We specialize in getting you the best life coverage possible.
Many people don't know or understand the full options out there, and of course, these options are also changing all the time.
See below for a full Q&A on Life Insurance.
Frequently Asked Questions About Life Insurance
1. How much life insurance do I need?
We always ask why? What are you trying to accomplish? There are several types of life insurance and the proper use of any of them will start with that question. The answer is subjective because the next question will always be what can you afford and what are you willing to sacrifice to achieve your end goal? Now you have the materials to build your program
2. What types of Life Insurance Are there and What type of policy should I buy?
The types of life insurance are as follows:
Term. This is usually sold to secure short term debt for families and businesses. It is a great value due to its inexpensive cost out of a budget. It can also create opportunities as leverage against future borrowing. Because of this it is often used to insure key people in a relationship such as business partners or upper management. Every family should secure a policy or multiple policies on the main bread winner. There are many good rules of thumb and financial calculators for coming up with a death benefit amount in any of these situations. Normal term lengths range from 1 to 30 year term policies. Once the policy is secured the life of the insured is guaranteed throughout that period of time.
Whole Life. The foundation of Final Expense policies as well as many estate planning policies. These policies are normally built on an actuarial table of 90 to 120 years of age. This matters greatly as we live in a time when that range has literally expanded in front of the Citizens of the United States over the last 75 years. Whole life is guaranteed through the age that particular contract states. You pay a flat premium for a set amount of time and the death benefit is guaranteed based on that premium. This allows for permanent coverage even if only paying for a shorter period of time. For instance: Two whole life policies could have the same death benefit on the same person for the same amount. Let's say each have a 50k benefit and are based on age 100. One policy is $50 a month for the life of the policy. The other is $250 a month but is only due for a certain number of years. The insurance companies can do this using the idea of Time Value of Money. For all of these reasons this product has been and continues to be a great value for the consumer. In today's market is is also the foundation of the hybrid long term care policies that have become so popular for estate planning purposes.
Universal Life. These policies are fairly new to the market. Within the last 40 years these have been introduced to the general public and have been created to be the most flexible of all of the life products. They do this by bending actuarial averages to the benefit of the consumer but always within a profitable range as described by Federal and State Guidelines. The idea of smoothing numbers and averages is used to do the bending. Policies can be structured to act a certain way to fill the gap left by term and whole life products. They are most commonly funded with an indexed or variable product. Tax laws are often times used to set the boundaries of the structure of these policies. They are a great tool in the hands of knowledgeable advisors but are often times mis-understood due to the flexability of the contracts. It is a great idea in our opinion to have teams of advisors build these structures. We like the idea of using an Attorney along with a CPA when using these products for any structuring with the idea of estate planning or retirement planning. When built with this team these products are a solid counterbalance to traditional American retirement planning. At Parr Insurance we understand the questions to ask and the reasoning behind them but make a clear distinction between that knowledge as it stands alone vs. the group knowledge of a good team as described. We have several Atty's and CPA's that we work with but are prepared and often times do work with clients who have already established these relationships.
3. What should I consider in naming life insurance beneficiaries?
When you ask yourself why you want to buy and what you are trying to accomplish a clear light will shine on who the beneficiary should be.
4. How old do I need to be to get life insurance?
Because we believe in planning based on statistics and actuarial tables we advocate for buying early and often. We've never met a person who's family or business partners were unhappy with having a contract in hand if and when a death occurs. In our opinion, there is no argument that logically makes sense against owning a policy. A logical argument can always be made to purchase. You can be over insured as well but that is a subjective idea and based on personal feelings. Just like not buying at all is subjective. We've been doing this a long time and the industry goes back to Roman times. If people depend on you there is a reason. Period. You just have to ask yourself if you are concerned about it or not. If you are. We want to talk to you about making a program that makes sense. What we do hear is this. I wish I would have done it 30 years ago. We've heard this from many multiples of clients in their 70's and 80's who are now facing "extravagant" premiums or not being able to be covered at all due to age and health.
5. I have a small LI Policy to cover my funeral expenses do I need more?
As we age and come to terms with financial planning based on fixed incomes it becomes clear how valuable coverage can be. Singled, Married, Etc. Doesn't matter. Inflation, Market Risk, Long Term Care Needs, and Taxes will be in your life in one form or another. Financial literacy is critical. The great news is this. You don't have to face any of that alone. You should not. Do not let fear or ego stand in the way of asking for assistance. Your team should meet you where you are with understanding and information. Anything less is a choice. If you own coverage already it is always a good idea to review your total situation every year. Some say this is a chance for agents to churn business and take advantage of a customer by over selling them. We've seen articles like this on the net. We stand strong that this is not the case. The simple truth is we age and die and while that is happening Governments and Markets are ebbing and flowing. This is real and in turn should create a new conversation between the team. Don't let yourself be lazy about it. Educate yourself at the very least by committing to letting a trusted system guide you along.
6. Can I think of my Life Insurance Policy as a tool for Financial Planning?
We see them for what they are and can help you use them to fill gaps in your plans. Debt is constant in most lives. Life insurance is the best tool in our opinion to manage that reality. We strive to keep our end goals rooted in this idea. We specialize in coordinating a balanced portfolio of products just as you would a portfolio of investments.
·7. How often should I review my life insurance needs?
We feel that at the very least an annual phone call should be had with your team lead. We recommend to all of our customers that they seek council. We want to be part of yours.