life insurance

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Frequently Asked Questions (FAQ)

Q: How much life insurance should you own?

A)��� Rough rules of thumb suggest an amount equal to 6 to 8 times your annual earnings. However, there are other things to consider when determining how much life insurance you need. Important factors include: income sources (and amounts) other than salary/earnings; whether or not you�re married and, if so, your spouse's earning capacity; the number of people who are financially dependent on you; the amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan, whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need), etc. Talk to an insurance adviser for a precise calculation of how much life insurance you need. Back op

Q:� Life insurance for a spouse or children?

A)��� Typically, this should not be done in lieu of buying appropriate amounts of life insurance on the family breadwinner(s). It is extremely important that you protect the earning capacity of the primary breadwinner, if possible, with the right amount of life insurance before considering life insurance on children or spouse. In a dual-income household, it is important to protect the earning capacity of both spouses. Life insurance for a non-wage earning spouse is often recommended for help in paying for household services lost if that spouse dies. ack to Top

Q: Term Insurance vs. cash value life insurance

A)��� Term life insurance pays out in the event of death. Cash value, which is more costly, has a cash amount you can withdraw before death. Which one is for you will depend on your circumstances. First answer an insurance question - how much life insurance should you buy? Then look at the financial aspect � what type of policy should you buy? The amount of life insurance you need may be so large that the only way you can afford it is by buying term insurance, which carries a lower premium than cash value policies. If your ability (and willingness) to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, you can consider the financial decision - which type of policy to buy. Important factors affecting the financial decision include your income tax bracket, whether the need for life insurance is short-term or long-term (20 years or longer is long-term), and the rate of return on alternative investments. ack to Top

Q: Am I considered a smoker?

A)��� Because of the high health risk associated with tobacco use, the cost of life insurance is higher for users than non-users or applicants that have not used tobacco products for an extended period of time. In general, this period of time is one year for preferred and standard non-user rates and three years for preferred plus rates (this varies slightly from company to company). However, some insurance companies waive certain kinds of tobacco use such as occasional cigar or pipe smoking.

Q: How long does it take to get insured?

A)��� Underwriting begins when we receive your signed application in our office. Typically, underwriting is a 6 to 8 week process, but there may be slightly longer periods in certain cases. Back to Top

Q: What is Level Premium Guarantee?

A)��� It is the guarantee that your term life insurance premium will not increase (remain level) for the term of your policy.

The general rule that we recommend is to purchase a term policy that matches the number of years that the coverage is required. If you are protecting the future of your young family then you would consider a twenty or thirty year term life insurance premium guarantee. Back to Top

Q: If I�m replacing an existing life insurance policy, what should I do?

A)��� You should keep your existing policy until you have received and reviewed your new policy and then cancel your old policy.  Top

Q: Is it safe to buy life insurance over the Internet?

A)��� Absolutely. The Internet is only a money saving communication vehicle. All payments are made by check to the insurance carrier you select. Back to Top

Q: Will I have to deal with commissioned salesmen?

A)��� Absolutely not. The vast majority of the process will be completed online so you will only need to deal with an agent when you have decided on a policy. Back to Top

Q: Can I borrow money against my life insurance policy?

A)��� If you own a cash value life insurance policy, you can take out a loan against the cash value you have built up in the policy. Of course, you will have to pay back the loan with interest. If you die before you pay back the loan, the balance that you owe will be deducted from the death benefit.

If you own a term life insurance policy, you cannot take out a loan against it because you do not build up any cash value in a term policy. For more information, click here. Back to Top

Q: What are the advantages of an annuity?

A) There are many, but the most important are:

  • Tax-deferred interest accumulation. The interest earned on an annuity ����premium is not subject to current taxation until it's withdrawn from the Contract. This allows for a potentially greater cash build-up than if income taxes were payable on accumulating interest as earned.
  • Competitive current interest. Current annuity interest rates generally are competitive with those from other fixed-interest vehicles.
  • Safety-guarantees. The insurance company guarantees the value of your annuity. All fixed annuities offer a minimum interest rate guarantee.

Q: At What Age Should Long-Term Care Insurance Be Purchased?

A) �Long-Term Care insurance usually is purchased at age 45 or older. However, Long-Term Care cost can arise at any time. For example: accidents, strokes, Multiple Sclerosis, and Parkinson's disease could arise at any time. Long-Term Care cost can effect even those in their 20's and 30's.

Q: Who May Need Long-Term Care?

A)��� The need for long-term care may begin gradually with the need for daily help with bathing and dressing, or may suddenly occur after a major illness, such as a stroke, a broken hip or a heart attack. Back to Top

Q: Who Provides Long-Term Care Services?

A) Traditionally, family members provide care for the individual in need. As their illness progresses, the individual may need more care than the family member(s) are willing or able to provide. The individual may require homemaker services at home, or need to be placed outside the home; such as in an assisted living facility, adult day care center, hospice, or a nursing home Back to Top

Q: Why Would an Individual Purchase a Long-Term Care Insurance Policy?

A) People purchase a Long-Term Care Insurance policy for several reasons. A few that should be considered are:

  1. To avoid being a burden and prevent stress on spouse and/or family who may not be able to provide the emotional and physical care needed.
  2. To help preserve independence and freedom of making choices rather than being dependent upon others.
  3. To help conserve an estate and retirement assets, especially for a spouse, while protecting children's inheritance.
  4. To help fund high-quality long-term care.
  5. To help avoid having to move away from a hometown area and giving up friends and physicians.
  6. Overall, the investment is very small in relation to the benefit received.

Q: In Purchasing Long-Term Care Insurance, How Is It Determined What Benefit Amount Will Be Needed?

A) When considering Long-Term Care Insurance, think about two different situations.

   What is the cost if the policy is used and what is the cost if the policy is not used? �With this in mind, there is the possibility of purchasing a policy that pays for 60 to 70 percent of the current cost of a stay in a nursing home. This will reduce the premiums, however 30 or 40 percent of the costs will be incurred personally if a claim arises. An example of this is as follows:

  1. Assume a Nursing Home Cost Per Day of $125.00 or $45,000 per year
  2. A 60% benefit would pay $80.00 per day or $29,000 per year
  3. A 70% benefit would pay $90.00 per day or $32,850 per year

Consideration should be given to paying a higher premium for a policy that will pay up to 100% of Room and Board costs.

Q: Who wants to own an annuity?

People who want a safe way to reduce taxes; people who want to decide when to pay taxes; people wanting to save money for retirement. Back to Top

Q: Why do Medicare Supplements premiums increase?

A) Your Medicare Supplement insurance benefits change to match the changes in Medicare. Medicare Supplement insurance policies are designed to keep up with the Medicare increases and it may mean your premium needs to be adjusted accordingly. B Top

Q: How do I decide which coverage is for me?

A) That can depend on your budget and needs. Another important factor can be whether or not your medical provider accepts Medicare assignment or if you are responsible for "excess" charges, not to exceed the limiting charge. Excess charges are what Medicare considers above the reasonable and customary charges for a particular service.

You may also want to consider whether you need coverage for travel outside the United States, at-home recovery and preventative care. If any of these are important to you, you may want to look at the more comprehensive coverage. Back to Top

Q: I purchased a Medicare supplement policy three months age, and now I want to change to another plan. I gave the agent a check for one year's premium. Is the company obligated to return my premiums?

A)��� For policies issued or renewed on or after October 1, 1991, an insurer must promptly return the unearned portion of any premium paid, in the event of cancellation. If the insured cancels, the earned premium will be calculated using the short rate table filed with the Department of Insurance. If the insurer cancels, the earned premium shall be computed pro rata. Prior to October 1, 1991, there were no statutory provisions requiring companies to refund premiums. Back to Top

Q: How long do I have to decide whether or not I want to keep my Medicare supplement policy?

A)��� You have a 30-day "free-look" period from the date the policy is delivered to you. During this time, the company will fully refund all premiums paid, if cancellation is requested in writing by the insured. Back to Top

Q: I am 65 years old and still working. I am covered under a group plan and do not need a Medicare supplement policy at this time. Will I lose my right to a guaranteed issue Medicare supplement policy if I do not purchase it now? A)��� No, upon retirement you have a two-month open enrollment period. However, you may want to elect Medicare part B to avoid a premium penalty for deferring enrollment in part B. Back to Top

Q: What is the difference between Mortgage Insurance, Mortgage Disability Insurance and Mortgage Life Insurance?

A)��� Mortgage Insurance (MI) is insurance written by an independent mortgage insurance company (MIC) protecting the lender against loss incurred by a mortgage default. Often, MI is required by lenders when the Loan-to-Value ratio (the amount of the loan divided by the value of the home) is greater than 80%. Mortgage Disability Insurance is a disability insurance policy that will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time. Mortgage Life Insurance is a term life insurance policy that covers the declining balance of a loan secured by a mortgage, and is payable upon death of a covered borrower.

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