Henry Okafor
Isn’t the purpose of life insurance to pay for funeral and burial costs?
Yes! That’s accurate. And a lot of Americans are aware of this. It is the main cause of life insurance, according to the Life Happens and LIMRA 2021 Insurance Barometer Study.
In a special report titled “Black Americans: Life Insurance Attitudes and Ownership,” the poll goes further this year into the perceptions and attitudes of the Black community. The survey found that Black Americans are better informed about what life insurance accomplishes in the event of a death. Black Americans have a higher rate of life insurance (66%), accounting for about half of all Americans (48%) who have it for ultimate costs.
That, however, only tells a portion of the tale.
What transpires if a primary source of income is lost as a result of the passing of a loved one? What happens to a family’s house, bills, children’s schooling, and anticipated retirement?
How will those costs and aspirations be covered for today, tomorrow, next year, and so on?
That is also the basis for life insurance. However, a lot of people don’t fully understand the potential long-term benefits of a strong life insurance plan. In actuality, just 35% of Americans (and 31% of Black Americans) cite this as a primary justification for purchasing life insurance, which is a much smaller percentage than the general population.
The following costs may be covered by life insurance:
EXPENSES IMMEDIATE
funeral and burial expenses
medical costs
auto loans for rent or mortgage
estate settlement fees credit card debt taxes
CURRENT EXPENSES AND BILLS
groceries
housing \utilities \transportation
insurance and health care
carrying on a family business
FUTURE OBJECTIVES
College expenses
Life Insurance Retirement Living Benefits
In addition to providing income replacement, your policy can also offer living benefits. Unlike term life insurance, permanent insurance accrues cash value over time. And there are no restrictions on how you can use that money—you can use it to finance a home purchase, cover an unexpected need, or even supplement your retirement income! (However, bear in mind that withdrawing or borrowing money from your policy may reduce its cash value and death benefit and, if not repaid, may have tax repercussions.) Additionally, life insurance can help you leave a financial legacy for your place of worship, university, or any other cause that is important to you.
Keep in mind that “burial insurance” is only one aspect of life insurance. It surely has the potential to be a gift that lives on long after you are gone. Visit the life insurance 101 section of our website for further details or contact an insurance consultant to help you find coverage that fits your budget.
Expectations When Buying Life Insurance
Let’s face it: most people don’t look forward to the idea of getting life insurance. The pandemic, though, has caused many people to halt. A recent survey found that younger Americans (ages 22 to 40) are now 45% more likely to buy life insurance than they were before COVID.
These days, if you fall into the “likely” category, being prepared will help you get started. We thus asked Maryland-based senior life insurance agent and former president of the National Association of Insurance and Financial Advisors Paul Dougherty for his opinion. We also talked with Marilyn Gill, a 48-year-old San Francisco resident who recently bought a life insurance policy, about her recent experience working with an online broker.
Recognize an agent’s role
Dougherty continues, “We’re at our best when we’re solving a problem for a customer that they might not even be aware of. As agents, it is our responsibility to get to know you and be able to anticipate your needs.
A qualified insurance consultant will do an in-depth examination of your financial needs and guide you through the questions that will help you choose the amount and kind of insurance that is appropriate for you. This advice session is without charge.
Dougherty continues, “We’re not transactional professionals. “You have a long list of things you need to do. We have the luxury of viewing situations through the lens of potential hazards and helping you to reduce those risks before they have a negative impact. When we can answer some of the questions you might not have even thought to ask yourself and then direct that light toward some solutions, it’s a wonderful experience.”
Any online publicity is better than none.
A coverage that is available when you need it is the finest kind, according to Dougherty.
If a new client has a web policy, “We let them know they made a smart choice.” We frequently leave things alone and create plans around them to improve on what is already in place. I promise people that I’ll either provide them a better deal or help them feel better about what they already have. In other cases, they might already have everything they need.”
Gill adds, “I would love to have someone handle all my insurance needs, but I didn’t have an existing agent, and calling one and going over every detail of my medical history would have seemed way too embarrassing. Additionally, I like performing research online. Before submitting an application, she spent her evenings and weekends working as a sales and design consultant for a commercial gardener.
enlist the aid of a qualified agent
“It is unusual for customers to comprehend our terminology because it is specific to our industry, Dougherty continues.
“We explain how different regulations work and show our customers how we can reach a solution through a number of ways,” the statement reads.
You could anticipate support from a licensed representative even if you place your order online. If I couldn’t speak to people on the phone, Gill adds, “I wouldn’t have gone ahead with an online policy.” The choice is too significant to be made exclusively online.”
Five recommendations for choosing an agent:
- Obtain referrals
- Learn about their specialties.
- Inquire if they are a member of any professional organizations.
- Schedule introductory meetings
- Inquire about their education and training. More information »Prepare to discard preconceived notions.
Gill acknowledges, “I learned a lot. One thing I discovered was that if your health problem is well controlled, your rates might not be impacted. That was instructive. That was making me really anxious.
She was also relieved to discover that her previous smoking habit won’t affect her rates. “All that matters is that you’re currently in reasonably good health,”
For many people, the cost is what opened their eyes the most. According to the 2021 Insurance Barometer Study, consumers greatly underestimate the cost of life insurance. In reality, a 30-year-old in good health can get a $250,000 level term coverage for 20 years for just $13 a month. In Gill’s case, she paid less than $50 per month for a policy that would pay off her mortgage completely, leaving her daughter, who was approaching college age, as “my largest asset free and clear.”
Recognize the key inquiries
Dougherty counsels, “Ask yourself, what would be the financial impact on those you care about if something were to happen to you tomorrow.”
Through a confidential discussion of your income, other assets, and debts, an agent will help you evaluate this impact (like a mortgage). They will ask you to name a beneficiary, or the person from whom you want the insurance to flow. They will also ask you questions about your health, hobbies, and other pursuits that can have an impact on your eligibility. Keep this information on hand, along with any initial thoughts and questions.
Here are some inquiries to put to your agent:
What amount of life insurance do I require?
What exactly is covered?
What if I am unable to pay my premiums?
Will my insurance premiums ever rise?
Can I convert or change my policy in the future?
What businesses do you suggest, and why?
When choosing a choice, longevity and financial stability are crucial factors to take into account.
When evaluating businesses with comparable rates, give reputation, stability, and longevity a higher priority than price.
According to Dougherty, “you have to believe that the company has existed and will continue to exist in the future—that they are financially sound enough to make a commitment and uphold it 40–50 years from now. While the Better Business Bureau and J.D. Powers assess customer satisfaction, the A.M. Best Company ranks insurance companies based on their ability to meet financial obligations.
