result of an early passing of an important family member. Life insurance is not designed to help yourself, but instead, to help reduce the hardships that a family experiences if someone they depend upon financially passes prematurely.
Life insurance is a cash payout, so you or your family can use it to pay for any type of expenses such as:
Health IQ believes that health conscious people are overpaying for life insurance. We are the only broker that offers special rates based on health knowledge and active lifestyles/diets like running, cycling, swimming, weightlifting, yoga, vegetarianism and veganism. Taking active control of your health is hard work, and we believe in rewarding you.
You can save anywhere from 8%-41%.
The short answer is "it depends." Every person has a different need, depending on their unique financial and family situation. But in general, you can find a good estimate by calculating your long term debts and financial obligations and then subtracting any savings, investments, or assets you have. Your ideal coverage amount should be enough to fill that gap. Most financial advisors recommend that you should have coverage for at least 7-10x of your annual income.
Total debt + total additional financial support (over x years) - savings/assets = estimated coverage needed
When thinking about your debts and assets, here are a few important factors to keep in mind.
Term life is the most popular and affordable type of life insurance. It provides coverage for a specific number of years, usually between 10-30 years. You make fixed monthly, quarterly, or annual premium payments to keep it active. If you pass away during the covered term, the pre-determined coverage amount is paid out in full. Almost all of our clients find that this type of policy is the best fit. Ideally, your family’s needs for coverage will end close to when your policy expires: your kids are through college, your mortgage is fully paid, etc.
However with term life you also have the flexibility to renew or convert at the end of the term if you need to. Permanent (whole life) insurance provides protection for life. The premium remains the same and coverage amount is guaranteed no matter how long you live. Since it never expires, the annual cost is significantly more expensive than term. There are several types of permanent life policies that provide added investment components, but these are more complicated to buy and come with additional fees and expenses. Unlike term, permanent life insurance requires a longer commitment. There is significantly less flexibility if your needs change.
Yes. Even if you have a current policy, you may want to refinance your existing policy as you may be overpaying for your current Life Insurance. There is no penalty for refinancing an old policy or buying additional coverage. Similar to mortgages, you can apply for a new life insurance policy even if you have an existing one. The new policy can either replace your existing one or it can be additional coverage on top of what you already have to cover—as in the case of having a second child.
Probably not. Group policies are often a “one size fits all” option that cover only 1-2x your annual salary. Most financial advisors recommend you have at least 10-15x. If you should leave this employer, you also most likely can’t take the coverage with you. Additionally, the choice of plan and carrier are made by the employer, which means that the policy may not be a good fit for your unique health and lifestyle profile.
There is only one reason your life insurance policy can ever be cancelled — if you stop paying the premiums. Once the policy is put into place, the insurance carrier is required to cover you at the same rate for the duration of the term. You are able to cancel your policy at your own will at any time.