AA032311This list of life insurance information was borrowed from the Banner Life Insurance Company’s website. I hope they don’t mind, but I thought it was well done.

  • Why do I need Life Insurance?  We buy life insurance because we want to make sure that our loved ones, especially our dependents, can remain financially secure after we die. Income replacement is the #1 reason why people buy life insurance. Stay-at-home moms or dads also have an important, often overlooked, economic value that should be covered by life insurance. Life insurance is also used to achieve specific business or estate planning goals.
  • How do I know how much Life Insurance I need?  ICI recommends that each family income provider carry no less than ten times their annual income in life insurance. The amount of your outstanding mortgage should also be a consideration. Any coverage for your mortgage should be in addition to the amount of insurance you calculate for your income coverage. It’s quite common to see life insurance also referred to as mortgage protection insurance since most people equate buying life insurance with the need to pay off large debts.
  • Who should I buy Life Insurance from?  The #1 most important buyer’s tip is to buy from a financially sound life insurance company. You should pay particular attention, at time of purchase and throughout the life of the policy, to the financial stability ratings of your life insurance company. ICI recommends that you buy only from companies rated A (“Excellent”) or higher by A.M. Best Company.
  • What are the advantages of Term Life Insurance? The easiest life insurance to understand (and the lowest cost to buy) is term life insurance. Term life insurance provides straightforward death benefit protection without any expensive “cash value” or investment component add-ons. Term life insurance offers level premiums for your choice of 10, 15, 25 or 30 years during which the premiums are guaranteed not to increase. As long as you pay your premiums on time, the company cannot cancel you.
  • Can I afford Term Life Insurance?  Term life insurance has become very popular with consumers in recent years because premiums for new policyholders have dropped to all-time lows. Most companies allow you to pay on a monthly, quarterly, semi-annual or annual basis.
  • What should I look for in a Term Life Policy?  Most high quality term life policies sold today are guaranteed renewable, which gives you the right to continue your coverage beyond the initial rate guarantee period without a medical exam. This feature can become extremely important to your family should you become sick and uninsurable towards the end of your initial term life rate guarantee period.
  • How do I decide the number of years (term) to choose for my policy?  Choosing an initial rate guarantee period is easy. Simply match the period of time you’ll need coverage to the available rate guarantee period. For example, if your children are young or you have decades to go on your mortgage, look at 20 or 30 year term life. If your children are leaving the nest and your home is paid off or nearly paid off, perhaps 10 or 15 year term might fit the bill.
  • How often should I review my Life Insurance needs?  Because life insurance needs change over time, your life insurance program should be reevaluated periodically. ICI suggests you review your life insurance coverage at least once every five years or when you experience a major life event such as change of income or assets, marriage, divorce, retirement, the birth or adoption of a child, or purchase of a major item such as a house or business.
  • What coverage does Term Life provide?  The standard term life policy covers death by any cause at any time in any place, except for death by suicide within the first two policy years (one year in some states). Heart disease, cancer, diabetes and other serious illnesses are looked at closely during the application process. Expect to also be asked about heart disease or cancer in your family and whether or not you engage in any risky hobbies or activities. A brief face-to-face interview with a paramedic technician is usually required for coverage amounts above $250,000.
  • Who can I name as beneficiaries?  In naming your beneficiaries, keep in mind that the life insurance company will only allow the names of those who are actually financially dependent upon you in some way. Adults or children that you support, or owe money to, are considered to have a financial interest in you. An acquaintance, roommate, friend or relative, absent of a financial relationship, will not do. You can name a charity if you have a history of giving to that charity.