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life insurance, term life insurance, whole life insurance

Question: Why buy life insurance?
Answer: Life insurance is designed to provide financial maintenance and support to those who would be left behind and would suffer financially at your untimely demise.

Question: How much should I have?
Answer: The amount of life insurance you should have depends upon your individual circumstances.  Factors to consider are the number and ages of children, your individual plans, hopes, and desires for your loved ones, and outstanding financial obligations.  A starting point that we would suggest is a minimum of $150,000 per child.

A six-(6) year old in 2018 has 12 years before (s)he is of college age and the cost of attending a 4-year public/state university is estimated to be more than $125,000 over four years starting in 2030 (a 6-year old’s freshman year).  The younger the child(ren), the more insurance you should have because there would be a longer time that they would need the support you provide today.  In this example, $150,000 doesn’t leave much for the other necessities your dependents would need.

You would do this analysis considering the number of children and their ages, but also consider any outstanding financial obligations you would leave behind such as a mortgage that provides their shelter and final (burial) expenses.

Question: Do I need additional life insurance if I have it at work?
Answer: Yes.  The limits provided by your employer may not be enough to cover the total needs of your family.  Furthermore, you generally are not covered during periods of unemployment.  If you quit your job on a Friday with plans to start a new one the next Monday, but die in an accident over the weekend, your loved ones WOULD NOT be protected.  It’s also a good idea to have life insurance separate from your employer-based policy because that coverage is often reduced or eliminated when you retire.

Question: What is term insurance?
Answer: Term insurance is life insurance that provides coverage only for a certain term (period of time).  That term is expressed in years and most commonly for 5, 10, 15, 20, 25, or 30 years.  Unlike permanent insurance (universal life, variable universal life and whole life), term insurance does not build cash value and because if this fact, can be obtained at a lower cost than permanent insurance.

Question: What is permanent insurance?
Answer: Permanent insurance is life insurance that remains in place permanently (as long as premiums are paid) and doesn’t expire.  Whole life, universal life, and variable universal life are examples of permanent insurance policies.

Question: What is the difference between the various types of permanent insurance?
Answer: The main difference is how and at what rate they build cash value.  When you pay life insurance premiums, the life insurance company sets aside a portion of the premiums for reserves (think of it as their savings account),a portion to cover their expenses, and the remainder ( the cash value), is invested, mainly in bonds, real estate, and other fixed-income investments.  If the early years of owning a policy, the cash value portion is small, but over time it increases.

With a whole life policy, the insurance company guarantees to pay you a fixed amount of interest that is credited to your cash value.  That interest rate is disclosed at the time of purchase of the policy and the insurance company is promising to pay that amount of interest rate in positive financial market environments and negative financial market environments.  Premiums are guaranteed to remain the same for as long as you own your policy.

With a universal life policy, the insurance company will pay a fixed amount of interest that will be credited to your cash value, but that rate may and/or can change depending upon how the investment returns of the insurance company.  It is not guaranteed as it is with a whole life policy.  Premiums are not guaranteed and can go up if the investments returns are lower than initially projected, but can go down if the investment returns are greater than initially projected.

A variable universal life policy is a universal policy that does not credit cash value at a fixed amount, but at a rate that is dependent upon the returns of investment accounts known as subaccounts.  Subaccounts fluctuate in value in a manner that is similar to mutual funds that invest in stocks and/or bonds.  Premiums are not guaranteed and can go up if investment returns are lower, but can do down when investment returns are greater than projected.  Cash values will also be negatively affected in periods when returns are negative and vice versa.

Question: What determines life insurance premiums?
Answer: Life insurance premiums are largely determined by factors of ages, sex, overall health and medical history, amount of insurance, physical build, tobacco use, and other factors.  All other factors being the same in all of these examples that follow: A younger person will pay less for the same amount of insurance as an older person.  A male will pay more for life insurance than a woman of the same age.  Someone who has excellent health will pay less than someone who has any type of ailments.  The greater the amount of insurance, the more it will cost.  A person that is overweight or underweight, based upon average height and weight proportions of the general public, will pay more.  A tobacco user will pay more than a non-tobacco user.

Question: What type of life insurance is less expensive?
Answer: All other factors being equal, insurance premiums will be lower for term insurance compared to permanent policies.  Ranking permanent policies from lowest premiums amounts are (1) variable universal life, (2) universal life, and (3) whole life.

Question: How much does it cost and how can I obtain a quote?
Answer: There is no cost or obligation to have a quote mailed or emailed to you.  You can request a quote by phone by calling 901-312-9166 or 800-754-1218 or via the contact page on this website or email your request to:​

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