What is life insurance?

Life insurance is a contract between an insurance policyholder (you) and an insurer where the insurer will pay a designated beneficiary a sum of money upon the insured person’s death. Diverse life insurance types depend on your specific needs, including term life insurance, permanent life insurance, accidental death insurance, and more. 

 

Why do I need life insurance?
 

A death in the family is not only emotionally tragic; it can also take a tremendous toll on future financial security. Suddenly, paying the mortgage or providing for a child’s college education may become much more difficult.  Those who decide to buy life insurance do so to help ensure their loved ones are financially cared for.

 

What if I already have insurance coverage?
 

If you already have a life insurance policy, it’s a smart idea to review it every few years to make sure it still meets your needs.
 

Check to make sure all beneficiaries and other information are current. It might be time to speak to a licensed agent if you:
 

 

• Were recently married or divorced.

• Have a child or grandchild who was recently born or adopted.

• Provide care or financial help to a child or parent.

• Need to help or long-term care for a loved one. 

• Purchased a new home recently. 

• Have children or grandchildren who are about to enter college. 

• You refinanced your home mortgage in the past six months. 

• Received an inheritance. 

• Retired or your spouse has retired.

• Started a business.
  
   

​

STANDARD LIFE INSURANCE TERMS
 

Term Life Insurance:
 

Term Insurance is the simplest form of life insurance. It pays only if death occurs during the policy term, usually from one to 30 years. Most term policies have no other benefit provisions. There are two basic types of term life insurance policies: level term and decreasing term.
 

Level term means that the death benefit stays the same throughout the policy.
 

Decreasing term means that the death benefit drops, usually in one-year increments, over the policy’s term.

 

Whole Life/Permanent Life Insurance:
 

Whole life or permanent insurance pays a death benefit whenever you die—even if you live to 100! There are three major types of whole life or permanent life insurance—whole traditional life, universal life, and variable universal life, and there are variations within each type.
 

In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the policy’s life. The cost per $1,000 of benefit increases as the insured person ages, and it gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what’s needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.
 

By law, when these “overpayments” reach a certain amount, they must be available to the policyholder as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional benefit under the policy.
 

 

What are the benefits of term life insurance?

 

Term life insurance is life insurance coverage designed to be purchased for a specific time, typically between 10 and 30 years. Term life insurance is an affordable way to get maximum coverage throughout that time frame. It is so excellent for covering specific financial responsibilities, such as paying for a mortgage or saving for college expenses.

​
 

How much life insurance do I need?

 

Consider what your spouse and dependents need to cover day-to-day bills and more considerable expenses, live comfortably, and have financial stability. Don’t forget to include savings for college and retirement. Also, consider the effect of inflation over time; the amount needed for college, say, twenty years from now, is likely to be significantly higher than today. Please speak with one of our licensed agents for a complete evaluation of your needs.

 

To keep your premiums as low as possible and save money in the long run, buy it now. Premiums for the same coverage generally increase the older you become. And the longer you wait, the more you risk developing a health condition that could increase your premium further or make you uninsurable.

 

If you want permanent life, but you’re on a budget, consider some terms for now. You can save money initially by buying some term life in combination with permanent life. Then later, if your budget increases, consider converting the term policy to permanent life.

 

Consider group life insurance offered through your employer. It may be available at a relatively low cost. But keep in mind that your group coverage may end or become more expensive when you leave your job or as you get older. 

​
 

How many years should I choose for my policy?

 

It depends. The period you’ll need coverage for should be the main factor. For example, if you have young children, you may want to consider 20 or 30 years of term life coverage to help your children for college or other future financial endeavors. On the other hand, if your children are out of college and supporting themselves, a shorter coverage period might suit your needs better.

​
 

Can my health affect the price of my life insurance policy?

 

It depends on the type of life insurance policy. Some plans offer Guaranteed Acceptance Whole Life Insurance, which is guaranteed acceptance-no medical questions or health exams. Depending on your health status, we will provide you with a fair price for the risk that they take on when providing you with coverage (assuming you qualify for coverage). For example, there will be a difference in a heavy smoker’s policies than the same person who has never smoked.

​
 

Who can I contact to learn more about life insurance?

 

Speak with one of our agents at (720) 744-0065. As an independent broker, it is our job to explore your needs and budget and find the best available Life Insurance policy.

 

Source: Insurance Information Institute

​

 

OTHER LIFE INSURANCE TERMS


Policy Owner:

The policy owner is the person who owns the life insurance policy. In many cases, the policy owner is also the person who is insured by the policy. However, the policy owner may also be a relative of the insured, a trust, partnership, or a corporation.

 

Beneficiary:

A beneficiary is a person(s) selected by the policy owner to receive the life insurance payments upon the insured’s death.
 

Premium:

Premiums are the payments made to the insurance company to purchase and keep a policy active.

Death Benefit: A death benefit is an amount paid to the beneficiary at the time of the insured’s death.

Face Amount: The policy’s face amount is the death benefit, as stated in the policy. This does not include additional amounts that the policy may provide.

 

Insured/insured life:

Insurability refers to how likely an applicant is to be offered coverage based on current health, medical background, family history, and other factors.