We have all seen the ads on TV for cheap term life insurance. Companies want to show you their lowest and best rates and compete for your business…but is it really that simple? Life insurance is an investment that requires a lot of consideration and thought – it’s not an impulse buy off of the home shopping channel. Getting the wrong kind of life insurance is just as bad as throwing your money away. Actually, it’s more like eating a tasty, albeit unhealthy, fast food meal.
The cheapest term life insurance like they show us on TV is almost never the ideal plan for someone. It’s just a price tag. It’s like advertising for fast food. Think about the most inexpensive fast food item you can. Is that item really what you should be buying and eating? Sure it may taste good and it might have a low price, but is that really the best thing for your well being in the long term? Life insurance is exactly the same. You can buy the least expensive, most appealing looking life insurance policy, but are you really getting something that’s going to have the strength, flexibility, and guarantees that you need? What if you become disabled and can’t pay for it anymore? What if you become chronically ill with a condition that will not kill you, and are going through financial hardship just to pay your medical bills? Does your life insurance policy help with that? If you are relying on “Fast Food” life insurance, the answer is probably “No!”.
In reality, TV advertised life insurance is usually advertised at the highest, most healthy “super preferred” rate class. If you read the fine print, you’ll also see that 99 times out of 100 those same ads are advertising a price for a 30-year old male non smoker, with the assumption that they are in the peak of health with no issues whatsoever. You’ll also notice that the insurance is usually a 10-year term life insurance policy, sometimes with an unknown insurance carrier, that has no benefit riders, no conversion options, and no guarantees. Only around 2-3% of term life policies actually pay out, and it is statistically proven that it’s far more likely for an individual to become disabled prior to 65, as opposed to death.
So now, you might be asking yourself, “Is all low cost life insurance bad?” Fortunately, there are affordable life insurance options that pay for more than just the insured’s death, and provide for living benefits and flexibility as well. In fact, many of the gaps can be filled with term life insurance without having to pay for the more expensive permanent kinds of life insurance such as whole life and universal life. Surprisingly though, whole life and universal life can still be affordable if they are built correctly.
What should you do to make sure you are getting the right kind of coverage?
Ask these very important questions when you talk to a broker to inquire about life insurance for your family.
1) What is the plan’s expiration date?
2) Does the plan have a disability benefit?
3) What happens if I want to make changes?
4) What company is the plan written through? (you want to make sure the carrier is rated “A” or higher by A.M. Best)
5) Will the monthly payment ever increase?
Most people really have no idea what life insurance can really do for them. There is a plan for everyone out there, but one size does not fit all. Take your time. Ask questions. Get educated about your options and don’t make any hasty decisions. Having coverage for your family or business is important, but do not rush into it or you may be stuck with “Fast Food” life insurance that simply does not get the job done. Now that you’re more educated about life insurance in general, go back over any current coverage that you have and read over your policy. What do you see? If you’re not sure about what you have, or are starting to question if your plan was really the right decision, we may be able to help you. Consultations are free, but we can’t help unless you call.