Life Insurance
Life insurance is a contract between an individual and an insurance company that provides a lump-sum payment (death benefit) to designated beneficiaries upon the policyholder’s death. It helps provide financial security by covering expenses such as funeral costs, debts, lost income, and future living expenses for loved ones. There are two main types: Term Life Insurance, which provides coverage for a set period (e.g., 10, 20, or 30 years), and Permanent Life Insurance, which lasts a lifetime and may include a cash value component. Life insurance is essential for protecting dependents and ensuring financial stability after a policyholder’s passing.Here at our agency we also provide coverage for Accidental Death & Dismemberment (AD&D ) Insurance.
Understanding your Insurance
Term Life Insurance
- Provides coverage for a set period (e.g., 10, 20, or 30 years).
- Pays a lump sum to beneficiaries if the policyholder dies during the term.
- No cash value – only pays if death occurs within the policy period.
Scenario:
John, a 35-year-old father, buys a 20-year term life insurance policy for $500,000 to protect his family.
Ten years later, he tragically dies in a car accident.
Since his policy is active, his beneficiaries receive the $500,000 death benefit, helping cover his family's living expenses, mortgage, and children's education.
2. Whole Life Insurance (Permanent Life Insurance)
- Covers the policyholder for life – does not expire as long as premiums are paid.
- ncludes a cash value component that grows over time.
- More expensive than term life but provides lifelong protection.
Scenario:
Maria, 40, purchases a whole life insurance policy with a $250,000 death benefit.
At 65, she is diagnosed with a terminal illness and withdraws part of her policy’s cash value to cover medical bills.
When she passes away at 75, her beneficiaries receive the remaining death benefit, helping with funeral costs and leaving a financial cushion for her family.
3. Accidental Death & Dismemberment (AD&D) Insurance
- Pays out if the policyholder dies or suffers severe injuries due to an accident.
- Does NOT cover deaths due to illness or natural causes.
- May be an add-on to life insurance or a standalone policy.
Scenario:
David, 30, has an AD&D policy that pays $100,000 for accidental death.
He dies in a workplace accident.
Since his death is accident-related, his beneficiaries receive the full $100,000 payout.
If he had lost a limb instead, the policy might pay a partial amount (e.g., 50% for losing a leg).
4. Final Expense (Burial Insurance)
- Designed to cover funeral costs and small debts.
- Lower coverage amounts ($5,000–$50,000) but affordable premiums.
- No medical exam required for most policies.
Scenario:
Linda, 70, buys a final expense insurance policy worth $15,000.
When she passes away, her family receives the $15,000 payout, which helps cover her funeral, cremation, and outstanding medical bills.
5. Riders & Additional Benefits (Optional Add-ons)
Living Benefits Rider – Allows policyholders to access part of the death benefit if diagnosed with a terminal illness.
Waiver of Premium Rider – Waives premiums if the policyholder becomes disabled.
Child Rider – Provides life insurance coverage for a policyholder’s child.
Required Information to Be Quoted:
1. Personal Information
- ✔ Full Name & Date of Birth – Determines your eligibility and age-based pricing.
- ✔ Gender – Affects pricing since life expectancy differs between men and women.
- ✔ Address & Contact Information – Required for policy documents and communication.
- ✔ Marital Status & Dependents – Helps determine financial needs for coverage.
2. Health & Medical History
- ✔ Height & Weight – Used to calculate your Body Mass Index (BMI), which impacts rates.
- ✔ Medical Conditions – Insurers check for chronic illnesses (e.g., diabetes, heart disease, cancer).
- ✔ Family Medical History – Helps assess genetic risks (e.g., history of heart disease or cancer).
- ✔ Medications & Treatments – Details on current prescriptions or past surgeries.
- ✔ Tobacco, Alcohol, or Drug Use – Smokers or heavy drinkers may face higher premiums.
3. Lifestyle & Occupation
- ✔ Hobbies & Activities – Risky activities like skydiving, scuba diving, or racing can increase costs.
- ✔ Occupation – High-risk jobs (e.g., firefighter, pilot, construction worker) may affect rates.
- ✔ Driving Record – History of DUIs or reckless driving can impact approval and pricing.
4. Coverage Details
- ✔ Policy Type – Choose between Term Life (temporary) or Whole Life (permanent).
- ✔ Coverage Amount – How much your beneficiaries would receive (e.g., $250,000, $500,000, $1M+).
- ✔ Policy Term – If choosing term life, decide on 10, 20, or 30 years.
- ✔ Beneficiaries – List who will receive the payout (spouse, children, trust, etc.).
5. Medical Exam (May Be Required)
Some insurers require a medical exam, including blood work, urine tests, and vitals.
No-medical-exam policies are available but may cost more.