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For many families who purchase a 20-year term life insurance plan, they realize in nearing the end of the term, that they still need coverage. An ideal scenario when purchasing a term policy is that your family will have time to pay off a home, get kids out on their own, and save enough in retirement to be able to cover expenses if anything happens to you.

However, with more adult children moving home to cover student loan debt and many homeowners taking out a second mortgage, the need for life insurance exists even after the term expires. Continuing the same term policy after the initial period typically comes with a major premium increase, but there are other options. If your term life policy is nearing its end, here’s how to maintain coverage.

New Term Policy

Term life insurance is more affordable than it was two decades ago thanks to new medical insights that allow us to live longer. With an experienced life insurance agent, you can easily compare prices. As your term policy nears expiration, begin to explore new term coverage options. You’ll likely be able to obtain a 10-year term life policy for the same or lower premium cost as your current coverage.

You can elect a policy that offers “living benefits,” which allow you to access benefits early if you have a terminal illness. While early access to benefits may reduce the payout if you die, you’ll be able to cover medical bills and ongoing treatment to avoid leaving your loved ones with massive debt.

Permanent Policy

If your health is good, you may get a better deal by buying a new permanent life insurance policy rather than converting your term policy. There are different permanent policies to consider:

  • Whole life insurance is a permanent policy that covers you for your entire lifetime and is designed for those who want to leave death benefits for their family – young families, parents with college tuition payments, families with a mortgage – to cover accumulated or anticipated debt. This policy earns cash overtime that you can withdraw (up to the amount you’ve paid in premiums) that will be subtracted from your death benefits.
  • Guaranteed universal life premiums never change. Your family receives the largest death benefit for the lowest level premiums. This type of policy typically doesn’t earn cash but premiums are less expensive than whole life insurance.

Long-Term Care

Many companies offer policies that combine life insurance and long-term care coverage. You can access a portion of your death benefit to cover care if you need assistance with daily living like bathing, eating, or moving about your home. These policies are different from stand-alone long-term care policies in that the premiums typically can’t increase.

The best way to avoid scrambling to find life insurance coverage as your term policy expires is to choose the correct policy in your 20s or 30s. Permanent life insurance policies never expire, but it’s important to ensure you purchase enough coverage. Another option is to layer life insurance coverage. Purchasing a term life policy as well as a form of permanent coverage gives you peace of mind knowing your family is secured in the immediate and short-term future and then through the rest of your life.

Don’t wait until your term life insurance policy is nearing the end of its term to review your needs. You have more options while the policy is still active.

Owning a house is likely the largest investment you’ll make in a lifetime, making life insurance crucial for families carrying a mortgage. If you or your partner dies, the mortgage still exists and death benefits payout will allow your family to cover the mortgage and keep your home.

Life insurance is the best way to ensure your family is cared for financially when you’re no longer living and providing income. Another way to help cover mortgage costs in preparation of the unexpected is mortgage life insurance.

What Is Mortgage Life Insurance?

Mortgage life insurance, often called mortgage protection insurance, does not replace regular life insurance. It is a way to pay off a mortgage if the unexpected were to occur.

Mortgage life insurance is typically sold through banks and home loan lenders but is also available through qualified insurance agents. As you could safely assume from the name, mortgage protection insurance pays off the balance of your mortgage if you die, with the payout going directly to your lender rather than your family, as with traditional life insurance. Because the insurance covers the exact amount of the loan balance, the payout amount decreases over time.

Do I Need Mortgage Life Insurance?

While mortgage life insurance is not required to buy a home, there are a number of benefits to consider.

  • Convenience: Rarely does a mortgage life insurance policy require a medical exam.
  • Availability: Even if you’re denied whole life insurance or a term life insurance plan, it may still be an option to obtain mortgage protection insurance.
  • Supplements Coverage: Mortgage life insurance can be used in addition to an individual life insurance policy. While the mortgage protection covers the balance of your home loan, your life insurance death benefits allow your family to pay other bills and debts without worry about their financial security.

Mortgage life insurance can help your family, but there are some elements of the coverage to keep in mind as you choose your plan.

  • Declining Payout: Although your premium will stay the same, the benefits received to pay off the mortgage steadily decline as you pay toward your home loan.
  • Don’t Use It Alone: Mortgage protection should be used in conjunction with an individual life insurance While a paid mortgage is a major benefit to your family, they will have other costs and debt that the mortgage life insurance will not cover.
  • Single Use: As the name implies, a mortgage life insurance policy can only be used for the home loan and goes directly to the lender. (Which is why having separate life insurance is so important).

When you envision taking the stress of a mortgage off of your loved ones and allow them to keep your family home, mortgage life insurance makes perfect sense. Because you’ll want to secure your family’s financial future, even beyond your life, you’ll want to partner the mortgage protection with a traditional life insurance plan that allows them to put a benefits payout toward other obligations as they see fit.

If you die with debt, your creditors must be paid from your estate, which includes cash, life insurance, property and possessions. Your spouse, life partner or beneficiary may be held responsible for your debt if you share a joint loan or if your loved one provided a loan guarantee. Here’s what happens to your estate and your debt when you die.

Estate Management

An executor, or administrator if there is no will, handles your estate. In many cases, the estate will need to go through the probate process, although there are ways around it. The executor must gather the estate assets and notify creditors and other beneficiaries of the death. State laws vary on which creditor gets paid first if multiple debts are left, but generally, debts are paid in the following order:

  • Costs of administering the will
  • Funeral and burial costs
  • Taxes due to the federal government (if applicable)
  • Medical bills (hospitalization, hospice, nursing home care, etc.)
  • Auto loans
  • Credit card balances

If you don’t leave enough cash or death benefits for outstanding debts to be paid, parts of your estate may have to be sold to satisfy the debt. If a significant debt exists and you own your home with a partner, there’s a change your partner may have to sell the house – but that depends on if you own as ‘tenants in common’ or ‘joint tenants’.

How Your Debts Are Paid

  • Mortgage: If you have it, mortgage life insurance may pay off the full amount still owed on the property. If there is no insurance, or a second mortgage isn’t covered, your beneficiary will have to assume the mortgage or sell the house.
  • Personal loans, credit cards: A number of debts must be paid before personal loans and credit cards are settled. For joint credit cards, your partner may be responsible for paying the balance unless covered by a payment protection plan.
  • Bank account: If your bank account is in your name alone, no one can touch the money until the estate is sorted out (typically through probate). If it was a joint account, your partner will likely still have direct access.

Experian found that 73 percent of Americans are likely to die with debt, but that doesn’t mean you can’t make the proper arrangements to have it covered and still secure your family’s financial future.

Are Any Assets Safe From Creditors After Death?

Laws that define what’s safe from debt collectors after you die differ for each state. For the most part, accounts with beneficiaries like IRAs, employer-based pension plans, brokerage accounts, and insurance don’t have to go through probate so creditors can’t touch that money. Speak with a lawyer about your state’s laws when it comes to accounts safe from debt collectors.

Community Property States

There are nine community property states: Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. Community property states follow the rule that anything that is obtained during marriage – house, car, cash – even if only held in one spouse’s name, is the equal property of the marital partner. Unfortunately, this includes debt. If you and your spouse live in one of these states and you die with debt that was incurred during the marriage, it automatically falls on your spouse.

The best way to avoid leaving your family with massive amounts of debt and sleepless night is to obtain a life insurance policy. The death benefits you’ll leave for your family will support their everyday lives, as well as help them with future expenses.

Not everything you leave behind when you die will go through probate. Payouts from life insurance policies rarely go through the process. The best way to ensure that neither your death benefits nor your property get stuck in the probate process is to ensure your policy’s beneficiary designations are properly set. If, however, you owe estate taxes or your beneficiary may not survive you, it’s time to revisit your will and life insurance policy.

What Is Probate?

Probate is the legal process that ensures the deceased person’s assets – home, cars, cash – are given to the correct beneficiaries and that all creditors are paid if debt remained. The probate process is time consuming, but typically goes smoothly if all legal documents are up to date and accurate.

Life insurance benefits don’t go through probate as long as named beneficiaries are available to receive the payout.

How To Skip Probate

Probate can be skipped by using one of several estate planning tools that pass the property directly to named beneficiaries.

  • Living trusts: Legal document that places your assets into a trust while you’re living and then transfers those assets to designated beneficiaries when you die.
  • Beneficiary designations: Legally binding designations of who will receive your assets if your primary beneficiary dies before or with you (Children, spouse, friends, charity, etc.). You’ll choose who will receive what percentage of your assets. Keep in mind, beneficiary designations override a will or any other document of asset allocation, so make sure you keep it current.
  • Joint tenancy: Way to hold title of property in equal shares among tenants – typically a husband and wife – so if one tenant dies, the other(s) can inherit the property without the asset going through probate.
  • Transfer-on-death deeds: Also known as a beneficiary dead, a transfer-on-death deed allows a living owner to execute a deed that names a beneficiary who will receive property when the owner dies.

If you don’t utilize one of the probate-skipping tools, your beneficiaries will likely go through the probate process, which, even when there are no hold-ups, can take months.

Steps Of Probate

  1. File a petition with the probate court. Step number one is to give notice to heirs and beneficiaries of the person’s passing with the petition. If there is a will, it is admitted to probate. If no will exists, the probate court will appoint an administrator of the estate.
  2. Creditors are given notice of the death. Based on state law (which can differ state-to-state), the estate representative must notify creditors of the estate and creditors can make claims as desired.
  3. All expenses and debts must be paid. The estate representative determines which creditor claims are legitimate and pays those debts.
  4. Beneficiaries receive the remaining assets. After creditors are paid, the estate representative petitions the court to be able to transfer the remaining assets to the named beneficiaries.

Remember to take the time at least once a year or during big life events to review your life insurance policy and will and keep all beneficiaries and asset information up to date to help your loved ones navigate the probate process, if necessary, smoothly.

Divorcees face more changes than losing a spouse throughout the separation process. It’s important to protect yourself financially when you file for divorce, and life insurance plays a vital role in your cash security.

If you’re going through a divorce and neither you nor your partner has a life insurance policy, the court could mandate the top earner to obtain a polity as part of the divorce decree to ensure the financial security of children and the surviving spouse.

Even in a non-contested divorce, costs begin to add up:

  • Secure and maintain separate homes
  • Loss of income or child care
  • Credit and debt issues
  • Family counseling as needed for children

The National Marriage Project at Rutgers University reports divorce reduces a man’s standard of living by 10 percent and can affect a woman’s by nearly three times as much.

Divorce And Insurance

If your life insurance details aren’t part of the divorce settlement and you want to remove your former partner from being a beneficiary, request your insurer send the necessary paperwork to make the change.

Other types of insurance can be affected in a divorce, including:

  • Homeowners: Remove partner from policy
  • Automobile: Remove partner and vehicle from policy for lower rates
  • Health: Divorce qualifies as a major life event for nearly all insurance providers. File the necessary paperwork to have your partner removed from your life insurance policy if allowed per the divorce settlement.

If you had health insurance through your partner’s policy and want to retain that coverage, utilize the COBRA program to keep the coverage for up to 36 months at your own expense.

Life Insurance After Divorce

If your divorce settlement entitles you to monthly alimony and / or child support, don’t depend on that money to secure your family’s financial future. It is even more important to obtain life insurance coverage after a divorce. If you were to die unexpectedly, your children, who depend on your income or child support payments, can accept your death benefits for their living costs, college tuition, and other expenses.

The divorce lawyers for you and your partner will likely require each of you – especially the partner tasked with monthly alimony or child support payments – to maintain a life insurance policy. If one already exists, the divorce decree may mandate an increase in coverage.

If neither you nor your partner has life insurance when you enter the divorce, it’s a good idea to at least obtain a basic 20-year term life insurance policy families with young children and a 10-year term life policy if the children are older. But there are a number of choices and policies to consider:

  • Term life insurance: Pay an annual premium for the policy term, which is typically 20 years. If you die within the term of the policy, your beneficiaries receive the payout.
  • Whole life: The most common type of life insurance is whole life. This type of policy comes with guaranteed cash value during the life of the policy. A portion of each premium payment goes toward the policy’s cash-value account. The policyholder can withdraw cash after it accrues and use it as desired.
  • Universal life insurance: For those who desire flexibility, a universal life insurance policy is best. Policyholders can withdraw or borrow cash after it accrues in the cash-value account and can adjust the death benefit amount as needed.
  • Return of Premium: Return of premium is a form of term life insurance that does not include cash-value features. However, this policy can return an amount equal to what the policyholder has paid in premiums when the level premium period ends as long as the policyholder is still alive and has kept the policy active.

A divorce can be emotionally and financially draining. Secure your children’s future with a life insurance policy by speaking with an experienced agent who can thoroughly explain your options.

 

Cancer will claim the lives of 609,640 people in the U.S. this year. Considering the number of families affected by the deadly disease, it’s not surprising that one of the most commonly asked questions of our agency is “Does life insurance cover cancer?”

Life insurance plans typically cover accidental deaths and natural causes. Because cancer is considered a natural cause, it is generally covered by life insurance. If you’re a life insurance policy holder and become diagnosed with terminal cancer, your insurance provider should pay out your death benefits to your beneficiary.

However, if you attempt to get life insurance coverage when you have cancer, most providers will stipulate that they will not pay out the benefit if you die from the cancer. It’s important to be honest with your provider because if it comes out that you have been medically treated for cancer-related symptom, have a history of cancer in your family or have had a previous diagnosis yourself, your provider may not pay out the benefit.

Can Your Get Life Insurance If You’ve Had Cancer?

It is possible to gain life insurance coverage after you’ve had cancer, but the policy type you’ll qualify for will depend on the type of cancer, severity of the disease, and the date of your diagnosis.

Life insurance is rarely top of mind when you’re young and healthy, but it is absolutely the best time to get coverage. Your rates will be inexpensive and you likely have a clean bill of health, making you an optimal candidate. It will be harder (if possible at all) to get coverage after being diagnosed with a severe illness. Even if you are offered coverage, the provider may include an exclusion related to your illness.

What Is Serious Illness Coverage?

Serious illness coverage differs from life insurance in that you can use the benefits while you’re still living. If you are diagnosed with a specific illness, like cancer, you can use the benefit cash to cover medical bills, day-to-day expenses, or existing debt. It’s a good idea to consider life insurance as well as serious illness so that you can have money to pay off incoming medical bills and your beneficiaries can also receive money.

It’s possible you may be able to borrow against your life insurance policy to receive living benefits, but you’ll need to speak with your provider to determine if it’s possible with you specific policy.

In 2018, an estimated 1,735,350 new cases of cancer will be diagnosed in the United States. Secure your family’s financial future with serious illness coverage as well as life insurance and be prepared for the unexpected. If you have questions about life insurance or how you can best be prepared for a serious illness like cancer, compare pricing and different policies with our team.

If you’re expecting a child or making plans to expand your family in the near future, life insurance should top your priority list. While the nursery décor and bottle brands may be more fun to shop for, your growing family depends on you to secure their financial future. Whether you’re shopping for life insurance for the first time or want to review your policy to ensure you’re putting your family in a safe position, here are the answers to a few questions that may be crossing your mind.

What’s The Best Life Insurance For New Parents?

Before you decide on the type of life insurance policy, determine the death benefit amount you’ll need. Your debt, income, and future goals for your children will all come in to play, but you’ll likely need five to 10 times your yearly salary (aim for the higher end if college is in the future for your little one). After determining your desired benefit amount, decide on the kind of coverage you need.

  • Term life insurance: This policy is set for a specific time period. If you die within the coverage time, your beneficiaries receive the payout. It can be converted to permanent coverage and is the most affordable policy for younger families.
  • Whole life insurance: This is a permanent policy that covers you for your entire lifetime. Premiums are more expensive but they don’t increase as you age – which may ultimately save you money. Whole life allows you to build cash value over time on a tax-free status.
  • Universal life insurance: This policy is designed to last a lifetime. It can be changed over the years – allowing you to customize your premium and coverage amount.

Should A Stay-At-Home Parent Have Life Insurance?

Yes. Unequivocally, yes. The idea that a stay-at-home parent doesn’t contribute financially to the family is more than out-of-date, it could be detrimental to your family’s financial planning. If the parent who takes care of the kids were to pass, the remaining partner must pay for that childcare. The average monthly child care cost in the U.S. is $972 – per child. Use the average U.S. salary – $40,000 – to calculate life insurance coverage for a stay-at-home parent. Multiply that salary by five or more years to determine death benefit amount.

Is Life Insurance Through My Work Enough?

You should absolutely take advantage of group insurance through your employer, but it’s likely not enough. Many companies offer a lump sum or one to two times your salary as the death benefit. While that may seem like a lot of cash, when you consider the cost of raising a child, maintaining your home, paying off debt, or saving for college, it’s evident you’ll need a supplemental policy.

How Much Does Life Insurance Cost?

The cost of life insurance depends heavily on your health and age. Coverage is cheapest when you’re young, so it’s better to purchase your policy sooner rather than later. Life insurance is much less expensive than most people think. For a healthy 30-something, a term life policy worth $250,000 can be as low as $15 a month.

Work with an experienced life insurance agent who can determine your needs as your family grows. A good agent will offer different policies within your budget that allow you to plan for the future and, when you welcome your new child into the world, you’ll never have to worry about their financial security.

 

Choosing which life insurance plan is best for you can be tricky. There are different types – some have time limits, allow you to access cash while living, or can be sold to another company – so working with a life insurance agent who will take the time to answer your questions is the best way to get the perfect-fit option for you and your family. To avoid overpaying or causing your family financial hardships by not understanding the policy, ask these three questions of your life insurance agent.

What type of life insurance agent are you?

There are two types of life insurance agents.

  • Independent agent: Independent agents work with a variety of companies to determine the best policy and rates for your needs.
  • Captive agent: A captive agent works for one company and only offers services from that provider.

Working with an agent who has access to a number of companies may save you some cash. When your agent can compare the same type of policy across different providers, you can rest assured you’re getting the coverage you want at the best rate possible.

How do you determine my needs?

There are a number of factors to consider to determine how much life insurance coverage you need. Plan for a policy that covers at least five years of your annual salary, and in some situations, up to 10 times your yearly income is ideal.

However, not everyone falls within this general rule, so ask your life insurance agent the amount of coverage you need and how that’s determined. Consider the financial needs of your family if you were to pass. Some expenses are straight forward, but others will vary based on your life position.

  • Funeral expenses
  • Income replacement (you decide the number of years)
  • Debt
  • Future financial commitments: college, retirement, donations

Walk through these expenses with your life insurance agent to determine your coverage needs.

What benefits come with the policy?

Added benefits – known as riders – come with policies. Some riders come at a cost while others are implicit with the policy. Examples include:

  • Accelerated death benefit rider: You can access cash from your death benefits to pay current medical bills if you’re diagnosed with a terminal illness and have less than two years to live.
  • Conversion rider: A conversion rider lets you convert your term policy to a permanent policy without proof you’re still insurable. This benefit helps if you’re hit with a health challenge that would make it hard to get life insurance coverage.
  • Guaranteed insurability rider: Buy extra coverage at set intervals without proving you are insurable.
  • Waiver of premium rider: The insurance provider continues coverage without requiring further premium payments if you are permanently disabled.

Ask if the policy offered to you comes with an option for these riders, or others. If not, keep shopping until you find a provider that offers what you need.

Your life insurance agent should be focused on your specific needs, not trying to force you into a one-size-fits all coverage plan. An experienced agent educates you on your options so you know you’re making the best choice for your family and their financial future.

Paying premiums, a possible health exam, and considering what happens after death are all difficult to deal with, so it’s no surprise that nearly 40 percent of adults in the U.S. don’t have life insurance coverage. However, the consequences of not securing your family’s financial future means what they’ll deal with if the unexpected were to occur will be much more difficult than shopping for the right policy. Whether you need to get life insurance coverage or already have a policy, here are the mistakes to avoid ensuring your family won’t be left in financial ruin.

Delaying Purchase

Life insurance isn’t reserved for a certain age. Not only is coverage easier to obtain when you’re young, but it’s also the time of your life when you typically have the most debt and financial obligations. Regardless, nearly 20 percent of all millennial parents have no life insurance coverage. Delaying your life insurance purchase means your family is at a great financial risk and you’ll end up paying more for coverage the older you get.

Too Little Coverage

If you’ve taken the step to buy life insurance coverage, review your policy to ensure it’s enough to protect your family financially. Your life insurance policy should cover at least five years of your yearly salary. For stay-at-home parents, use a $40,000 annual salary fill-in for your policy amount. You’ll also want to consider the cost of college if you have younger children. Increase your policy amount if higher education is in the plan.

Depending On Coverage From Work

Life insurance is often a benefit offered by employers, but in most cases it is not enough. Don’t rely solely on the policy offered through group coverage. Determine how much coverage you have (typically one to two times your yearly salary) and shop around for supplemental life insurance coverage.

Only One Partner Is Covered

The breadwinner in the home is not the only partner  or parent who should have life insurance coverage. It’s estimated that a stay-at-home parent brings $40,000 or more of value to the family. Without that parent, other child care and home maintenance options would have to be used.

Don’t Protect the Policy Proceeds

The lack of estate planning could mean children get your life insurance policy benefits in a lump sum when they reach adulthood – typically 18 to 21. Giving a young adult so much cash could spell disaster for their future due to a lack of money management skills. Establish a trust to oversee your assets until the children are old enough to handle the money wisely.

In order to find the best policy for your family’s needs, it’s best to work with a life insurance agent who doesn’t just represent one company. By partnering with an agent who has access to several policy providers, you can choose from a range of premium costs, policy types, and benefit amounts. Your family’s financial future depends on the choices you make today.

It’s common practice to have your credit history pulled when you apply for car or home insurance, but now insurers are using the information to help put a price on your life insurance premium. Providers say there’s a connection between how you handle credit and the likelihood of an early death.

While your credit report isn’t as pertinent as your health or family medical history, it can give insight to your longevity, according to LIMRA research.

What Determines My Life Insurance Premium?

Insurers obtain a number of records to learn about you, your health risks, and lifestyle before determining your premium. Credit history is one of many elements that allow providers to predict your lifespan and habits. Other factors that play a role in your premium:

  • Age
  • Gender
  • Health
  • Hobbies
  • Occupation
  • Type of policy

Insurance providers want to gather as much data about you as possible to assess the risk in providing you a policy. With advanced tools that help providers predict risk, insurers hope to offer policies to more people without requiring extensive health exams.

How Do Insurers Use My Credit History?

LIMRA published a survey last year that revealed how providers utilize your credit history.

  • 18 percent said applicants’ credit history was used
  • 8 percent used a TransUnion generated credit-based score for life insurance applicants
  • 28 percent used a risk predictor model from LexisNexis Risk Solutions that considered credit information

It’s only in the past 10 years that life insurance providers started looking to an applicant’s credit history to help determine risk. LIMRA reports the better a person’s credit, the less likely they are to file a claim.

While some states have banned the use of a credit report to determine car insurance rates (California, Hawaii, and Massachusetts), none have put a restriction on using it for life insurance.

What Does A Credit Report Determine?

Whether you’re applying for life insurance or considering a change to your policy, it’s important to know what’s on your credit report. Your rating determines if you’re eligible for loans, credit cards, or a mortgage, and plays a vital role in the loan rate.

There are a number of reasons to maintain good credit, including life insurance, but keep in mind your health, driving record, and drug use are bigger indicators of your risk of dying. Practicing healthy habits – eating, exercising, and getting regular health exams – will help clear the way to obtaining a life insurance policy that’s best for you. Keep in mind, if your health becomes better over time – you lose weight, your blood pressure is in check, you doctor stops your heart medication – you can contact your insurance agent or broker to inquire about a lower premium.

Your credit score is being checked by future employers, financial institutions, and now life insurance providers. The first step is knowing your score and checking your credit report for any fraudulent activity, after that, create a game plan to better your score (if needed) or continue to monitor it to prevent inaccurate information from damaging your rating.