Life Insurance For Empty Nesters

January 27, 2021 16:01 newlambertagency

Many people buy life insurance so that their children have a financially secure future. It offers peace of mind that no matter what, your children won’t have to struggle in absence of your presence.

But about when children leave their nest and parents become empty nesters? Does it still make sense to keep your life insurance coverage when your children aren’t dependent on you?

Granted now you’ll have fewer financial obligations, but that does not mean you don’t require the financial security that insurance provides.

Let’s take a look at why life insurance for empty nesters is important:

Support a surviving spouse

When an earning life partner passes away, the surviving spouse can be left with a lot of financial obligations without any means to meet those debts. The benefits from the life insurance can help your surviving spouse pay off the mortgage and any other large debts, as well as cover any funeral expenses. This not only takes off some financial burden from your spouse but also helps them plan the next move without any pressure.

Support for adult children

Just because you’re children have moved out doesn’t mean they won’t require financial help from you. It’s increasingly common these days to see adult children move back home, relying on their parents for at least a portion of their financial support. In such a situation, life insurance for empty nesters seems like the saving grace that’s got your back. It can be a critical part of your family’s overall financial plan, helping to ensure that their needs are always met.

Provide bequests to heirs

Many people want to leave something for their heir so that they can be financially independent and are not struggling to find their way. If you’re one of those who want to bequeath money or assets to your children or grandchildren, life insurance is the way to go. With the economy forcing the young generation to work twice as hard, your financial support could prove to be extremely beneficial.

Back-up retirement income

When one spouse passes away, the other might see a drastic reduction in pension or Social Security payments and in some cases, may even lose that relied-upon income completely.  Whether a surviving spouse gets pension payments depends entirely on how those benefits were set up in the first place, and all too often those payments stop coming when the spouse who had the pension dies. With the support of permanent life insurance, retirement can be maintained for the surviving spouse so that they don’t face a sudden budget crisis.

Also,

  • Permanent life insurance provides coverage and peace of mind that can’t be outlived.
  • Some policies allow for flexible premiums and death benefits.
  • Policies have a cash value that accumulates over time with the potential to borrow from the cash value.
  • Death benefits are generally tax-free to named beneficiaries in most cases.

These are just a few reasons why having life insurance is important even after kids have flown the nest. If you’re convinced and are looking for ways to enhance your financial security then consult an agent or agency that can help you guide with further steps.

How Do Life Insurance Death Benefits Pay Out?

January 22, 2021 12:22 newlambertagency

When someone close to you dies, a lot of things go through your mind. Apart from the grief caused to you, you need to make several arrangements. At such a time, the life insurance death benefit is the last thing on your mind.

Many find themselves unsure of how to proceed further to get the death benefit. That’s why it’s important to have an idea of how life insurance works, and how it pays out when someone passes away. This can relieve some of the pressure during your grief.

Let’s take a look at how things work and the kind of issues you may expect:

Filing a claim

The thing about life insurance death benefits is that they’re not paid out automatically from a life insurance policy – that would have been made things easier.

To get the benefit, the beneficiary must first file a claim with the life insurance company. This may be done online or it may require a paper claims filing, depending on the insurance company’s policies.

Being the beneficiary of someone’s life insurance policy, you may be required to provide a copy of the policy along with the claims form. You must also submit a certified copy of the death certificate – it can be obtained through the county or municipality or through the hospital or nursing home in which the insured died.

Many companies take claims submitted through their website. You can also call or write to the insuring company to find out what all is needed.

When benefits are paid

Most companies pay out life insurance death benefits within 30 to 60 days of the date of the claim. Many states allow insurers 30 days to review the claim, after which they can pay it out, deny it, or ask for additional information. If a company denies your claim, it generally provides a reason why.

Most insurance companies are motivated to make the payment as soon as possible to avoid steep interest charges for delaying payment of claims.

Payout delays

As with any process, there could be a delay in payment due to various reasons. One such reason is the one- to two-year contestability clause. Most policies contain this clause, which allows the carrier to investigate the original application to ensure fraud was not committed.

As long as the insurance company cannot prove the insured lied on the application, the benefit will normally be paid. Most policies also contain a suicide clause that allows the company to deny benefits if the insured commits suicide during the first two years of the policy.

Life insurance death benefits may also be delayed in case of homicide as the claims representative may communicate with the detective assigned to the case to rule out the beneficiary as a suspect.

Delays may also arise if:

  1. The insured died during am illegal activity such as DUI.
  2. The insured lied on the application.
  3. The insured omitted health issues or risky hobbies/activities like skydiving.

These are the basic thing to know about the death benefit payout. Hope this puts your mind at ease.

Using Key Person Life Insurance to Secure Your Business

December 21, 2020 12:23 newlambertagency

You must be aware that a life insurance policy can provide the necessary financial protection to your dependents in the event of your death.

But do you know that a term life insurance policy can also help to keep the company running smoothly in the event of the death of a key member of your leadership team?

Such a life insurance policy is called key person life insurance or key person insurance and it can provide an income tax–free death benefit when they’re needed most during transitions in your company.

Key Person Insurance is a life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary of the plan and pays the insurance policy premiums. This type of life insurance is also known as “key man insurance,” “key woman insurance” or “business life insurance.”

Who is a key person in your business?

If you’re a business owner, it’s natural that you care about all your employees and would want the best for them. But there are certain employees whose absence can affect your business operations directly.

This person might be handling the operations, managing your profits, or is a business partner. So for your company, this individual becomes the key person.

How key-person insurance works with a term life insurance policy

A key-person life insurance is a term life insurance policy that provides cash to meet outstanding debts and maintain business continuity.

As a company, you need to obtain the key employee’s written consent and follow the formalities necessary to approve the purchase of the key person life insurance policy.

In any case, the company or the business pays all the premiums and is the beneficiary of insurance on the key employee’s life.

Thus if the key employee dies, the company receives the policy benefits to cover losses and find and train a replacement.

After the business files a claim following the death of the key person, the life insurance carrier will pay the policy benefit income tax-free to the business.

Then the business can use the benefit to replace lost earnings, provide a financial cushion, recruit and hire a qualified replacement, make survivor income payments to the key person’s family, etc.

Death is unpredictable and you can’t be overly dependent on your current cash flow to sustain your business in the event of a key person’s death.

Buying key person life insurance means you’ll have the necessary financial assets available at crucial times. Thus consult an agent, do thorough online research, and apply for such a policy to put your mind at ease.

A Guide to Life Insurance for Non-US Citizens

December 9, 2020 02:29 newlambertagency

Life insurance is an integral part of life. There are various plans available that meet the unique requirement of individual US citizens.

But what about life insurance for the non-US citizen? Not everyone who lives in the states is a US citizen, so what options do they have as far as life insurance is concerned?

Non-US citizens generally fall into these categories:

Permanent residents: Also called green card holders, they are treated as same as US citizens.

U.S. Residents: Even though they’re not US citizens, they live in the US. This includes visa holders and work permit holders.

Non-US Residents: Even if you’re a US citizen that primarily lives outside the US, you would come under this category.

Can non-U.S. citizens buy life insurance?

You can get life insurance even if you’re a non-U.S. citizen as long as you have the proper documentation. But as with everything, you might experience some roadblock. Your citizenship status also affects the approval of your life insurance policy from the insurance company.

There are a number of factors that determine the cost of life insurance, but your best chance of getting affordable life insurance is to apply through a broker.

Life insurance and Non-Citizen IDs

Life insurance for non-US citizens also depends on the type of ID/documentation that verifies your legal status in America.

Below are the most common types of non-US citizen ID:

Green card: Green card holders will encounter very few roadblocks and may qualify for best-class rates.

Visa: Visa holders will often see additional steps and some carriers will not be able to offer coverage.

Student Visas: Because most student visas are temporary, many carriers are hesitant to offer coverage.

How carriers approve non-citizens

Most life insurance carriers judge whether or not they can offer life insurance for non-US citizens based on the below criteria.

ID type

Most carriers separate the people they are able to give life insurance based on the type of visa an applicant has. For example, some companies can offer life insurance to students from abroad who are studying in America with an F-class Visa, but most cannot.

Substantial Presence

For most companies, showing 1 year of residential proof is enough to grant life insurance for the non-US citizen. But some carriers require up to 5 years of residence. If you’ve not been in the US for 1 or more than a year, they will consider you to be a Non-Resident. However, a non-resident can still be approved by a few carriers, and may even get best-class offers.

Approved countries list
Many insurance companies have limits on whom they can insure based not only on your visa status but on your home country as well. Some countries don’t allow their citizens to buy life insurance outside of their home country. However, this list is short so it’s typically not an issue.

Life insurance is extremely important to protect your family’s future, especially if they’re dependent on your sole income. So don’t let your citizenship be a problem in attaining your life insurance.

Life Insurance Buyer’s Guide

December 3, 2020 17:48 newlambertagency

Life insurance is an essential part of life that isn’t discussed enough. Of course, no one wants to talk about the different plans and coverage in their day-to-day conversations; but it’s important to have a general idea about it so you can safeguard your family from any financial trouble that may arise in the future.

With the help of this life insurance buyer’s guide, you can put your mind at ease and make an informed decision.

Buying life insurance

When you decide to buy a life insurance policy, you would want a plan that fits your budget and provides the necessary financial support to you or your loved ones. So your first step should be to decide how much you need and how much you can afford. Then you can move on to find the type of policy you want and like. We will discuss that too in this life insurance buyer’s guide.

A good way to decide how much life insurance you need is to figure how much income your dependents would need in the event of your death. Life insurance can be a source of cash for handling taxes, mortgages, and illnesses. Hence, your policy must provide the necessary financial support if your income is no longer available.

Choosing the right type

Every life insurance policy pays off a specific amount of money when the insured dies. But not all policies are the same. Below are the 3 basic types of life insurance that we’ll discuss in this life insurance buyer’s guide:

  • Term life insurance
  • Whole life insurance
  • Endowment insurance

Just remember that no matter how fancy the policy title may seem, all policies contain one or more of the 3 basic types.

Term insurance

Term life insurance provides coverage for a specific period of time. This is the “term” of the policy. If the policy owner dies within the set term of coverage, their beneficiaries will receive a check from the life insurance company. Once the term is over the coverage terminates unless you convert or renew the policy.

A term life insurance policy can last anywhere from one year to 40 years with coverage amounts ranging from $50,000 to millions of dollars. Some term insurance policies are extendable for 1 or more additional terms if your health has changed. However, each time you extend the policy, the premium gets higher.

 Whole life insurance

Whole life insurance is designed to last your entire life, often has fixed premiums, and accumulates a cash value over time. In general, whole life insurance is the most comprehensive and fully featured type of permanent coverage. This means that it typically has the highest premiums as well.

Although premiums are higher than term life, whole life policies develop “cash value” which you may avail if you like. You can either take the cash amount or use it to buy some continuing insurance protection.

Endowment insurance

This type of insurance pays a sum amount to you if the policyholder lives to a certain age. And if you were to die before then, the death benefit would be paid to your beneficiary. Premiums are higher for endowment insurance thus are not a very popular type of insurance amongst Americans.

Thus to summarise this life insurance buyer’s guide – you need to know how much you can afford, what are the benefits and which type of insurance fits your requirement the most. Never buy life insurance without proper research – check the plans and compare, consult with an insurance agent and your family members, and only then make a decision.

Re-Evaluating Your Life Insurance Needs

October 14, 2020 04:13 newlambertagency

If you have taken a life insurance policy, likely, you don’t think about it often. After a while, it seems like a car that drives itself. Life insurance gives you the security and peace of mind of knowing that your family would be financially safe in the event of your death.

But it’s crucial to not get too comfortable or fall into a sense of complacency as life, as we know, is pretty unpredictable. As the economy changes, so will your financial life changes and your life insurance needs.

To be on the safer side, it’s always a good idea to re-evaluate your life insurance coverage every few years, especially after major life changes, such as marriage, divorce, or having children. The changes could be good or bad, depending on your financial needs and condition.

Below are some of the changes to consider after reviewing your life insurance:

Buy more coverage

You may think there’s no reason to buy more coverage now. But what if you have more children in the future?  More children will add many years of child-care and education expenses. The most obvious way to secure more life insurance is to buy another policy that adds to your existing coverage.

It’s even better if your needs are specific. For instance, if you only want to cover the years of your child’s education or the length of a mortgage, then term life is the right type of life insurance for you.

Convert term life to permanent life

Most term life policies are convertible term life insurance. You can easily switch your term life policy to a permanent policy such as whole life or universal life depending on the company that issued the term life insurance.

You don’t even have to convert the entire policy. You can just convert a portion, such as $100,000 of a $1 million term life policy.

Cash-out a permanent life policy

If you feel like you don’t need to own permanent life insurance, you can surrender it for the cash value. However, the downside to this is that your beneficiary won’t be able to make a life insurance claim when you die.

Cashing out is a suitable option only if you have a permanent life insurance policy or you feel like you don’t need life insurance coverage anymore.

Sell your life insurance policy

If you don’t want your permanent life insurance anymore, there’s also the option of selling it. A third party can buy your policy at a price that’s more than the cash value and less than the death benefit. This transaction is called a life settlement. After buying the policy from you, the buyer then makes the premium payments and gets the death benefit when you die.

Before making any moves, do your research and talk to a financial advisor as it’s often difficult to tell whether you’re getting a good deal. You can sell your policy through a life settlement broker or through a life settlement company that buys policies.

And according to the Financial Industry Regulatory Authority, the transaction fees can cost up to 30% of the settlement.

Takeaway

Always remember to review your coverage and life insurance needs periodically, even if you recently bought a policy or you purchased one year ago.

What To Do When Term Life Insurance Expires?

October 9, 2020 07:22 newlambertagency

When you buy a term life insurance policy, you purchase it for a set term. You pay the premium and your family gets the complete benefit in the event of your death.

But what happens when the policy expires?

Even if your term life policy is ending, you may still need some sort of insurance protection. Especially if you have house payments, have dependent children, or have major debts.

Here are some options for you to consider:

Buy another term life policy

If you’re reasonably healthy and still have some financial obligations, buying another term life insurance policy is the best option. But as you’ll be older now, you might have to pay a higher price. Though buying a shorter term such as for 5 or 10 years could help lower the cost.

There’s also the chance of getting a better life insurance rates than your former insurer, you just have to shop around. Just keep in mind that you’ll probably have to answer health questions and take a life insurance medical exam during the application process.

Take it year by year

If you’re not interested in buying a new term life insurance policy, you could opt for annual renewable term life insurance, where you decide each year whether to continue coverage or not. This is the best choice for people who have very few financial obligations.

However, the rates can jump quite a bit each year so there’s that. Alternatively, you can ask your agent if you can extend your current term policy one year at a time turning your policy into an annual renewable term life – it’s the best option for people with terminal medical conditions who need life insurance at any cost.

Convert your term policy to permanent life insurance

It is well known that term life insurance is the best choice for many people, permanent life insurance does have certain advantages. Although it costs much more than term life, permanent life insurance lasts for the rest of your life – it includes whole, universal, and variable life insurance.

Your insurance provider may offer the option to convert your term life to a permanent life insurance policy — without taking a new medical exam or answering health questions again.

Most carriers allow you to convert term life to whole life insurance, which has a fixed premium, the investment return, and death benefit. While some may allow conversion to universal life, which offers flexible premium payments and permits changes to the benefit amount. It all depends on your insurance provider.

Although there’d be a deadline for conversion and age cut off, usually 75.

Be sure to browse around or consult an agent to better understand your next step.

Understanding Level Term Life Insurance

September 23, 2020 04:00 newlambertagency

Term life insurance is the simplest form of life insurance. It is affordable and straightforward. You pay regular premiums, and if you die over the course of the term a death benefit is paid out to your loved ones. If you outlive the term, the policy expires and you stop paying.

There are different versions of term life insurance. However, people buying term life insurance are buying level term life insurance, an important distinction that guarantees you pay the same price for your policy no matter how long it’s active.

What is Level Term Life Insurance?

It is one of the most popular types of life insurance that offers you protection in the event of your demise within the term of the policy. Unlike decreasing term insurance, the amount paid as premium as well as the sum assured does not change over the course of the policy term.

That means regardless of whether you die in the 4th year or 24th year of your 30-year policy, your beneficiaries will get paid the same amount. That is why they’re also known as level benefit term life insurance.

The cost of premiums for level term life insurance varies from person to person and relies on a person’s well-being, age, and occupation. Thus you must keep up the premium payments to keep the policy coverage in place.

How do they work?

They follow the same basic process as other life insurance policies:

You chose a policy, along with a death benefit amount and term period. The cost of a term life insurance policy is determined by these, as well as the applicant’s health and age. The premiums can be paid monthly or annually.

If you or the insured person dies during the policy term, the death benefit is paid out to the named beneficiaries. If the policyholder outlives the policy, the policy expires and they don’t have to pay the premium anymore.

The terms typically last anywhere between 10 to 30 years.

Benefits of level term life insurance

Level term life insurance has its perks. When you take out a level term life insurance policy, you’ll set a term at the beginning, usually around 25 years, as well as a pay-out size. This pay-out will be the same whether you die at the beginning or end of the policy term.

Thus, it can be said that predictability is the main benefit this policy offers as you’ll know how much you’ll be leaving to your beneficiaries no matter when you die, as long as you don’t outlive your policy.

This policy also makes budgeting easy since the amount you pay for your coverage throughout the policy will remain the same. And since you’ll be paying the same amount and receiving the same coverage throughout the life of the policy, you can get 10, 20, or even more than 30 years of coverage based on your current age.

Such benefits are what make level term life insurance so popular.

Do I Need Life Insurance If I Have a Pension

August 24, 2020 11:38 newlambertagency

People often go for life insurance when they’re in their early 30s. It seems to be the ideal time as they have their whole life ahead of them and naturally, anyone would want to feel secure. But what about the people on the other spectrum? People who have retired, their children are grown and are settled. They have put together a reasonably solid income plan with Social Security, pensions, and annuities supplemented by investments and retirement accounts. They often wonder, do I need life insurance if I have a pension?

Well, first of all, life insurance is intended to help the beneficiaries cope with the expenses incurred from the loss of a loved one. And life as we know it is unpredictable. It’s important to be ready for anything that life throws at us and life insurance could be the answer to that.

Life insurance safeguards you from any hardships of financial loss and the primary concern is the loss of income. So if your family remains secure after your passing and they don’t experience any financial loss with the support then logically there’s no need for life insurance.

But what if that’s not the case?

Do you need life insurance?

You need to ask yourself, Will someone experience a financial loss when you die? If the answer is no, then you don’t need life insurance. For instance, let’s say you have a steady source of retirement income from investments and pensions and you’ve chosen an option that pays 100% to your surviving spouse. Then your death wouldn’t have any effect on their income.

Do you want life insurance?

Even if there will be no substantial financial loss experienced upon your death, you may like the idea of paying a premium now so that family, or a favourite charity, will benefit from your death. Life insurance provides you with an option to leave a substantial amount to a charitable cause, children, grandchildren, nieces, or nephews. So life insurance after retiring could be a great way to spread happiness.

Situations Where Life Insurance Is Needed

Everyone has a unique situation regarding their finances but below are some considerations for continuing life insurance policies:

  • Retirees who will lose a substantial portion of the family income when one spouse dies
  • Families or couples in their peak earning years that are saving for retirement
  • Parents whose children are not adults
  • Business owners or business partners, and employees employed by small businesses
  • Families with a large estate that is subjected to estate tax

 

Simply put, for people that have substantial financial support regardless of any loss of income, life insurance after retiring might not seem like a necessity. But for people who like to go the extra mile for protecting their families, life insurance is the right step.

Is Whole Life Insurance Worth It?

August 10, 2020 13:40 newlambertagency

In your otherwise busy lifestyle, there comes a time when you wonder about taking an insurance policy- it could be to safeguard your family or just to have a secure retirement plan. But when you sit down to Google about a policy that’ll offer the protection you desire, you’re immediately bombarded with terms you may not understand.

There is more than one type of insurance policy so naturally, it results in confusion. But if you find yourself wondering about Whole Life insurance, then we may be able to guide you and put an end to your confusion.

What is a Whole Life insurance policy?

Whole life insurance is a type of permanent life insurance, which means the insured person is covered for the duration of their life as long as premiums are paid on time. Permanent life insurance is different than term life insurance, which covers the insured person for a set amount of time (usually between 10 and 30 years).

Whole life insurance is the most common type of permanent life insurance policy that people purchase. They also cost more because they include an extra savings component, which is referred to as the “cash value”, which brings us to the next question, is whole life insurance worth it? Read on.

How do they work?

There are 3 major components of a Whole Life insurance policy:

Death Benefit: As the name suggests, the death benefit is a tax-free amount of cash which is paid out by the insurance company after you die. For instance, let’s say you bought a whole life insurance policy with $100,000 in coverage, then that $100,000 becomes the death benefit.

Beneficiary: A person that receives the death benefit is the beneficiary. Anyone can be your beneficiary- be it a spouse, children, a business partner, a friend, trust or organization etc.

Premiums: The amount of money you pay for your whole life insurance policy – payment could be made monthly or annually.

As the name implies, a Whole Life insurance policy lasts for your life as long as the premiums are being paid on time. That means if you buy it when you’re 30 and continue paying your premiums until you die, your family will receive the death benefit.

How does cash value work?

Cash value is your ideal volatility buffer for uncertain economic times and financial emergencies. That means a whole life policy can serve as a source of emergency funds for you if something goes wrong, or you may be able to take out a loan against the policy.

Over time, the cash value of your policy increases, and you may have the option to withdraw funds or borrow against it. The rules on how and when you can do this differ from company to company and the policies they offer.

The cash value of a policy earns interest and grows over time. Life insurance companies often guarantee a certain amount of growth every year and that is why people flocked to buy whole life insurance following the 2008 recession.

Hope the above information answers your burning question – is whole life insurance worth it?

You can always consult an agent for guidance and choose a policy that suits you the best.