One thing to consider when looking into purchasing a life insurance policy is that the coverage is not really for you! An insurance policy on your life pays out to whomever you have designated as the beneficiary such as your spouse, children, or even a business associate. It pays you nothing because it’s only designed to pay out whenever you die. If there are no dependents and no one else you consider should be included as a beneficiary and gain from your death, why buy the coverage?

Why buy life insurance?

Insurance on your life is meant to help out those you leave behind in the event of your death. If you have a mortgage to be paid off, children to put through college, or accrue large medical bills before your death, having a policy that pays out a large lump sum to your designated beneficiary will be a blessing for them.

What type of coverage do you need?

There are several forms of insurance to select from but the primary considerations are between whole life and term life. Term insurance only pays out upon the policy owner’s death, and that amounts to whatever the policy is worth.

Whole life can pay back in cash value and upon the policy owner’s death. This type of coverage is very expensive and can be considered a form of savings account in addition to life insurance coverage.

How much coverage?

As a general rule it is recommended you have approximately ten times your salary annually but at least five times. This may depend on the amount of debt you owe, how many dependents, and what your lifestyle is like. If you have a large family you will need to determine how much you want to be paid out to each member upon your death. If your family is accustomed to living comfortably, you may wish to up the benefit your policy pays out. Keep in mind however, that purchasing an exorbitant amount of coverage will be very costly in premiums.

Final consideration

Determining the type and amount of coverage varies among individuals and their circumstances. Insuring against your death is a personal thing yet when family is involved you must provide for them as well as possible.

Life is precious and so is, at least to some extent, a good life insurance policy. It ensures your family’s financial future when you are not there to do it.

Life insurance can be a complex product, especially as there are many different variations and options to choose from.

However, it could be particularly important for those with dependents, as it makes a payout in the event of the policyholder’s death – helping to boost the financial security of their family.

Two different types are available: term insurance and whole of life cover.

Term insurance

A simple, cheap product, term insurance covers a certain period of the policyholder’s life.

For example, the consumer may wish to have life insurance in place for the next ten years. If he or she dies within this timeframe, a payout is made to their spouse or children.

However, if the term passes without the policyholder’s death, no payments are made.

It is possible to take out a term life insurance product that names a couple rather than a single individual, so if one of the pair died before the term ends, the surviving spouse receives a payment.

Customers can also buy renewable products that let them extend the original term once it is over, as well as those where the cover and premiums increase or decline over the term and policies where an income is paid out rather than a lump sum.

Whole of life insurance

While whole of life insurance is more expensive than term products, it offers increased cover as the insurer pays out whenever you die, rather than if you pass away within a specified period.

There are various charges linked to whole of life policies and premiums may be higher for some people than others.

Those in dangerous jobs are likely to have to pay more than those with an office-based role.

Similarly, men may end up being charged more than women because they have a lower life expectancy, while smokers could see higher premiums than those who do not smoke.

Because there is such a wide range of products available, it may be wise to shop around and get different life insurance quotes and information on the various levels of cover on offer before making a final decision on which policy you buy.

Life insurance has been recognized as one of the basic step to achieve financial security. It protects families to suffer dramatic financial setback or disaster in the event of unexpected death on top of emotional lose. However, choosing an appropriate life insurance policy that fits your need could be challenging. You will have to study so many types of products, understand confusing terms and jargons, and choose genuine advice from profit driven sales pitches.

Shopping for financial products is actually quite similar with shopping for other items. The most important thing is to know exactly what you need. To help you to make better decision, a few questions need to be clarified by yourself before you go out shopping for the best rate.

First, what is the purpose for you to get life insurance?

Yes, protection is always the first purpose. But, what triggers you to consider buying it. Is it because you just purchased a house, and worried how your family can afford to continue paying off the mortgage is something happens to you? Or you just have had a new baby, and want to make sure he/she will be ok financially? Or you want to leave behind some money so that your spouse will be taken care of when you are gone?

By answering this first question, you will have a good idea of what type of life insurance policy you need. If your answer is yes for temporary need, term insurance should be your choice. If there is no definable time when you need the coverage till, you should consider permanent insurance.

Second, how much coverage you will need?

“The more, the better”…only if you don’t mind spending extra money on premium. Instead of throwing around ideas, you can actually calculate a solid number to start. Depending on the answer of the first question, your number could be very different. If your purpose is to cover debt, knowing how much debt you currently owe is a good start. If you worry about your children, you can start with your current income times the number of years left for them to be financially independent, say age of 18 or 22. Of course, you should always include final expense, which is about $10,000. The rule of thumb, the amount should be enough to allow your family maintain similar level of current lifestyle financially.

Third, how long do you need the coverage for?

Now, you can easily answer this question based on the answers for the previous questions. For example, if covering the mortgage is your main purpose, you might need term insurance for 25 years, depending how long it will take to pay off the mortgage; or if you want to protect your child, then 20 years or 25 years will be a good benchmark considering of their age; of course, if for estate purpose, you will need permanent insurance.

Last, but not least, how much is your budget?

Paying for life insurance is a long term commitment. You need to look at your monthly cash flow and know exactly how much within your comfortable level you can allocate. The premium is decided by the age, gender, heath condition, death benefit amount and the type of insurance policies.

A lot of times, combination of more than one policy will give you the most cost effective way of getting all the benefit. Here is an example:

Susan is 35 years old with two kids aged at 1 and 3. She would like to take life insurance policy to protect the mortgage payment which is 20 years, and continue to provide financial support for her kids before they become independent. She also wants to leave behind some money to her family for estate planning purpose. After calculation, she needs $1 million dollar coverage for 20 years, and $200,000 coverage permanently.

Solution 1: She takes $1 million permanent life insurance; the premium is about $350 monthly minimum.

Solution 2: She takes $1 million term life for 20 years; the premium is about $85 monthly. But if she renews the policy after 20 years, the premium will jump to $1,000 a month, and only cover her up to 85 years old.

The recommended solution: take $200,000 permanent policy with extra $800,000 term for 20 years; the premium will be about $150 monthly. She will get $1 million coverage for 20 years, and $200,000 permanently.

If you are looking to be an insurance agent or you are looking to be an independent insurance agent, rather than captive, then this article is for you. Final Expense Life insurance is the easiest insurance product to sell. It’s very simple to understand, explain and it is in great demand. Plus, the underwriting is generally just a few questions and if the client can truthfully say no to these questions, then they will be approved for the insurance.

First, you must understand what Final Expense Life Insurance is. Final Expense Life Insurance is a small whole life insurance policy that is designed to pay for the final expenses; mainly, the funeral and burial cost but also including other bills that come along with someone’s death. You may have hospital bills, credit debt, transportation costs, etc. However, the largest part of the final expense is the funeral and burial which generally cost around $10,000. Sometimes more and sometimes less.

Second, you must know the best products to sell. There are probably over 100 insurance companies selling final expense life insurance. Most, in my opinion, being overpriced and just plain junk insurance. Your job as an agent is to know these companies and to have the best companies to offer to your customers. You want companies that are solid financially and have products that fit your needs. I always look at price first. You want companies that are cheap for smokers and non smokers. Then you want to take the application for each company and compare the underwriting guidelines.

Some companies will allow medications that other companies will not allow or they will accept someone with a recent heart stent implant, whereas another company will deny them… and so on! The point is, you need a company for every scenario. You don’t want to find yourself in front of someone that wants insurance, but you can’t offer them anything. Also, you will often times find yourself in a situation where someone already has insurance and if you can offer them a much lower price or better coverage, then you can easily make a sale.

Third, you need final expense leads. Leads are people who are interested in buying your product. They have already said they are interested. In my opinion, this is the hardest part of the business; however, by simply knowing where to get your leads, from companies that have great success in the business, you can have an endless supply of fresh, hot leads.

Fourth, you need a great sales presentation and since this is such a simplified product, it doesn’t need to be long and drawn out, it just needs to feed on their emotion, build value in your product and it needs to break down the wall of rejection. If you have the right sales presentation, you will eliminate almost all objections and you will have seniors signing on the dotted line before they even know what they are doing. It’s just all about how you present it.

Fifth, you need a follow up process. You will need to keep in contact with your clients on a regular basis. There are several programs designed to help you do this. They will remind you of birthdays, holidays and any other reason you may have to contact your client. These programs are essential and the best way for you to keep your book of business for the rest of your career (which many agents claim is the secret to success).