Life insurance is based off of the premise that a person is assuming a risk in life. People that buy insurance are looking for assurance if their life that if the unexpected happens then their loved ones are covered. Having insurance is a way to reduce risk and provide for the money necessary for survivors to live if the primary earner prematurely passes away. It is done through a contract between the buyer, usually called the insured, and insurance carrier, also called a provider or the insurer. The insurer will pay the insured an agreed amount of money called the coverage period for an agreed amount of payments from the insured called premiums for a certain amount of time called the term.

There is Term Life insurance which is generally the least expensive. It last for a term of generally 10, 15, or 30 years. This is generally the cheapest and most competitive option for budget minded buyers. There is also Whole Life insurance that generally last for the life of the policy holder. It is more expensive but it does provide lifetime coverage at level premiums. It also accrues a cash value by splitting your total premium into life insurance and the other into an investment vehicle. You may even borrow against it and pay it back and keep your coverage amount. This is often used by business professionals that use it insure the life of their partners. Universal Life insurance was popular in the 1980s and 1990s and premiums are tied to market indexes. These were popular when interest rates were much higher, which caused premiums to be much lower. Now these are less generally purchased as the premium rates are higher. They can be cheaper though than Whole Life and some people are willing to assume the risk that their monthly payment could potentially go up because it has lifetime coverage. A newer version of Universal Life is Guaranteed Universal Life. It has many of the benefits of traditional Whole Life but removes the market volatility in favor of a fixed premium rate.  There is also AD&D coverage that protects against accidental death, dismemberment,  or disability but it will not pay out for any deaths resulting from natural causes. It is a terrific mechanism to get coverage for death from accidental natures and the premiums are generally very reasonable. 

Depending on what type of plan you are interested in and your age and health circumstances depends on what options you have within individual policies. Add on features called riders add benefit for generally pennies on the dollar. Some examples include: 

• There are child riders that cover your children in event of their death to pay for funeral expenses.
• There are return of premium riders where you can get your premiums back after a certain number of years. 
• There are charitable giving riders that provide charities a match for donating.
• There are accidental death benefit riders that add coverage just in case of accidental death, disability, or dismemberment.
• There are hospice and medical riders that cover end of life care.

Life insurance is regulated by state and federal laws. Every state requires at a minimum that insurance agents be  licensed to do business in their home state, be educated on all state and federal laws, and comply with continual continuing education and laws.  Life insurance companies have employees including underwriters and captive agents. Captive agents work only for their company selling their products.

Independent agents are licensed with the state and have at will contracts with life insurance companies to sell their products. The advantage of independent agents is that they most often represent many carriers and can provide a wider array of options for their clients. They also act as an underwriter learning their clients unique medical history and shopping for preferred insurance carriers.

It is best to work with an insurance agency that represents multiple insurers and not just one. Insurance agents that work for just one agency are called captive agents. One example is say a Mutual of Omaha captive agent that is captive to that company only. They can only sell those products. Some of their products are great and in one sense it doesn’t matter which agent you buy those from if you just want that one option. Agents in this scenario often are salaried employees of the company but may get bonuses for selling a certain amount of a product. 

There are also providers that sell online. We do this in the apply now section where you can get a quote online and sign up in some cases online in an instant. The insurance provider does the underwriting process and will verify your information. The referral agent generally gets a finder’s fee and generally has to be licensed in the state where the product is sold. The drawback is if you are declined for any reason it gets reported and makes it sometimes harder to get coverage at other carriers. A healthy young adult though can usually get approved without incident. 

Another option is independent agents that do not work for anyone carrier. They assist you in finding your best coverage options and they tailor your needs to their group of providers. They work for you to win your business. If you policy then the insurance provider pays them a commission for the sale.

F3Life believes in providing you assurance for even your family’s worst day by giving all your insurance needs our personal touch. We help get you coverage from birth to death and cover the events in between. We are here for you.

The benefit of getting prequalified is that the agent representing you identifies any issues that would come up during underwriting that may cause you application to be denied. If you are denied then it is possible that the agent can get you through the process by helping clarify issues of concern with the insurance carriers underwriting department.The later is the actual applying with a provider for coverage and if the policy is denied then the person applying has to do the work of finding out why and trying to address any issues. It is advisable to get an independent insurer to help you discover your best options. Since independent agents work on commissions they will often get you the best deal possible at no charge at all to you.

The insurance carrier or provider, the lingo changes depending on the state, provides an exchange that generally are always in favor of the client. For example, if Mary at age 20 buys a 10 year policy for $40.00 a month for $200,000 of coverage.

Mary is preparing for the possibility that she may have an untimely death and is leaving a legacy for her partner and/or children. If Mary dies her estate get $200,000 guaranteed from the insurer. That is 5000 times return on the monthly investment premium of $40.00. She is protected the entire time that the policy is in place. The terms are binding, insurance lingo for can’t be changed, for the length of the loan. 

Let’s use Mary again. She can decide at any point in the 10 year term of her policy to cancel coverage. She loses coverage in the scenario but she is not obligated to pay the rest of term period of her contract if affordability becomes an issue. The insurer is also not required to pay out if something were to happen to Mary since she would be outside of her coverage period. If Mary were to die at any period during that term where she was making her premium payments then the insurance provider is obligated to pay the policy in full.

Let’s use Mary one last time. When she got her initial policy at 20 at $40 dollars a month Mary felt that was a fair deal of a 5000 to 1 return on investment. She bought her policy from a captive agent that did a great job explaining the benefits of the plan she purchased. Mary at 20 was a smoker and social drinker. She was also 15 pounds overweight. Her premium was thus higher because people that smoke, socially drink, and overweight have higher morbidity rates. 

Mary at 30 is shopping for a new policy. She responds to a letter in the mail and sees an online advertisement for independent agents. Mary has been smoke free for seven years, lost the excess weight, and seldom drinks. Her independent agent gets here a new policy for $250,000 of coverage for $19.43 a month. Mary even covers all her kids for $5.22 a month.

Why did her rate improve? It is because the variable improved in the underwriting process with a different company were better suited for Mary. Her independent agent found another company that saw Mary as a low risk and gave her a preferred rate. 

Let’s use a new scenario. Darrell at 20 years old takes out a 30 year term life policy for $200,000. He has made every payment for 22 years but can’t make an upcoming payment for whatever reason. Since he has been keeping up with making the premiums then the contract is good. All states require that insurers give a grace period if a payment is missed for a short period. The timeframe changes by state law but about 30 days is normal. 

If Darrell were to die on February 15th but missed his payment on January 28th then the insurers would pay the full benefit though they may opt to deduct the January late payment. If Darrell missed the January and February payments and was now two months pass due then Darrell would likely have the policy cancelled by the insurers for his lack of paying his premium. In this period he would not be covered. 

He could upon contacting the insurers possibly get the policy reinstated by making up the missed months of payments. He also resumes coverage at the original preferred rate. This saves Darrell’s preferred rate and from having to start a new policy at his now current age of 42. The advent of Covid has made some insurers extend reinstatement if within 60-90 days but this is not guaranteed by all companies or to continue.