Life Insurance for Business Owners

Are you a small business owner or a co-owner of a company? Among the many days to day responsibilities you encounter, you also are responsible for your family. You need to protect your family at home as well as your business family.

Life Insurance for Business Owners

Life insurance for business owners can help lay a proper financial foundation by protecting your current and future business. Let’s look into the different situations that life insurance can benefit your company or business.

Collateral Assignment Life Insurance

A life insurance policy can be used for business owners that require cash to begin a business or buy a company. Typically, when you buy a life insurance policy you will name a beneficiary. This beneficiary has an insurable interest to the insured. This beneficiary can be a family member, spouse or a business partner or company. When you’re getting a life insurance policy for an SBA loan or bank loan – it is the same overall concept. You have to assign a primary beneficiary, however- the lender will be named the collateral assignee. If you were to die the lender will get the balance of the loan from the life insurance death benefit. Your primary beneficiary will then get the balance once the loan is paid off.

What would happen in the event that you didn’t use a collateral assignment? If you had the lender the sole beneficiary, the lender would then collect one hundred percent of the life insurance policy’s death benefit. E-exchanger life insurance can help you avoid that.

Executive Bonus Plan Life Insurance

With an executive bonus plan, you’re using a compensating method for specific employees by paying the life insurance policy premiums on the key employee’s life. The employer or business owner will pay for a benefit that is owned by the executive or employee. There are benefits to both the employer and employee when it comes to Executive bonus plans.

For the employer, there is no administration needed, the plan is simple, and costs are tax deductible. For the employee, the executive is the owner of the life insurance policy and of the cash values. The policy is not lost if they were to change employers. The death benefit can be income tax free.

Key Person Life Insurance

The purpose of key person life insurance is pretty basic:

A company buys a life insurance policy on a key employee, business owner or executive who is very important to the business. The company will apply for a life insurance policy, pay for all of the premiums and own the policy. The business is also the beneficiary of the life insurance policy. If the key person were to die, the company will receive the death benefit of the key person. The tax-free benefit can be used in a variety of ways. It can help make up for company sales as well as lost earnings. The benefit can also help cover some or all of the costs of finding a good replacement and provide proper training.

What would happen if the key person were to die unexpectedly? Could your business move forward without a hiccup? The life insurance death benefit can provide liquidity quickly so you can provide ongoing financial demands.

How about securing loans for your company’s growth? Sometimes loans are needed to help with the financing opportunities of expanding a business. Your lender will often seek collateral as security and the death of a key employee may pose too much of a risk to your lender. It is very common for a lender or bank to require key person life insurance on anyone that is vital to the life of your company.

One of the most important uses of key person life insurance is when there’s a need to buy out a deceased co-owner's interest in a company. There are some unfortunate situations that can arise if a key person policy isn’t in place. How would the deceased co-owner's family receive their share of the interest in the business without selling it off? How would the surviving owners pay off the dead owner’s family in order to avoid becoming partners with them?

Buy Sell Agreement with Life Insurance

When you’re an owner of a company or a partner in a business, a buy sell agreement can be an excellent way to avoid uncertainty. When a partner or company owner dies, the life of the business and it’s future are uncertain. With a buy-sell agreement, you can make sure you’re helping to protect you and your company from the unexpected or unintended transfer of ownership. By considering a buy sell agreement and funding it with life insurance, you can provide protection and extend the life of your company.

The buy sell agreement will aid the sale and purchase of a company based on a specified event. The most common events are retirement, disability or death of the owner of the company. The buy-sell will lay out specifically who will get what with regards to shares of the business. It will define how much and it will guarantee the buyer at a predetermined price. The buy-sell agreement also allows for the purchasing of company shares from the estate of the surviving family. Lastly, a buy-sell can be beneficial with creditors. Creditors will most likely be much easier to deal with when they can see that a company has protection established to make the loan decisions easier.

Business Succession Planning

Life insurance plays an important role as the driving force in succession planning. It is key that you have adequate coverage for you and your business partners. You need to get a formal valuation of your company and make sure that your coverage is updated with the growth of your company. Succession planning is a very important topic and can be vital to your business. If you let the estate plan dictate how your company transitions, it may cause significant issues. There are many companies that have had disastrous results due to poorly designed succession plans. Just ask the Robbie family and the Miami Dolphins.

Get Started

If you’re ready to get started, make sure you work with the following 3 resources:

  • Attorney
  • CPA
  • Life Insurance Broker

You’ll need experts in each of these areas in order to secure the best strategy and policy for your business succession plan.

How to Get Quotes and Apply

Once your plan is in place you can begin shopping for your life insurance policy. Simply use the free quoter on this page to get an idea of rates.

However, the best way to secure coverage is to have our research customized quotes. You can simply contact us at E-exchanger.com.  We’re independent and licensed life insurance agents. We’ll find you the best policy at the most competitive price from dozens of top rated life insurance companies. Once we find you the lowest rate, we’ll help you apply conveniently online or over the phone. We’ll help you from start to finish.

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Can I Buy Life Insurance on My Significant Other?

Americans are waiting longer to get married.  This doesn’t mean that today’s couples love each other less than generations past.  Most couples are postponing marriage because they want to be financially secure first.  Part of being financially secure is owning life insurance.

It’s very common for married couples to purchase life insurance on one another or name each other as beneficiaries of their policies.  When you buy life insurance on someone, you need to have consent and insurable interest.  Insurable interest exists when one person financially benefits from another person living.  Essentially, they are worth more to you alive than dead.  With married couples, it’s obvious that they have an insurable interest in one another.  They live in the same house, both contribute toward bills and maybe raising children together.

The life insurance industry changes and adapts to keep up with societal norms.  According to the U.S. Census Bureau, the number of U.S. adults who are unmarried yet cohabitating has risen 29 percent since 2007.  For couples that aren’t married but want to buy life insurance on one another, you may need to check a few more boxes, but it isn’t as difficult as it used to be.

Buying Life Insurance on Your Fiancé/Fiancée

Being engaged shows a higher level of commitment and financial dependency than dating – in the eyes of the life insurance company.  It’s typically not an issue for engaged couples to buy life insurance on one another.  Some life insurance companies will want to know that a wedding date is set, but this isn’t always required.

How to Buy Life Insurance on Your Significant Other

If you’re looking to get life insurance on your significant other or name them as the beneficiary of your policy, E-exchanger can help.  We have helped many married and unmarried couples purchase life insurance.  Start the process by running a free and anonymous term life insurance quote.

If you want to buy life insurance on your significant other, be sure to complete the online quote and application using their information.  (Remember: You can always contact us directly if you want one-on-one assistance.)  After running quotes, when you’re ready to apply you will be brought to a page that looks like the screenshot below.

You can see it asks that you fill out the form with the insured’s information (your significant other.)  The life insurance company will need to personally contact the insured (your significant other) to verify application information and, if necessary, to schedule the medical exam.

Remember, you can’t just buy life insurance on anyone.  Consent is required.  If you believe life insurance is important for your significant other, but he or she doesn’t agree, you can’t just buy it on them anyway without their knowledge.  If you’re having trouble getting them to understand the importance of life insurance, check out our blog post How Do I Get My Spouse to Buy Life Insurance?  There are some tips that may be helpful.  We look forward to helping you and your loved one buy life insurance.

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Do You know What a Home Warranty is?

A home warranty is often a feature in the sale of a home.  In that scenario, the seller typically pays a few hundred dollars for a one-year warranty covering the home’s major fixtures such as the furnace, water heater and kitchen appliances.  This gives the buyer some protection during that first year of ownership knowing that if something major breaks down it will be covered.  Many homeowners choose to continue paying an annual premium rather than risk-bearing the full replacement cost of a major item.

Although technically not insurance, warranties are very similar in that the homeowner is paying an up-front fee to protect against a potentially huge replacement cost.  If nothing breaks during the coverage period, the customer may in hindsight feel the fee was a waste of money, but that’s what managing risk is all about.  Are you financially prepared to replace major components as they are needed, or would you rather pay a set amount per year whether something breaks or not?

One important difference between insurance and a warranty is that the homeowner must go through the warranty company to arrange for service, and this can be another point where a customer might be dissatisfied.  Home warranty companies establish relationships with service providers in the areas for which they provide coverage.  So whether customers are satisfied with the warranty company depends in large part on whether they are satisfied with the repairmen whom the warranty company has hired.

Even though home warranties aren’t considered insurance, the companies that sell them are typically regulated by each state’s department of insurance. According to the Service Contract Industry Council, 32 states require home warranty companies to register or obtain a license with that state’s department of insurance. This state agency is responsible for licensing the entity, examines the company for compliance of applicable laws regarding home warranty services and monitors the financial condition of the company for the protection of their clients.

What’s covered?

Most home warranty companies offer a variety of plans, each providing different levels of coverage, so be sure to read the details of any contract before buying. Even if you choose to renew the contract from year-to-year, double-check the details of your plan because coverage can change annually. Here is a general idea of what a homeowner can expect to find in each tier of service:

BASIC COVERAGE

  • Plumbing systems
  • Range/oven
  • Dishwasher
  • Garbage disposal
  • Exhaust fans
  • Sump pump
  • Water heater
  • Ceiling fans
  • Heating and electrical system components
  • Built-in microwave
  • Whirlpool tub

ENHANCED COVERAGE

  • A/C
  • Washer/dryer
  • Refrigerator
  • Garage door opener

OPTIONAL ITEMS

  • Pool
  • Spa
  • Well pump
  • Septic system
  • Standalone freezer
  • Central vacuum

For newly constructed homes

Many states require that all home builders and contractors warranty their work on a newly constructed home.

This provides the homeowner with the assurance that should any major defects or repairs become necessary within its new home for various time periods up to ten years following construction that is not the fault of damage or negligence by the homeowner then the repairs or replacements necessary will be covered.

The workmanship of the home construction, materials used and performance of major systems such as the plumbing, electrical and HVAC are all covered under these types of home warranty services. This includes the overall integrity of the structure. Each state monitors the specific requirements in these situations.

For pre-existing home purchases

When buying a pre-existing home, buyers can choose to purchase home warranty coverage. This will provide them with coverage against for repair or replacement costs that they may incur with existing mechanical systems or appliances in their new home within a specific time frame following the purchase date. Major mechanical systems that are covered include plumbing, electrical, heating, and air.

For seller solutions

Homeowners that are trying to sell their homes may want to consider the benefits of offering a home warranty on their home. The seller can choose to pay for the home warranty coverage on his or her own or ask that the buyer pay for a specified portion of the cost. By including a home warranty option on their home, homeowners can get the maximum selling price for their home, be relieved of further obligations should repairs or replacements become necessary after the final purchase is completed and interest buyers in a tough market. Home warranties can be purchased through independent home warranty companies of the seller or buyer’s choice or through the real estate agent that will handle the paperwork with the home warranty company for the parties.

What do home warranties cost?

The average cost of a basic coverage plan ranges from $350 to $500 a year, with the cost of an enhanced plan adding $100 to $300. Prices reflect not only coverage but also a company’s loss history, which is determined by how often an item breaks down and the cost to repair it. Some home warranty companies offer additional coverage for certain items, such as a good pump or pool, for an extra fee. Regardless of the type of plan, homeowners typically pay an additional service fee ranging from $50 to $75 for each repair job.

The majority of home mortgage companies have a set price for their basic home warranty plans that they offer. The type of housing such as townhouse, condominium, single-family residential, duplex or apartment often determines the set cost of the home warranty coverage.

While detached garages are generally covered under the basic home warranty plans that are offered, most separate buildings on the premises are not. Extended home warranty plans are available at additional costs for these building structures.

Costs for home warranty plans are paid upfront before the coverage goes into effect. Some companies offer their clients the ability to make payments on their home warranty plans if it helps to secure the sale or they have a long standing with the client.

Complaints about home warranties

Among the many negative reviews submitted by Angie’s List members about warranty companies, the key complaints are: (1) Something wasn’t covered that the customer assumed was covered, and (2) although the item was “covered” there was still a service call fee that the customer didn’t expect.   Although this expectations gap can also occur with insurance policies and other purchases, home warranties may be particularly prone to it because so often they are purchased by one owner (the one preparing to sell), but used by another owner (the buyer). Most plans do require an additional service fee to be paid by the homeowner. Typically, the least expensive plans cover the least amount of items and require the highest service fees.

In order to minimize misunderstandings, experts stress the importance of reviewing and understanding a service contract before purchasing a home warranty. For example, if a certain appliance needs repaired or replaced, a homeowner should know how much money will need to be spent out of pocket.  Also, how comprehensive is the potential repair or replacement?  If one component of an appliance break but the unit needs replacing, is the warranty company responsible for replacing the unit or the component? That’s an essential question that needs to be answered. It’s also important to review at least three warranty companies, understand what it is covered and what is excluded.

 To keep from getting fooled by your contract, consider the following tips:

  • Check with your state’s department of insurance to verify if the home warranty company you’re considering is properly licensed to do business. If licensing isn’t required in your state, inquire about the company’s status with your local consumer protection agency.  If you join us you can search for home warranty companies that serve your geographic area and find out which have received positive reviews from past customers.
  • Be sure to read the fine print and ask the company any lingering questions before deciding if a home warranty service contract is right for you.
  • Tell your real estate agent about any denied claims. Oftentimes, he or she will have a relationship with the home warranty company and can make a call on your behalf.
  • Be sure to tell the home warranty company if their network contractor did a good job or not. Most keep a rating system on their contractors and disperse the work accordingly.
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What to Ask When Choosing a Home Warranty

There are a number of things to know about before getting your first Home Warranty Plan. Here are 10 questions to ask yourself and the provider when comparing your options.

Purchasing a home warranty to cover your major appliances and system components (refrigerator, dishwasher, garage door entry system, HVAC unit, etc.) can be tricky. You have to balance consideration of each warranty's options, premiums, deductibles, terms, and conditions. At the end of the day, what you really want is some assurance that, in times of need, you and your family will remain safe, comfortable and suffer the least amount of inconvenience.

What should you look for in a home warranty? There is no simple answer, and there is no one-size-fits-all home warranty solution. As with all your other investments, one of the best things you can do for yourself is to enter negotiations as well-prepared as possible. So we’ve assembled this checklist of questions to ask before you commit to a home warranty agreement to help you better understand your needs, your expectations, your reservations, and your own attitudes towards what makes a house a home.

1. How much wear and tear do your appliances already have?

Appliances exist for one reason: to make our lives easier and that means taking on the dirty work (literally, in the case of a dishwasher or washing machine). Some of us use them harder than others and age can add up over the years, but as long as you use your appliances according to manufacturer's instructions, a home warranty can help you keep your machines running without worrying about unexpected repair or replacement costs. Should your appliance's or system's major components break down due to your normal use, a home warranty can be there to help cover the costs to get back in working condition.

2. Do you plan on upgrading or replacing your appliances any time soon, even though they are still functioning?

New appliances and systems come with manufacturer's warranties which are great protection, however, they run out and are unit specific. A home warranty can provide more of an umbrella of protection for your home to cover multiple appliances and systems. Plus, some companies, E-exchanger, for example, provide programs such as the Appliance Discount Program that can save you money on the purchase of brand new, brand-name appliances.

3. Are you aware of any pre-existing conditions or problems with your appliances that have gone unaddressed?

Home warranty companies want to help you keep your home in working order but there may be some limitations when it comes to addressing certain pre-existing conditions. Check with your potential provider.

4. Are there any essential components on your appliances (e.g., your refrigerator’s ice-maker; your HVAC system’s ductwork) that may not be covered by a particular warranty?

Today's appliances are amazingly complex machines with evolving pieces and parts. However, they still basically rely upon essential core parts to perform their necessary duties. Those components are what require protection and often can be most expensive to repair. Your home warranty should cover these core components.

5. How does a particular warranty complement or supplement your existing homeowner's insurance policy?

Home insurance is great protection for your home for what MIGHT happen (fire, flood, natural disaster, etc.). However, what about protection for things that WILL happen? For example, your air conditioner condenser finally giving out or your clothes dryer refusing to dry your clothes. Having a home warranty plan to work side-by-side with your home insurance can greatly help your home remain a comfortable and happy place.

6. Will a specific home warranty policy help you pay for routine preventative maintenance of your major appliances?

A home warranty may not cover your routine preventative maintenance, however, they may penalize you for NOT taking that action. American Home Shield will not do that. We understand you're busy and that time gets away from you. That's why we can help cover you when your major system and appliance components break down from normal use.

7. Will a specific home warranty policy help you to pay for significant cosmetic damage to your major appliances?

Home warranties are designed to cover parts and components that are designed to wear down from normal wear and tear. If that normal use causes cosmetic damage, you should be covered. However, if an overly excited family member causes damage to your dishwasher door, for example, you will not be covered.

8. Are any repairs, services or appliances too minor (e.g. your microwave oven) to be covered by a specific warranty?

It all depends on your provider and your contract. An E-exchanger Home Warranty Plan, for example, covers every part of your refrigerator. Other companies may exclude coverage for a dozen or more parts. 

9. What is the upper limit for repairs and replacement that the warranty will cover?

This depends on your prospective provider, but AHS offers some of the most competitive levels of coverage. In some cases, E-exchanger provides twice or even five times as much in terms of replacement coverage.

10. When can you make a claim with your prospective warranty provider?

You may currently have appliances in need of repair. Most companies may make you wait 30-60 days before you are able to submit a service request. 

So, which home warranty combines the best reputation, the greatest expertise, and the most satisfactory customer service?

That warranty is the one that can be of the most benefit to you when the time comes for you to maximize your home’s equity. And American Home Shield is confident that the home warranties we offer are world-class in that regard. As the home warranty industry creator and leader, we are proud to offer the best, most comprehensive and award-winning home warranty plans. Learn more about E-exchanger Home Warranty Plans and get a quote today.

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Making Home Warranty Comparisons


 Home warranties take the hassle out of home ownership and give you peace of mind by protecting your family from unexpected and costly bills when major systems or appliances fail. However, coverage options vary widely from provider to provider and choosing the right plan can be tricky. Here is a checklist that details what to look for in a home warranty and how you can choose the provider that's right for you.

Initial Considerations

  • Make a list of all your appliances and systems. Determine which ones are critical to your family's needs, are costly to repair or replace or are at risk of breaking down.
  • Home warranties are designed to fill in the gaps left by homeowners' insurance, but there is potential, however small, for some overlap. Also, some of your appliances may be covered under other warranties. Check and compare these policies so that you're not paying twice for the same coverage.

Coverage

  • Verify which home warranty providers offer coverage in your area. Then narrow your search based on your priorities. Some providers offer fixed plans that cover a list of appliances or systems, some specialize in only a few specific ones, while others offer the option to customize your home warranty benefits.
  • Understand the various levels of coverage. You may find that the advanced coverage offered by one provider is equivalent to the standard coverage offered by another.
  • Take note of the pre-conditions and limitations to any coverage under consideration. Many plans won't cover appliances or systems with pre-existing conditions or costs that arise from improper installation or maintenance.
  • Are you planning to sell your home? Ask if the home warranty is transferable.

Cost

  • Determine the annual cost and what's included. The cost of home warranties varies significantly depending on where you live, the kind of home you live in and what you choose to cover. Some plans include additional services, while others have a more scaled-down offering.
  • Ask about service fees or deductibles. Home warranties take care of much of the heavy lifting when it comes to repairing costs, but there still may be additional fees, such as one for each home visit if something breaks down. Compare any added costs.
  • Establish whether there are limits on the maximum amount a provider will pay for repairs.

Service

  • Easy access to a service network is one of the biggest home warranty benefits. With just one phone call, you can schedule a home visit for a wide range of maintenance issues. Investigate how many in-network contractors service your area and make sure there are a variety of specialties represented.
  • Inquire about the provider's screening process and selection criteria for their contractors.
  • With some companies, the service provider may be different from the company selling you the home warranty. Make sure you can find contact information for the company that will ultimately be servicing your warranty.
  • Ask about the provider's service level agreements, average response time and claims process. Many providers offer the convenient option of requesting service and filing a claim online, but it's also good to know that you can reach a representative when you need one. Compare the level of follow-up documentation each company may require.

Reputation

  • Check out consumer ratings and reviews to learn about other customers' experiences. You want to make sure you choose a reputable provider.
  • Peruse a company's social media and online presence to help confirm its legitimacy and level of consumer focus. Is this a company that places the customer first?
  • Verify that the home warranty providers you're considering are properly licensed if you reside in a state that requires it. These requirements vary by state.
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Life Insurance with a Felony Conviction


When applying for fully underwritten traditional life insurance, most insurance carriers are going to inquire about any felony convictions you may have had in the past. It makes sense – if a life insurance company is willing to check your motor vehicle record for your driving behavior, then they would likely search your history for any felonies that may have been committed. These are just some of the things that go into the underwriting process to determine how acceptable a potential insured person will be to purchase life insurance with a felony conviction.

There is one major point that should be made here. Simply because a person has been charged with a felony does not make them a felon. Only if a person has been convicted of a felony are they classified as a felon. The vast majority of the time, the insurance carrier will need to know how much time has passed since you were convicted of your felony charge. Most carriers will also need to know the details of any sentences you were to serve for said conviction. Of all these things, the most important to almost any life insurance carrier will be, what was the nature of the charge and conviction you received.

Insurance Companies look at Felony Convictions Differently

As far as the underwriting process goes, many insurance carriers have very different criteria that are examined and weighed through the process. Each carrier interprets the information they require differently, and many have completely different types of information that is required. Infractions, (whether felony or not) that are most likely to cause problems for a life insurance applicant would be:

  • Larceny
  • Driving while intoxicated or under the influence of drugs or alcohol (1st offense is a misdemeanor)
  • Crimes involving property
  • Drug-related crimes
  • Assault

Because these five crimes make up over half of the current prison population, these are the offenses that pose the greatest concern to life insurance carriers. These crimes, in some cases, are not life-threatening inherently when committed. However, the time that one will spend in prison once convicted could be. Moreover to this point, convictions are much less likely to become a barrier to buying life insurance with a felony when the crime committed is larceny or assault.

Some Good News

The bright side of this story for individuals seeking life insurance coverage that have one or more felony convictions is that not all insurers have the same guidelines. There are some carriers that will offer an individual coverage, however, there are some that will not. That being said, an individual’s first step when seeking insurance coverage should be to contact us and discuss your current situation in order for our licensed insurance professionals to be better able to determine ahead of time which, if any, insurers will be able to offer coverage.

The quality of the insurance professional you utilize is just as important as the insurance carrier you choose to apply to. Submitting a life insurance application with a life insurance carrier that has a track record of denying coverage to individuals with felony records would make no sense. The independent life insurance professional that we connect you with will know exactly who will be your best option when seeking coverage.

The Deal Breakers

Some felony convictions are all but a guarantee that a traditional life insurance company will deny life insurance coverage. These are :

  • Child molestation
  • Drug Trafficking
  • Rape
  • Murder
  • Kidnapping
  • Conspiracy to commit any of the offenses listed above

A conviction for any of the aforementioned charges will result in a declination of coverage from all traditional life insurance carriers. However, individuals in this category will still be permitted to purchase “Guaranteed Issue” life insurance from a carrier and also Accidental Death life insurance as well.

Drug-Related Felonies

Individuals who may have previously made an attempt to obtain life coverage through a traditional life insurance carrier and were denied may still have remaining options that are not simply limited to “Guaranteed Issue” life coverage.Generally speaking, most life insurance carriers will automatically decline applicants that have prior drug-related felonies. However, there are carriers that will still consider offering coverage depending on how the individual may answer the following questions:

  • Have you ever been incarcerated?
  • If so, how much time did you spend imprisoned?
  • How much time has passed since you were charged and then convicted of the crime?
  • How long ago were you released from your last incarceration?
  • Are you currently on probation or parole? If so, for what time frame?
  • If you were on probation or parole, how long ago was it terminated?

The answers given to these questions will be the best determining factors in allowing an underwriter to assess how eligible an individual is for life insurance coverage. The exact nature of an individual’s charges and convictions are important because some convictions have a higher recidivism rate than others. Generally speaking, underwriters use this information about an individual’s criminal record to determine how likely they are to be reincarcerated for another criminal offense.

Be mindful of the fact that being incarcerated is considered a life-threatening circumstance. The amount of time that has passed between the date of application and the date an individual was convicted and or released from prison is the most important detail here. The reason this detail is so important is that the underwriter assigned to this case will want to see exactly how much a potential insured’s lifestyle has changed since they were released from prison.

Felonies involving Alcohol or Violence

Primarily felonies involving alcohol usually are related to operating a vehicle while intoxicated. However, violence related felonies can be just as likely contributed to the use of alcohol.

In cases of this sort, underwriters are on the lookout for at least a two-year gap between the time of conviction and the time of probation before considering the opportunity to offer life insurance coverage. In the event you have been denied life coverage after two years has passed, you have likely applied for coverage with the incorrect insurance carrier and should give our office a call for help.

Challenges Agents Face when You Reveal Your Felony

Good insurance agents know on initial contact that it will take a considerable amount of work to find life insurance coverage for an individual that has a record containing a prior felony conviction. If you take the typical call center agency approach, most likely you will be denied coverage based on criminal history due to the agent not being motivated to spend additional time and resources on your case because it may result in a declination even after the agent has invested the necessary time to properly scout the potential carriers to obtain life coverage for you.

This, however, should not deter you from contacting an independent insurance agent that has access to multiple life insurance carriers and is willing to put in the time, energy, and effort to see to it that you acquire life insurance with a felony conviction.

A knowledgeable independent insurance agent will know after your first conversation if traditional life insurance is the route that you should take, or if a “Guaranteed Issue” life insurance carrier will be more suited to your needs based on your particular situation. Your agent will have the necessary experience and know how to assist in your life insurance purchasing decision to allow you to make the most informed decision possible.

Independent insurance agents that specialize in hard-to-place and high-risk cases appreciate the challenge that comes along with this type of business and are more than willing to represent you and your best interest to block any hindrances and help you obtain the life insurance coverage you need.

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Is Term Life Insurance Worth it?

We write endlessly about the times in your life when you need life insurance, how to pick your beneficiaries, and even why buying life insurance online might be the best option for you.

But there’s usually a question that lingers when you’re going through the researching and buying process: Is life insurance really worth it? If you have a spouse, children or other family members who rely on you financially, then the answer is pretty simple: It’s absolutely worth it.

Why Is Life Insurance Necessary?

You have to approach life insurance like you would any aspect of your life that poses a risk and ask yourself, “What’s the worst case scenario?”

If you’re on the fence about buying coverage, then consider how your family might fare if you were no longer around. How would they keep up with day-to-day bills? Or, how would your spouse afford childcare or education expenses?

Most people would agree that, without a financial cushion from life insurance, their family might face a dire money situation. That’s why term life insurance is so valuable. It’s an affordable way to protect the people you love most financially.

Life insurance helps provide financial security if you were to die suddenly so that your family won’t struggle to cover day-to-day expenses. It can help:

  • Replace lost income and cover living expenses, like rent or a mortgage
  • Spare your family from needing to pay off debts you leave behind
  • Provide for your kids’ care if you are a stay-at-home parent
  • Cover burial, estate taxes and other final expenses
  • Fund college expenses
  • Cover unpaid medical bills or taxes
  • Create an inheritance or supplemental retirement fund through an income tax-free death benefit

Your family’s savings shouldn’t be depleted to cover those expenses.

Even if you’re living the single life with no spouse or kids, term life insurance may still be necessary. It can help protect your parents or other co-signers from needing to pay off the mortgage, student debt, credit card debt, or even a car loan that you leave behind.

However, for most people, life insurance becomes necessary when you get married and have a spouse and children who rely on your income.

How Term Life Insurance Works

Term life insurance is one of the simplest (in a good way) and most affordable types of life insurance. It insures your life for a period of time of your choosing, such as until your mortgage is paid in full or your kids are adults. This helps ensure that none of your financial obligations will burden your family if you were to die unexpectedly during the term length.

Most insurers offer term lengths of 10, 15, 20, 25, and 30 years. You make (in the case of E-exchanger Term policy owners) monthly payments for the policy term, and in the event of your death, the policy pays out a death benefit to your beneficiaries.

If you are young and have many working years ahead of you, a long-term policy (30 years) might make more sense. If you have small children, the same is true. Perhaps you want your term length to end around the time your home mortgage or student debt is paid off — in that case a shorter term length might make sense to protect your co-signers from needing to take over loan repayment before it’s paid in full by you.

Determining which term length you need is actually very easy. You can use an online life insurance calculator to receive a recommendation on a coverage amount and term length that best fits your financial situation.

 

How Much Does Term Life Insurance Cost?

Many people don’t realize how affordable term life insurance can be. It usually offers ample coverage at a much lower premium amount than many other types of life insurance.

 

That’s over 4 times more than a policy would actually cost. A 20-year, $250,000 E-exchanger Term policy for a healthy 30-year-old woman would cost about $12 per month. That’s less than your online TV streaming services.

And even if you’re slightly older, you can get affordable coverage to protect your family. A thirty-six-year-old man in excellent health can buy a 20-year, $750,000 policy for as little as $31 per month, for example.

Your individual rates will depend on a range of factors including your age and your overall health. If you’re curious how much (or little) your premiums might be, you can get a free estimate online.

Why Term Life Insurance Versus Other Types?

There are many types of life insurance policies. If you’re looking for a policy that offers more than $100,000 in coverage, term life insurance is usually the most affordable choice.

Another type of life insurance coverage that offers high death benefit amounts if permanent life insurance, but it’s usually far more costly. For example, a $500,000 whole life insurance policy for a healthy 35-year-old male would likely cost more than $500 per month, compared to $21 per month for a no exam term life insurance policy.

The price difference can be attributed to the fact that permanent life insurance policies cover you for a lifetime versus a term length. They also have a cash value component that you can borrow from over time – although, borrowing from the policy cash value can reduce the total death benefit for your family.

Overall, term life insurance is a simple and affordable life insurance option. It has no investment components to track, and no cash value or loans that impact the final payout. You simply make the monthly payment, and you’re covered for the specified term length. Term life also requires only minimal maintenance – just a review of your financial needs periodically – like when you have another child or if your income increases considerably from when you first took out the policy (a good problem to have.)

In addition to affordability, term life is a product you can build on. If you start out with just $100,000 in term life insurance coverage when you’re young, for example, you’re not stuck with that coverage amount forever. Provided your health allows you to qualify for more coverage, you can continue adding term life policies as your lifestyle and situation changes. As we mentioned already, having another child might give you a reason to buy more term life insurance coverage. Earning more money over time or advancing in your career is another smart reason to buy additional term coverage to replace your income upon your death.

Employer-Provided Life Insurance is Often Not Enough

Many people assume that if they have life insurance through work, they’re set. Usually, employer-provided life insurance is not worth it if you are paying for coverage.

The fact is that most people don’t have enough term life insurance through their employer if they are married, have kids, or hold significant debt like a mortgage. Typically, employer-provided policies only cover, at most, two to three times your income, while the often-recommended amount is at least six to ten times.

Another important consideration is that coverage usually ends when you leave your job, which could leave your family without coverage.  Your best option is to hold an individual policy to ensure you have enough coverage and to lock in an affordable rate while you’re young and healthy.

Keep in mind, it’s perfectly acceptable to have an individual term policy on top of the coverage offered by your employer. More coverage means more protection for your family. However, when many people realize they need additional coverage, they usually think it would be easier to add on more coverage to their existing work policy. Employer-provided policies are at group coverage rates, which means insurers charge everyone the same amount of money. If you’re young and healthy, you’ll likely be paying significantly more for coverage than if you were to receive an individual rate because you’re making up for the risk insurers take on some of the older, less healthy people at your company.

No matter what your employer offers, it’s worth it to carry your own coverage that keeps you covered no matter where you work.

Understanding Your Needs

Term life insurance isn’t a complex financial product and is a necessary part of financial protection. What’s most important is that you understand what your coverage needs may be and if you do need coverage, make sure you’re not putting off the purchase.

Like we mention above, term life insurance (and most life and health insurance for that matter) is more affordable when you’re young and healthy. The earlier you buy your term policy, the better your rates. So the time to comparison-shop and act is now. Given its low cost and high value, a term life policy that fits your coverage needs is clearly worth it. Picture the alternative: dying without a policy and the potential for leaving your family with a huge financial burden. That’s a high cost to pay.

Life insurance needs aren't one-size-fits-all.

Five Steps to Buying Life Insurance

If you’re someone who is unsure of where to begin, consider these steps as you search for the right amount of coverage to protect your family.

Step 1: Fill out a life insurance calculator.

The best way to get a general idea of how much life insurance coverage you need is to toy around with a life insurance calculator. By entering details like your age, income, overall health, and family status, you can find out how much term life insurance coverage is suggested for your family and compare quotes to top insurers. Check out our free term life insurance calculator.

Step 2: Ask yourself if you want additional coverage for any reason.

Our life insurance calculator can guide you to the average amount of coverage you’ll need based on the information you provide, but it’s possible you have other, personal factors to consider as well. Maybe your goal is buying enough coverage to leave behind a legacy for your children, or to financially care for an elderly parent or relative. Either way, you can and should buy whatever level of coverage will help you sleep better at night.

Step 3: Pick a process.

There are two main ways to buy a policy: through an agent or buying life insurance online. We’re partial to online, because it allows you to get covered immediately and on your own time. Also, because it’s what we offer. If you’re comfortable shopping and banking online, this is probably the best choice for you.

Step 4: Check the rating of the provider.

A company such as A.M. Best does the homework on an insurer’s claims-paying ability and record, to help determine whether the provider is considered reliable and in good financial standing. We’d recommend providers rated A+ or better. Our E-exchanger Term policy is issued by MassMutual, an A++ rated insurer.*

Step 5: Get the coverage you need.

Once you’ve decided how much coverage you need, how you want to purchase it and from which insurer, it’s time to get covered. There’s no reason to delay buying life insurance because it’s now easier than ever with thorough and simple online services. And the peace of mind is absolutely worth it.

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