Affordable Health and Life Plans, Inc. - Suwanee, Georgia

Why Do I Need Life Insurance?
Buying life insurance is probably not one of the most enjoyable things you've ever done, but it could turn out to be one of the most important. It's easy to delay buying life insurance because your need does not seem immediate, and there always seem to be plenty of more pressing needs for your cash than life insurance premiums. The problem with putting off purchasing insurance is that by the time you need it, you will not be able to buy it. The same principle is true with all forms of insurance. You can't buy tornado insurance just as a twister appears on the horizon headed for your house. You can't buy cheap health insurance just before you go into a hospital for open-heart surgery. And you can't buy life insurance once you have contracted a terminal illness. You have to purchase coverage long before the problem you are insuring yourself against occurs. In the case of life insurance, you really are buying protection for the people left behind after your death. What you are insuring is that the people who are depending on your income, such as your spouse and children, will not have to endure a major sacrifice of their lifestyle because you died long before anyone expected.
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How Much Life Insurance Do I Need?
Your insurance death benefit not only has to cover the income you would have produced in the year you died, but all the projected income you would have earned over the next several decades. The last thing you want your grieving family to have to go through after the funeral is to be forced to sell your house or business because they cannot afford to keep up with expenses. The death benefit from the insurance company should be large enough to throw off adequate income so you can continue making mortgage payments or keep a small business operating if necessary. The benefit can also be a key source of liquid cash which your family might need to pay estate taxes.
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What is Term Life Insurance
Term insurance offers your beneficiaries protection on your life for a specific number of years. The term varies and can range from 5 years to 30 years. If you die during the period of coverage, a term life policy will pay a claim equal to the coverage amount you purchased. Claims can be paid out either in a lump sum or in a stream of annuity payments over many years. Some term policies offer fixed (or what are called level) premiums for a certain number of years, while others charge higher premiums each year you grow older. As soon as you stop paying premiums, your coverage ceases. Unlike permanent life insurance, term policies do not provide any cash value feature.
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Should I purchase term or permanent life insurance?
There are pros and cons associated with buying both term and permanent policies. What is right for your situation depends upon how much coverage you need, how much you can afford, and your investing habits, among other factors. The main advantage of buying term is that it is much cheaper than permanent, and therefore you can afford a great deal more protection. This may be a big benefit, particularly if you are just starting out and have young children and a relatively low income. Working within the reality of your budget, you might only be able to afford $50,000 or $100,000 of permanent life insurance, but the same premium amount might buy you $500,000 or more of term life coverage. Term insurance also gives you the opportunity to invest the difference between what you would have spent in permanent premiums in alternatives like top-performing stocks or mutual funds. On the other hand, permanent policies allow you to build up an investment fund that you might not accumulate on your own. In addition, permanent premiums remain fixed, while term premiums can rise over time, so if you plan to keep the policy for the rest of your life, you might want to lock in some permanent coverage at a cheaper rate. One solution is to create an appropriate mix of term and permanent coverage.
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How should I decide what term length (10, 15, 20, or 30 years) is best for me?
In assessing how long you need a term policy to cover you, consider how many years your dependents will likely be depending on your income. For example, if you have a 10 year old son, you may want at least 15 years of term coverage to cover him until he is age 25 and hopefully self-supporting. If you are using term to protect a nonworking spouse, you may need more years of coverage to make sure they can survive financially until retirement benefits like Social Security and pensions kick in. Many people drop their term coverage by the time they reach their late 50's or 60's because the premium cost becomes prohibitive.
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How do life insurance companies calculate my annual premiums?
There are several factors that insurance companies use to set rates. The most important factor is the likelihood that you will die, based on your age and health condition. The older you are, the more likely it is that you will die, so the more you will pay in premiums. The worse your health condition, the more you will pay. That is why companies offer a separate, and higher, premium rate for smokers. This is also the reason insurance companies make you take a physical exam when you apply for life insurance coverage--they are trying to size up your health condition in order to set your rates. An insurance company's past mortality experience also affects the rates they charge. The fewer claims they have to pay, the lower their premiums can be. Gender also plays a role in pricing - because women tend to outlive men, they are offered lower premium rates. Another major factor in setting rates is the cost structure of the insurance company. The lower their cost of doing business, the cheaper they can make your premiums.
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