Florida Residents - Shopping for Life Insurance? Call 561-741-8849! I know - my website is not the fanciest. But, I can promise you fantastic personalized service. I can promise you that when you call you will talk to me, Keith Murray. A live Florida Licensed Insurance Agent located in Florida - not a sales center in India.
Why would I want to buy my term life insurance from Keith Murray? : If you live in Florida you need to call me. I am a broker / agent representing AIG, American General, Banner Life Insurance, Empire General, First Colony Life, GE Life and Annuity, Humana One, ING, Jefferson Pilot Life Insurance, John Hancock, Lincoln Benefit Life Insurance, Lincoln National, Mass Mutual Life, MetLife, Nationwide, Pacific Life, Penn Mutual, Pruco, Prudential Life Insurance, Transamerica, West Coast Life, William Penn Life Insurance. I work with a lot of different life insurance companies because one size does not fit all. You are unique and I shop to find the best insurance for your needs.
LIFE INSURANCE 101 - THE BASICS Often times you hear people say the following about life insurance. 1) I don't need life insurance. 2) I have life insurance though my job. 3) My nephew / cousin / neighbor / friend / auto insurance agent sold us life insurance that is also our retirement account.
I will try to address these key points and share with you my thoughts on life insurance.
What is the point of buying life insurance? The best way to express this, you buy life insurance if you love someone and want to take care of them and support them when you are gone. Imagine a two parent household suddenly losing the main money earner or worse, both parents. Who would take care of the family? Who would take care of the children? Who would pay for their needs? And who would pay for their college?
What if my wife is a stay at home Mom, does she need life insurance? Yes, if your wife were to die, who would take care of the children? Who would cook, clean and perform all of the duties that she performed? If you were forced to hire someone to do all of these activities over time it could amount to hundreds of thousands of dollars.
What if I have life insurance though my job? If you have life insurance through your job, that is a good thing. But do you have enough? A friend of mine told me that he was covered, he had good benefits at his job. After a little research we found that he only had $10,000 of life insurance. This was barely enough to cover the cost of a funeral, definitely not enough to provide for his two minor children. To calculate your life insurance needs I recommend multiplying your annual income by 7.5. This is generally a good target for the life insurance needs for a famuly.
Example: Amy and Frank are married with two small children. Amy works part time while the kids are in school earning $18,000 while Frank works full time earning $55,000 per year. They have a $250,000 30 year mortgage and have $35,000 in debt including car loans and credit cards. Both Amy and Frank should purchase life insurance. I always recommend having at least enough coverage to pay off all debt. Using the 7.5 rule mentioned above we can calculate how much they each need is to multiply their annual income by 7.5. Frank should purchase at least a $500,000 policy ($55,000 x 7.5 = $412,500) and Amy should purchase at least a $300,000 policy ($18,000 x 7.5 = $135,000) plus you want to cover all debt.
Although no formula is exact and no one can predict the future it is always better to over estimate your needs than the opposite.
Can I combine life insurance and retirement savings? Life insurance does not make for a good retirement vehicle nor does the opposite apply. Does your car make a good house? The answer is obviously no. If you need life insurance, buy a good term life insurance policy. If you need a good retirement plan, setup a good retirement plan. Don't try to make one item do both.
Divorce - I am getting divorced, why is a life insurance policy necessary? If you have children or if you are paying / receiving alimony a term life policy is a must. Many people opt for the return of premium rider which returns all of their money at the end of the term.
Example: John and Debbie are divorcing. John has agreed to pay Debbie $2,000 per month for alimony and child support for the next 15 years. They also want to help their children with college tuition. John should purchase a 15 year term life policy to protect his family. In the event John should die during this period his insurance policy could replace his monthly payments and help pay for the children's college education. * A nice option, if John takes the return of premium rider, at the end of the policy he will get his money back. It is almost like getting the insurance for free.
My final comment, life insurance is not the lottery. You should have enough to keep your loved ones in the life style they currently have. Don't view your death as your family hitting the lottery. You should purchase enough insurance to maintain their standard of living, not put them on "Life Styles of the Rich and Famous". Any extra money you would be wise to invest it for your future for you to enjoy with your family.
If you have questions please feel free to e-mail or call my office to discuss your insurance needs. I promise, I will not try to sell you any insurance products that you don't need. I treat each customer as if they were a family member and I never sell you an insurance product I wouldn't sell my mother.
Please direct any questions or comments to Keith via e-mail at Keith@KeithMurray.biz or by telephone at 561-741-8849.
Accelerated Death Benefit Option: Most insurance companies calculate age by using the age you are nearest to. Example: Insured is 45 and it is January, and the insured's birthday is in March. If the insurance company was calculating age nearest, the insured would be considered age 46 for the purpose of calculating rates. Also known as "living benefits." This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home. Availability and specifics of these riders vary by carrier and state. Age:
Assignment: The transfer of the ownership rights of a Life Insurance policy from one person to another.
Aviation Hazard: The extra hazard of death or injury resulting from participation in aeronautics. It usually does not include fare-paying passengers in licensed commercial aircraft. This generally will require paying extra premium or the waiving of certain benefits of coverage.
Backdating: A procedure for making the effective date of a policy earlier than the application or issue date. Backdating is often used to make the age at issue lower than it actually was in order to get lower premium. State laws often limit to six months the time to which policies can be backdated.
Beneficiary: The person designated to receive the death benefit when the insured dies.
Business Insurance: Policies written for business purposes, such as key employee, buy-sell, business loan protection, etc.
Buy-Sell Agreement: An agreement among owners in a business which states the under certain conditions, i.e., disability or death, the person leaving the business or in case of death, his heirs are legally obligated to sell their interest to the remaining owners, and the remaining owners are legally obligated to buy at a price fixed in the Buy-Sell agreement. The funding vehicles are either disability or life insurance or both.
Children's Term Insurance Rider: Provides term insurance to the insured's children. It is a flat premium for all his children and the benefit usually is not less than $1,000 or more than $10,000.
Collateral Assignment: Assign all or part of a life insurance policy as security for a loan. If the insured dies the creditor would receive only the amount due on the loan.
Conditional Receipt: This is the more exact terminology for what is often called a receipt. It provides that if premium accompanies an application, the coverage will be in force from the date of application, or medical examination, if any, whichever is later, provided the insurer would have issued the coverage at the rate applied on the basis of the facts revealed on the application, medical examination and other usual sources of underwriting information. This coverage usually has a limit until the policy is delivered and all delivery requirements are met. A life and health insurance policy without a conditional receipt is not effective or available until it is delivered to the insured and the premium is paid and all other conditions are met.
Contestable Clause: A provision in an insurance policy setting forth the conditions under which or the period of time (usually 2-4 years) during which the insurer may contest or void the policy. After that time has lapsed, normally two years, the policy cannot be contested. Example: Material misrepresentation in the application. The suicide exclusion on life policies also may apply during the same period..
Contingent Beneficiary: A person or persons named to receive policy benefits if the primary beneficiary is deceased at the time the benefits become payable.
Convertible (conversion): A policy that may be changed to another form by contractual provision and without evidence of insurability. Most term policies are convertible into permanent insurance.
Credit Insurance: Insurance on a debtor in favor of a creditor to pay off the balance due on a loan in the event of the death of the debtor.
Cross Purchase: A form of business life insurance in which each party purchases life insurance on each other.
Decreasing Term: A form of life insurance that provides a death benefit which declines throughout the term of the contract, reaching zero at the end of the term. Almost never sold any more because level term insurance is so much less expensive.
Delivery: The actual placing of a life insurance policy in the hands of an insured.
Double Indemnity: Payment of twice the basic benefit in the event of loss resulting from specified causes or under specified circumstances.
Entity Agreement: A buy-sell agreement in which the company agrees to purchase the interest of a deceased or disabled partner.
Evidence of Insurability: The medical and other information needed for the underwriting of an insurance policy.
Examination: The medical examination of an applicant for Life Insurance.
Examiner: A physician, nurse, or paramedic appointed by the medical director of a life insurance company to examine applicants.
Expiry: The termination of a term life insurance policy at the end of its period of coverage.
Face: The first page of a life insurance policy.
Face Amount: The amount of insurance provided by the terms of an insurance contract, usually found on the face of the policy. In a life insurance policy, the death benefit.
Fixed Benefit: A benefit, the dollar amount of which does not vary.
Free Look: A period of time(usually 10, 20, or 30 days, depending on the state) during which a policyholder may examine a newly issued individual life insurance policy, and return it in exchange for a full refund of premium if not satisfied for any reason.
Insurability: Acceptability to the insurer of an application for insurance.
Insurable Interest: You have an insurable interest in the life of the insured if upon the death of the insured you would suffer financial loss.
Insurance Policy: The printed form which serves as the contract between an insurer and an insured.
Insured: The party, who is being insured. In life insurance, it is the person because of his or her death the insurance company would pay out a death benefit to a designated beneficiary.
Insurer: The company that pays out the death benefits if the insured dies.
Irrevocable Beneficiary: A beneficiary that cannot be changed without his or her consent.
Key Person (Key Man) Insurance: Insurance on the life of a key employee whose death would cause the employer financial loss. The policy is owned and payable to the employer.
Lapsed Policy: An Insurance policy which has been allowed to expire because of nonpayment of premiums. In a cash value life insurance policy such as Whole Life or Universal Life the policy could expire because the cash surrender value reached were insufficient to cover cost of insurance payments are being made to replenish it.
Level Term Insurance: A type of term policy where the face value remains the same from the effective date until the expiration date, it would also mean a period of time the premiums would remain level. For example, the 5, 10, 15, 20, 25 & 30. However, after the level premium period most policies turn into Annual Renewable Term where the premiums increase annually.
The average number of years remaining for a person of a given age to live as shown on the mortality or annuity table used as a reference. Life Expectancy:
Life Insurance: An agreement that promises the payment of a stated amount of monetary benefits upon the death of the insured.
Medical Information Bureau (MIB): A data service that stores coded information on the health histories of persons who have applied for insurance from subscribing companies in the past. Most Life insurers subscribe to this bureau to get more complete underwriting information.
Mortality Charge: The charge for the element of pure insurance protection in a life insurance policy.
Mortality Cost: The first factor considered in life insurance premium rates. Insurers have an idea of the probability that any person will die at any particular age; this is the information shown on a mortality table.
Mortality Rate: The number of deaths in a group of people, usually expressed as deaths per thousand.
Mortality Table: A table showing the incidence of death at specified ages.
Mortgage Insurance: A life policy covering a mortgagor from which the benefits are intended to pay off the balance due on a mortgage upon the death of the insured.
Nonmedical (Non-Med): A contract of life insurance underwritten on the basis of an insured's statement of his health with no medical examination required.
Not Taken: Policies applied for and issued but rejected by the proposed owner and not paid for.
Occupational Hazard: A condition in an occupation that increases the peril of accident, sickness, or death. It usually will mean higher premiums.
Ownership: All rights, benefits and privileges under life insurance policies are controlled by their owners. Policy owners may or may not be the insured but need to have an insurable interest in the life of the insured at the time of application. Ownership may be assigned or transferred by written request of current owner.
Permanent Life Insurance: A term loosely applied to Life Insurance policy forms other than Group and Term, usually Cash Value Life Insurance, such as Whole Life Insurance or Universal Life.
Policy Fee: There are two calculations to determine the premium for term insurance. The Policy Fee which is a flat fee added to each policy and the rate per thousand times the number of thousands of death benefit.
Preauthorized Check Plan: A premium-paying arrangement by which the policy owner authorizes the insurer to draft money from his or her bank account for the payments. This is usually done on a monthly basis.
Preferred Risk: Any risk considered to be better than the standard risk on which the premium rate was calculated. Some companies are now offering degrees of preferred to reduce the premium rates even more. An extremely healthy person can now get extraordinary low rates.
Premium: The price of insurance for a specified risk for a specified period of time.
Primary Beneficiary: The beneficiary named as first in line to receive proceeds or benefits from a policy when they become due.
Provisions: Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract.
Rated: Coverage's issued at a higher rate than standard because of some health condition, or impairment of the insured.
Renewable Term: Term insurance that may be renewed for another term without evidence of insurability. Level term usually turns into renewable term with increasing premiums after the level premium period.
Replacement: A new policy written to take the place of one currently in force.
Revocable Beneficiary: The beneficiary in a life insurance policy in which the owner reserves the right to revoke or change the beneficiary. Most policies are written with a revocable beneficiary.
Rider: An attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage.
Standard Risk: A risk that is on a par with those on which the rate has been based in the areas of health, physical condition, and lifestyle. An average risk, not subject to additional charge / rate or restrictions because of health. At one time the best class of risk was the standard class. As the insurers improved their underwriting skills, they were able to define those in very good health and offer them better rates with the new preferred class. Now some insurers have even developed different levels of preferred.
Stock Purchase Agreement: A formal buy-sell agreement whereby each stockholder is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obligated to sell. This agreement is usually funded with life insurance.
Stock Redemption Agreement: A formal buy-sell agreement whereby the corporation is bound by the agreement to purchase the shares of a deceased stockholder and the heirs are obliged to sell. This agreement is usually funded with life insurance.
Term Insurance: It is the type of life insurance that provides protection for a specified period of time. It usually has no real cash value build up.
Underwriter: A technician trained in evaluating risks and determining rates and coverage. When an application is submitted to the insurer, it is the underwriter who gathers all the necessary information to determine whether a person is a preferred risk, a standard risk, or rated.
Underwriting: It is what the underwriter does to determine the class of risk an applicant will be placed in.
Universal Life: An interest sensitive life insurance policy that builds cash values. The premium payer has some flexibility as to amount and frequency of premium payments. It is a matter of considering 3 variables. The assumed interest rate, the cash surrender value and the premium payment plan. The policy is interest sensitive , and if interest rates change from the assumed interest, it will effect the other two variables. If you have a Universal Life Policy, you should have it evaluated to see if you need to increase premiums based on current interest rates. A fourth variable that has not been a factor but could be in the future, and the owner should be aware of, is the cost of insurance variable. Universal Life policies are usually structured assuming current cost of insurance rates. The insurance companies reserve the right to change those rates.
Waiver of Premium: A provision of a life insurance policy which continues the coverage without further premium payments if the insured becomes totally disabled.
Whole Life Insurance: Life insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained. The variable in a whole life policy is the dividend which could vary depending on how well the insurance company is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policyholder in the form of dividends. Policyholders can use the cash from dividends in many ways. The three main uses are: It can be used to lower or vanish premiums, it can be used to purchase more insurance or it can be used to pay for term insurance.
