Life Insurance Guide

Buying life insurance, disability income insurance, or critical illness insurance can be confusing – especially if you don’t understand what various types of products do or how they work. Symmetry Financial Group has developed this informational guide to help you understand the insurance products we provide, so you can make more informed decisions. In the sections below, you’ll find basic information about, and definitions for, different types of insurance policies, answers to frequently-asked questions about insurance, how to buy an insurance policy and what to expect from the process, who needs insurance, why you may need different coverage at different stages of your life, how to compare different types of life insurance, and much more. If you have questions or want more information about any of the information in this guide, your Symmetry Financial Group Independent Insurance Agent is another valuable resource.

What is the definition of life insurance?
Simply put, life insurance is an agreement you make with an insurance company to provide financial protection for losses and expenses that would arise if you were to die prematurely. You pay premiums to the insurance company to keep your policy in force. In exchange, if you die while the policy is still in force, the insurance company pays death benefits to your named beneficiary(ies). In most cases, those death benefits are income-tax free.

Are there different types of life insurance?
There are many different options when it comes to buying life insurance coverage. In some cases, a term life policy will make the most sense, providing a set amount of insurance coverage for a fixed time period. In other cases, a whole life or universal life insurance policy may be more advantageous, providing coverage designed to last for your entire lifetime along with a cash value savings component built right inside your insurance policy. Life insurance vehicles can also be used for retirement planning and helping your children or grandchildren get a smart start by protecting their future insurability. Your independent insurance agent can help you evaluate your coverage needs and design insurance protection to meet those requirements, while staying within your budget.

What does life insurance cover?
The primary reason for buying life insurance is to help protect your loved ones from potentially devastating financial consequences that could arise at your death.  Life insurance provides cash death benefits to the person or people you name as your beneficiaries, if you die while the policy is in force. Those death benefits are usually income-tax free to the recipient, and can be used for any purpose. Some common uses for life insurance proceeds include paying off debts, paying final expenses and funeral/burial costs, meeting tax obligations, making up for lost income and creating a financial legacy for loved ones.

Do I need life insurance?
Most people need some amount of life insurance coverage. For single people who don't have anyone else depending on their incomes, a minimal amount of life insurance can provide ready cash to pay for final expenses. People with spouses and/or children should consider buying life insurance to provide a financial cushion, so loved ones wouldn't need to necessarily change their standard of living if a death occurred. Life insurance also has practical applications for people with sizable estates and potential estate tax issues, as it can be used to create a source of cash to pay estate tax obligations and other expenses.

What happens if I don’t get life insurance?
You do not need to be in perfect health to qualify for a life insurance policy; you may qualify for insurance protection even if you have one or more underlying health conditions. Symmetry Financial Group is proud to represent dozens of insurance carriers. This means our Independent Insurance Agents have access to a variety of term and permanent insurance solutions. If one insurance company denies your application for coverage, your insurance agent can help by working to find other potential carriers willing to offer you the insurance protection you and your loved ones need.

Top 5 Things to Know About Life Insurance:

  1. Life insurance death benefits are generally 100% income tax free to your named beneficiaries (recipients).
  2. Life insurance proceeds paid to one or more named beneficiaries will pass outside of your will or trust, and outside of probate court proceedings.
  3. You can buy coverage for a short period of time (term insurance) or you can buy a policy designed to protect you for your entire lifetime (whole life and other permanent insurance policies).
  4. Cash value life insurance can help you save for retirement, children’s education, or any other purpose, in addition to providing valuable insurance protection.
  5. You may be able to obtain coverage even if you are not in perfect health!

Who Needs Life Insurance?

People at any stage of life can benefit from owning life insurance; not just retirees. Here are some of the many ways owning life insurance at various points in your life can be worthwhile:

  • Starting Your Career. When you’re just getting started in your career, you may not have family members who depend on your income yet. However, you should still have coverage that could pay for your final expenses and debts if you were to die prematurely. Life insurance is typically most affordable when you are young, so this may be the ideal time to plan ahead and buy universal life coverage that will provide insurance protection with a built-in cash value savings component.
  • Settling Down. Meeting the love of your life is an exciting time. If you decide to get married or combine households, you need to consider how your premature death might impact your spouse or partner. Your life insurance needs will likely be higher than when you were single, and your policy or policies should be designed to provide funds that could help your spouse or partner stay on solid financial footing in the event of your death.
  • Buying a House. If you are like most people, you will need to take out a mortgage loan when you buy a house. This can change your insurance needs. In addition to needing coverage to pay your final expenses, debts, and to protect a spouse’s or partner’s finances, you may also need mortgage insurance protection designed to provide funds to pay off the outstanding balance on your loan when you die.
  • Having Children. When you have children, you will likely want to explore insurance options that would provide enough funds to pay for their health care, living expenses, support, and education until they are adults, if you were to die prematurely. You may also want to consider providing funds your children could use to pay for college. In addition to re-evaluating your own insurance needs, your insurance agent can help you determine if purchasing a SmartStart insurance policy is right for your family.
  •  Empty Nesters. After children leave the house, your financial picture will likely change. You may no longer have to worry about funding children’s educations or paying off a mortgage. Instead, you may want to evaluate how Retirement Insurance products can help you supplement pension income, Social Security, and other retirement savings.
  • Retirement. Many retirees still need life insurance. Your insurance policy can pay for your funeral and other final expenses, provide liquid assets that could be used to pay federal and/or state estate taxes due at your death, create a charitable legacy, or generate an inheritance for future generations.

Mortgage Protection Insurance

If you have a mortgage on property you own, you may want to consider purchasing a mortgage protection insurance policy. This is insurance coverage designed to pay off your mortgage if you die prematurely. When you buy this type of insurance protection, you are giving your family valuable peace of mind, because they would not need to worry about how to make the mortgage payments if you weren’t there. In addition to covering your mortgage balance at your death, this type of insurance policy can also be structured to pay off the mortgage if you are alive but are critically ill or disabled.
Mortgage protection insurance vs. private mortgage insurance: what's the difference?
Although these two insurance products sound similar, they are actually different. Private mortgage insurance, or PMI, is designed to protect your mortgage lender from a scenario where you stop making payments and default on your loan. Your lender may require you to have this type of coverage if you purchase your home with less than 20% down. Mortgage protection insurance, on the other hand, is designed to protect your loved ones in the event you die, become ill or disabled and are unable to continue making mortgage payments as a result.

Is there life insurance to cover a mortgage payment?
Yes! Mortgage protection insurance offers life insurance protection designed to ensure your mortgage payments will continue to be paid if you die prematurely. This can provide valuable peace of mind to your loved ones, knowing they won't need to change their residence at an already difficult time. Some mortgage protection policies also offer coverage for homeowners who become disabled or are diagnosed with a covered critical illness.

Is mortgage protection insurance the same as homeowner’s insurance?
No. While both types of insurance policies are important, they are designed to protect you in different ways. Your homeowner’s insurance is property coverage designed to protect you against financial losses that can occur if your property is damaged by fire, water intrusion, lightning, wind, vandalism, and other covered events, or if someone sues you for damages after being injured at your home. Mortgage protection insurance is a life insurance product designed to protect your loved ones. If you die while the policy is in force, the insurance company will pay a lump-sum benefit to your loved ones so they can pay off the remaining mortgage balance on your home.

When should I get mortgage protection insurance?
If you have an outstanding mortgage on your property, you may need mortgage protection insurance. This type of life insurance policy can be especially valuable if you have a spouse, partner, or others who share your home and who could find themselves struggling to make mortgage payments if you were to die before the mortgage was paid in full. As long as you qualify for the coverage based on your health, you can purchase a mortgage protection policy anytime – even if it’s been years since you took out your mortgage.

Can my partner and I get a joint mortgage protection insurance policy?
Some insurance carriers offer joint life insurance policies. These can include “first-to-die” coverage which pays the death benefit if either policyholder dies while the policy is in force, and “second-to-die” coverage which only pays out if both of you die during the policy term. With access to insurance products offered by dozens of insurance companies, your Symmetry Financial Group Independent Insurance Agent can help you determine whether an individual or joint mortgage protection insurance policy makes the most sense and can help you shop for affordable coverage. In some cases, it can make more sense for spouses or partners to purchase two separate, individual policies.

Retirement Insurance

Buying retirement insurance is a smart move for anyone who needs the protection life insurance offers but also wants a way to supplement their retirement savings. There are two main types of insurance products that fall under the category of “retirement insurance”: annuities and indexed universal life insurance. An annuity can help your retirement savings grow much faster than it could sitting in a saving’s account, because it is tied to a market index. With an IUL, you’ll be secured by life insurance while you save for retirement through an added cash value savings component.  

Retirement Insurance vs. 401(k) Plans: Which is Best?

  • Both retirement insurance products and employer-sponsored retirement plan accounts can play key roles in helping you save for retirement.
  • Retirement insurance annuities can supplement your 401(k) plan, IRAs, and other savings by providing a steady income stream during your retirement years
  • Only indexed universal life retirement insurance can give you the added protection of life insurance coverage, offering an income-tax free cash death benefit to your loved ones when you die

Does retirement insurance cover long-term care?
Retirement insurance products, including annuities and indexed universal life insurance, are life insurance products rather than health insurance products. However, you can use accumulated cash value in an indexed universal life policy or retirement annuity assets to pay for any type of expenses you want, including paying for skilled nursing home or other long-term care services. Additionally, some life insurance policy also come with long-term care “riders”, providing a certain amount of long-term care insurance protection on top of life insurance coverage. Ask your Symmetry Financial Group Independent Insurance Agent about how various insurance products might meet your needs.

When should I get retirement insurance?
You are never too young to start planning for your retirement! In fact, life insurance products – including retirement insurance – are generally less expensive when you are younger and healthier. Buying a policy in your twenties, thirties, or forties means your savings will have more time to grow tax-deferred before you start using the funds. Don’t worry if you’re getting a late start on your retirement savings; most people qualify for retirement insurance products. Your Independent Insurance Agent can help you learn more about product options and help you get on the right path toward your retirement goals.

Do I need retirement insurance if I already have life insurance?
When it comes to insurance solutions, there is no one-size-fits-all answer. Many people who already have life insurance coverage can still benefit from retirement insurance products. The answer will depend on the death benefit on your existing policy, whether that’s term insurance or a cash-value life insurance product, and why you bought that coverage in the first place. You probably don’t want to short-change another goal by using an existing life insurance policy to help fund your retirement. Your Symmetry Financial Group Independent Insurance Agent can help you determine whether it makes sense to purchase retirement insurance.

How can I use life insurance to fund retirement?
There are actually several ways to use life insurance products to help fund your retirement. You could choose a whole life or universal life policy, either of which will allow you to accumulate funds using the policy's cash value component. Another popular choice is to use the Retirement Protection products available from Symmetry Financial Group that allow you to take advantage of the accumulation potential in annuities or indexed universal life (IUL) policies. These vehicles combine insurance protection with tax-deferred growth or with the option to tie growth to a market index, providing the potential for enhanced returns.

Term Life Insurance

Term insurance is affordable, short-term insurance coverage that you buy for a certain period of time, typically 10 - 30 years. Term insurance policies are typically the most affordable types of life insurance and are sometimes used in combination with universal life coverage to provide insurance protection your loved ones need today, with the understanding that part of the coverage will end when the set term of years ends. Unlike universal life coverage, there is no cash value component with term life insurance; 100 percent of your premium payments go to fund the cost of insurance – whether needed in the event of unforeseen tragedy or as a savings return in the event of the best outcomes

Term Life Insurance   Vs.  Universal Life Insurance

Term Life:

  • Coverage is for a set period of years, determined up-front   
  • Provides a set amount of insurance protection, but does not include a cash value savings component   
  • Generally, the most affordable type of life insurance with fixed, monthly premiums  
  • May be renewable when the initial term expires
  • Able to add additions like Return of Premium

Universal Life:

  • Coverage can last your entire lifetime or until the policy’s maturity date, as long as premiums are paid
  • Provides a set amount of insurance protection plus a cash value account that accumulates tax-deferred with a minimum guaranteed interest rate
  • Premium payments may be flexible, drawing on cash value as needed to keep the policy in force
  • Cash value can be withdrawn or borrowed and used for any purpose

How long is a term life insurance policy?
Term life insurance policies come in a variety of available policy terms, which means you can customize your insurance protection to truly meet your needs. Typical policy terms are between 10 years and 30 years. Term policies with shorter durations will likely be less expensive than those with longer timeframes. However, it’s also important to make sure you will have the coverage you need as long as you anticipate needing it. Symmetry Financial Group has relationships with dozens of well-known insurance carriers offering a variety of quality term insurance products.

What happens when term life insurance expires?
When you buy a term life insurance policy and outlive the policy term, you may have the option of extending coverage for a new term. However, be aware that the premiums can jump significantly when you exercise this option. That's because the premiums were originally based in part on your attained age when you took out the policy. The new premiums will be based on your attained age when the initial term expires. You may also have the option of converting an expiring term policy to a permanent policy. Talk to your insurance agent to explore options for your particular policy.

What happens if I can’t afford my term life insurance payment?
With term life insurance, 100 percent of your policy premiums go to pay the cost of insurance; there is not a cash value component like there is with universal life policies. That means that if you cannot pay your policy premiums, your policy will lapse and you will not have the insurance coverage you need. If your financial situation has changed and you are struggling to pay your term insurance premium, talk to your Independent Insurance Agent who can help you explore other solutions.

Does a term life insurance policy cover accidental death?
Yes! When you buy a term life insurance policy through your Symmetry Financial Group Independent Insurance Agent, you are purchasing life insurance protection that will pay policy benefits to your named beneficiary regardless of whether your death is the result of natural causes or if it is deemed accidental. This can provide much-needed peace of mind for you and your loved ones, knowing that you have the life insurance protection you need. As long as the life insurance policy is in force when you die, and as long as the circumstances surrounding your death are not otherwise excluded from coverage (for example, death by suicide within two years of the policy’s issue date is generally excluded), the policy will pay.

Critical Illness Insurance

If you were to suffer a heart attack next year or be diagnosed with cancer or another serious illness, would you and your loved ones have funds available to pay your regular ongoing expenses while you go through treatment and recovery, in addition to paying your medical bills? If the answer is “no”, you should ask your insurance agent about critical illness insurance. This type of insurance protection can provide the funds you need so you and your family could stay in your home and continue paying your bills. This type of policy pays out a lump sum benefit if you are diagnosed, helping relieve unnecessary financial strain.

Health insurance vs. critical illness:

  • Health insurance pays your medical providers for covered services, as defined in your health insurance policy. In contrast, critical illness insurance pays  a lump-sum cash benefit directly to the insured after diagnosis of a serious health condition.
  • You can use critical illness insurance proceeds to pay your insurance deductibles or out-of-pocket expenses not covered by health insurance.
  • Health events are a leading cause of bankruptcy in the U.S. Critical illness insurance can provide cash so you and your loved ones can meet your financial obligations even if you can’t work because of your condition.
  • Health insurance only pays for medical expenses; critical illness pays cash you can use for virtually any purpose.

Why should I get critical illness insurance?
Critical illness insurance is designed to pay a lump-sum cash benefit to you if you are diagnosed with cancer, have a heart attack or stroke, or have another serious health event covered by your policy. Having a critical illness policy can help you meet your regular, ongoing financial expenses, pay medical expenses not covered by your health insurance policy, or use the funds for any other purpose after a serious health event or diagnosis occurs. Having this type of coverage in place can remove added financial stress so you and your loved ones can focus on your recovery.

Can I get life insurance if I have a critical illness?
Learning you have cancer, heart disease, or another type of critical illness can be devastating and may leave you wondering how to protect your family from potential financial hardship if your illness was to result in death. Having a critical illness does not necessarily mean you will not be able to obtain life insurance, although you will likely not be able to obtain as much coverage as you desire and may pay high premiums for a policy. None of us own a crystal ball to predict what the future holds; therefore, it's best to buy life insurance when you are relatively young and healthy. You may be able to obtain insurance at more favorable rates and have the peace of mind that comes from knowing you are protected, no matter what life brings.

If cancer runs in my family can I get critical illness insurance?
Even if your family medical history includes cancers, heart conditions, or other serious medical conditions, you may still qualify for your own critical illness insurance policy. Sometimes, the fact that a loved one suffered from cancer can be a motivating factor to purchase a critical illness policy. If you wait until you have an active cancer diagnosis yourself, however, it will be too late to obtain coverage.

Is it possible to get critical illness insurance if I had a stroke?
If you previously had a stroke but rehabilitation efforts have been successful, you might qualify for a critical illness insurance policy. When the insurance company evaluates your application for coverage, they will need to know details about when you had the stroke, what your risk factors were, what treatments you received and the results of those treatments, your long-term health prognosis, and what your current risk factors for another stroke or other serious health condition are. If your stroke is recent, however, you may not be able to obtain coverage.

Disability Income Insurance

Disability insurance is coverage that can protect your income in the event you become disabled and are unable to work. The reality is that one in four of today’s 20-year olds will become disabled before reaching their full retirement age. If you buy disability insurance and become disabled, the insurance company will pay you a set amount of money each month during the period of disability, up to the maximum time frame specified in the policy. The monthly payments should replace a significant portion of your income so you can continue meeting your financial obligations.

Disability Insurance   

  • Pays a monthly benefit, based on your income, if you become disabled   
  • Can allow you and your loved ones to continue paying bills if you become disabled and are unable to work   
  • Can be purchased as a separate policy or included in a life insurance policy   
  • Monthly benefits continue as long as you are disabled, up to the maximum number of months specified in your policy   

Critical Illness Insurance

  • Pays a one-time lump-sum if you are diagnosed with a critical illness detailed in the policy
  • Can allow you and your loved ones to continue paying bills if you have a critical illness and face additional expenses your normal health insurance does not cover.
  • Policies typically include benefits for cancer, heart attacks, strokes, and may include heart disease, kidney failure, and additional conditions. These can also be purchased as a stand-alone policy or included as an addition to a regular life insurance policy.
  • Lump-sum policy benefit can be used for any purpose, including medical bills, regular financial expenses, travel, and more

Is disability insurance the same as workers compensation?
No, the two types of policies are different. Worker’s compensation is an insurance policy your employer maintains and is required under state law. If you suffer a job-related injury, worker’s compensation will pay for medical expenses and related costs while you are unable to work. Worker’s compensation may also provide additional benefit payments to you to make up a portion of your wages until you can go back to work. A disability insurance policy is a policy you purchase directly. A disability policy will pay you a portion of your wages if you become disabled and are unable to work, even if your disability is not job-related. A full comparison is outside the scope of this insurance guide, but your insurance professional can help you understand why you should consider purchasing disability coverage.

Why do I need disability insurance?
Learning you have cancer, heart disease, or another type of critical illness can be devastating and may leave you wondering how to protect your family from potential financial hardship if your illness was to result in death. Having a critical illness does not necessarily mean you will not be able to obtain life insurance, although you will likely not be able to obtain as much coverage as you desire and may pay high premiums for a policy. None of us own a crystal ball to predict what the future holds; therefore, it's best to buy life insurance when you are relatively young and healthy. You may be able to obtain insurance at more favorable rates and have the peace of mind that comes from knowing you are protected, no matter what life brings.

Who receives the cash payout for a disability insurance claim?
When you are unable to work because of a disability, your monthly obligations and expenses unfortunately won't just go away. If you buy a disability insurance policy from your independent insurance agent and later become disabled, the insurance company will make payments directly to you or to your designated payee. This can provide much-needed cash you can use to make up for lost income. Use disability claim benefits to pay your mortgage or rent, help with medical expenses, pay your regular monthly bills, or for any other expense.

Can I get disability insurance if I am already injured?
When an insurance company reviews applications for disability income insurance, they are weighing the likelihood that they will have to make benefit payments while the policy is in force. When they approve a policy, they are assuming the risk that you will become disabled. Unfortunately, if you wait until you are already injured and unable to work before applying for coverage, it will be too late to obtain coverage. The best time to get approved for a disability insurance policy is when you are healthy and able to work.

Universal Life Insurance

Universal life insurance, sometimes called “UL”, is flexible, permanent life insurance coverage designed project you through multiple stages of life. Part of the premium payments you make each month go to pay for the cost of insurance. The remainder is used to fund a cash value account that grows tax-deferred inside the policy. Universal life coverage can provide financial flexibility to policyholders, allowing for modified premium payments, policy loans, and withdrawals of accumulated cash value when needed. As long as premium payments are sufficient to pay for the cost of insurance, the policy will stay in force until your death or the policy’s stated maturity date, whichever comes first.

What is the main difference between accidental death and dismemberment vs life insurance?
Life insurance policies generally pay death benefits to the named policy beneficiaries regardless of how the insured died, although there are generally some exclusions for suicide occurring during the early years of a policy.  In contrast, accidental death and dismemberment policies only pay benefits if death occurred as the result of a covered accident, or if an accident caused dismemberment, as defined under the policy. While both types of policies would likely pay death benefits if the insured person died from an automobile accident, only the life insurance policy would pay if the insured died after battling cancer.

When should I get universal life insurance?
The amount you will pay for life insurance premiums is driven largely by your age and how healthy you are. Because none of us is getting any younger and we don’t know what’s around the corner from a health standpoint, the best time to buy life insurance is now. When you buy universal life insurance coverage at a young age, you will also benefit from the policy’s built-in cash value savings component. With more time for your funds to accumulate tax-deferred, the savings inside your policy will have more time to grow.

What happens if I miss a premium payment for my universal life insurance policy?
One of the key benefits of universal life insurance policies is their flexibility when it comes to premiums. Because cash value accumulates inside the policy, the policy owner may be able to occasionally miss a premium payment without causing the policy to lapse immediately. The cost of insurance would be withdrawn from the accumulated cash value to keep the policy in force. Of course, relying on this flexibility too frequently or for an extended period of time will likely mean that additional premium payments would be required in the future in order to keep the policy going.

Is life insurance necessary for young adults?
Young adults may not have families depending on them financially. However, they also generally haven't accumulated enough assets yet to be able to cover final expenses and funeral/burial costs. Life insurance can provide that protection, and can also be used to pay off debts in the event the insured dies, so his or her parents don't have to cover those types of expenses.  The cost of life insurance is also based on the insured's attained age when the policy is issued. Buying coverage at a younger age means getting more affordable coverage that can last a lifetime.   IUL’s also offer tax-free retirement funds and can be a good savings option for younger adults. They can also pair IUL’s with term policies with living benefits to make sure they maintain their retirement funds even if they develop a disease.

Is it more difficult to be approved for a universal life insurance policy?
Generally speaking, universal life insurance policies may require a more stringent underwriting process than term life policies for the same face amount. That's because a term life policy is designed to provide life insurance protection for a specific period of time, whereas universal life policies are designed to provide life-long protection, as long as premiums paid are sufficient to fund the policy. However, many carriers also offer "guaranteed issue" or "no exam" life insurance options that are easy to qualify for. However, going that route can leave you underinsured and can leave you paying more for your insurance coverage than you would otherwise need to pay.

SmartStart

Choosing Symmetry Financial Group’s SmartStart program can help you give your child insurance protection designed to grow with them over their lifetimes, as well as providing a mechanism to accumulate savings inside the insurance policy. Those savings grow until your child needs them, and tax-free funds can be used for virtually any purpose, including helping fund college education, buying a house, and more. With SmartStart, you are also protecting your child’s future insurability, so he or she will have valuable life insurance coverage for his or her entire lifetime as long as policy premiums are paid – regardless of any future medical conditions that may develop.

College Savings vs. SmartStart

  • SmartStart offers valuable insurance protection on your child’s life, helping protect their future insurability; traditional college savings vehicles cannot offer this protection.
  • Some college savings vehicles limit tax-advantaged withdrawals to qualified tuition expenses; SmartStart funds can be withdrawn for any purpose, even if your child doesn’t attend college.
  • Some traditional college savings accounts offer tax deductions for contributions. SmartStart contributions are not tax-deductible, but funds inside the cash value account grow on a tax-free.

Can SmartStart be used for something other than college savings?
Yes! One of the things that makes the SmartStart plan so attractive for many parents is that the funds inside the policy can be used for virtually any reason. Many parents purchase SmartStart with the intention of using the funds to help pay for their child’s college education. Plans can – and do – change, however. Funds in a SmartStart policy’s cash value account can be used to help your child buy a house or for any other purpose. Because the SmartStart policy is based on your child’s life, he or she could even maintain the policy in force and use accumulated cash value to help fund his or her own retirement!

At what age should I get SmartStart for my kids?
The best time to apply for SmartStart for your child is shortly after he or she is born. Because SmartStart is a life insurance product covering the life of your child, the cost of insurance will typically be lowest when your child is smallest. The sooner you establish a SmartStart policy, the longer the funds you set aside will have to accumulate tax-deferred for your child. This gives your money more time to work for your child’s future.

When can my child claim their SmartStart payout?
The funds set aside in a SmartStart policy’s cash value account are there for your child – whenever they are needed. Many families rely on the SmartStart savings balance to help defray the costs of college, but those funds could instead stay in the policy and be used for a down-payment on a house for your child, for graduate school, to pay for the costs of getting married, or even for your child’s own retirement. Until your child reaches the age of majority in your state, you will have control over the policy and its cash value, on your child’s behalf.

Is SmartStart the same as life insurance?
The SmartStart plan, available through Symmetry Financial Group, is a cash value life insurance solution designed to protect your child’s future insurability while allowing you to set aside funds that can grow tax-free until needed. Because a SmartStart policy covers your child’s life, insurance costs are typically inexpensive, giving you more funds you can use to fund the cash-value component of the policy. Your child will benefit both from having accumulated cash value savings that can be used for college or other expenses, and rom having permanent life insurance protection – regardless of any future health conditions that may arise.

Final Expense Coverage

Buying a final expense policy is a gift to your loved ones. Each of us is going to die someday. When we do, the funds for a memorial service or funeral, and burial or cremation, need to be paid. With the cost of an average burial in the U.S. approaching $10,000, not including final medical bills or funeral costs, this is no small expense. It can be difficult for families to come up with ready funds when their deceased loved one didn’t purchase final expense coverage. This type of insurance policy can also be used to pay valid debts and other expenses when you die, giving your loved ones a fresh start. And, these policies rarely require a qualifying medical exam.

Final Expense vs. Life Insurance

  • Final expense policies are a type of life insurance coverage designed to meet the policyholder’s final expenses, including the cost of burial or cremation, and a funeral or memorial service.
  • Non-final expense life insurance typically has a higher death benefit amount and is often used to create generational or charitable legacies, provide funds for estate taxes, and other larger goals.
  • Final expense insurance may be payable directly to a funeral home; other life insurance policies typically name individual family members as policy beneficiaries.

Do I need final expense insurance if I already have life insurance?
Even if you already have one or more life insurance policies, you may still benefit from purchasing a final expense insurance policy. That determination will depend on your current financial situation, insurance needs, and goals. An existing insurance policy may be sufficient to meet your needs. However, if that policy is a term insurance policy, you should consider what will happen at the end of the policy term. You could find yourself without the insurance coverage you need to pay for your final expenses when the time comes. Your insurance professional can help you evaluate your coverage needs.

What does final expense insurance cover (and not cover)?
Final expense insurance is a life insurance product designed specifically to help loved ones manage the cost of having to pay for a funeral or memorial service, cremation or burial. It is also common to use final expense insurance to pay for final medical expenses, outstanding debts, final tax obligations, the cost of administering an estate, and more. The death benefit for a final expense policy will be paid out in cash to your named policy beneficiary, free from federal income taxes. Your beneficiary can then disburse the funds in whatever manner makes the most sense.

How do I know if my family had a final expense insurance policy?  
When someone dies, it can be difficult to determine whether they had in-force life insurance, including final expense coverage. Sometimes, you can determine whether there was a final expense policy in force by looking through your loved one’s paperwork to find premium bills, policy statements, or other correspondence from a life insurance company. You may also find the answer by reviewing bank records or your loved one’s check register to see if he or she recently paid an insurance premium. If your family member worked with a Symmetry Financial Group Independent Insurance Agent, you can also contact him or her after your loved one dies to inquire about coverage.

How long does it take to receive a payout for a final expense policy?
Final expense policies are designed to pay the expenses of a funeral or memorial service, burial or cremation, and other costs that can arise when someone dies. Exact payout times for final expense policy death benefits vary from one insurance company to the next, but insurers typically pay policy benefits to your named beneficiary when they have received the “death claim” paperwork and have all of the information they need to process the claim, including a certified copy of your death certificate.

Life Insurance and Work

Life insurance offered through an employer sounds like an attractive part of a benefits package. In some cases, the group life insurance may come at no cost to the employee—prompting you to avoid getting supplemental coverage. Consider the following to make an informed decision about life insurance plans.

Life insurance versus a pension: which is best?
Both life insurance and pensions are designed to provide financial benefits. However, they are different in several key ways. Life insurance will pay a cash death benefit to your named beneficiaries when you die, giving them funds to pay final expenses and funeral costs, pay off debts, replace lost, and more. When you have permanent life insurance, there is also a cash value savings component, which can be a way for you to help save funds for retirement. In contrast, pension plans are designed to provide you with income in your retirement years. Benefit payments may stop when you die, or they may continue for your beneficiary's lifetime. When you are evaluating your options for providing financial protection, remember that it doesn't need to be an "either/or" decision. You can have both life insurance and pension benefits.

I have life insurance through my job, why do I need another policy?
Getting supplemental life insurance is strongly recommended, even if you have group coverage through your job. Group life insurance plans may only offer minimal coverage. For instance, a group life insurance plan can start as low as $25,000. This amount may assist with funeral costs, but won’t provide adequate financial assistance to your beneficiaries. The amount of debt you currently have and your annual salary determines proper coverage amounts. Also, you should take into consideration any future expenses such as childcare and college tuition if you have young dependents. Although a $500,000 policy may sound like a lot of money, this may not be enough to provide for long-term expenses.

Why does my job offer a life insurance plan?
Life insurance plans add value to an employee benefits plan. Job candidates who are comparing company benefits will consider whether or not a company provides life insurance benefits. Group life insurance coverage is likely to draw in more candidates into the hiring pool. This helps employers find and retain valuable staff members. Moreover, certain employers may be required to offer life insurance policies. For instance, most law enforcement agencies will include life insurance as part of their benefits package since the job is considered high-risk.

Why would a company take out a life insurance policy on an employee?
Businesses are able to take out what is known as corporate-owned life insurance or COLI against an employee. For this type of policy, benefits are paid out to the employer upon the death of the employee. No family members of the deceased or other beneficiaries are able to collect on this type of policy. The idea behind the creation of COLI policies was to protect businesses that would face serious financial losses if key employees died. The insurance policy would protect a company during the period of time when they attempted to recruit and train a replacement. After some abuse in the 1980s by companies who attempted to insure all employees as a way to gain untaxed windfalls, tougher laws were enacted. Consent is required in most states along with employers having to provide proof that financial loss is likely upon the death of the insured employee.   

Is it better to have one large life insurance policy on my own, or one through work and one on my own?
The policies offered through your employer will decide the best route to take. If the life insurance coverage is free from the employer, then you should enroll and then take out a supplemental policy to bridge any coverage gaps. However, you may find the cost not worth it to buy life insurance directly from your employer. For one, you may find a better rate on your own. Secondly, you could run into issues if you don’t stay at your current employer. You would have to look into options for converting the policy from a group to individual—causing costs to surge. Plan options from an employer may be limited too with only term-life policies be presented. If you’re looking for whole or universal policies, then you’ll want to find plans outside of work.

Life Insurance Financial

What is the cost of life insurance?
Many people put off buying life insurance because they think they are not going to be able to afford it. In reality, life insurance is usually much more affordable than people think it will be. The cost of your policy will be based on many factors, including your attained age and overall health at the time you apply for coverage, what type of policy you buy (i.e. term vs. permanent coverage), and whether you select optional policy options. Your independent insurance agent can help you find policy options that meet your insurance needs - and your budget.

How are life insurance premiums determined?
The amount of policy premiums you will need to pay to keep your life insurance policy in force will depend on a number of factors, including the type of policy you are buying, how old you are, and your health and lifestyle.  Generally speaking, permanent life insurance premiums are higher, because you're buying coverage designed to last your lifetime, rather than just "renting" term insurance coverage. Premiums for a young, relatively healthy individual will be cheaper than those paid by an older person with some past or potential health complications.

Are life insurance premium payments tax deductible?
Premium payments for individual life insurance policies are never tax deductible. In certain circumstances, business owners can deduct premium payments they pay on life insurance policies for employees (other than the business owner or anyone else with a financial stake in the company), as long as the business is not the beneficiary of the policy. The rules and limitations are nuanced, so it's best to consult with a tax professional to determine tax deductibility for your particular situation. The real tax benefit for life insurance lies in the tax treatment of death benefits. In most cases, the payments to beneficiaries of life insurance policies after the death of the insured person are income-tax free to the recipient(s). However, interest on a life insurance policy generally must be reported as ordinary income by the recipients.

How can I use life insurance to save for college?
Life insurance can do much more than provide tax-free cash benefits when you die. It can also be used to help save for - and to pay for - college expenses for you or your children or grandchildren. When you purchase permanent life insurance, including whole life and universal life policies, you have the opportunity to build up a cash value inside of the policy. If you start funding this cash value account when your children are small, you'll be amazed at how it grows over time. When it's time to start paying for college, you can borrow against the cash value or take a partial distribution from it.

Is life insurance expensive?
The price you will pay for life insurance premiums depends on a number of factors, including your age and health when you apply for coverage, the type of policy you apply for (i.e. term or permanent insurance), and how much insurance coverage you want. Many people are pleasantly surprised to find that life insurance is more affordable than they thought it would be. Your Symmetry Financial Group Independent Insurance Agent, as an independent agent, will work with you to find and tailor life insurance coverage that meets your needs and your budget.

Millennials participating in the LIMRA study were noted for overestimating life insurance premiums by as much as five times the actual cost. The surveyed group expressed uncertainty about premium amounts and coverage options offered. Here are just a few things you may be spending money on that actually cost more than a term-life insurance policy:
•    Cup of Coffee: Your daily Starbucks run may have you spending at least $4 a day on coffee.
•    Gym Memberships: The $30 and up that you spend on an unused gym membership could go toward a more worthwhile life insurance policy.
•    Designer Jeans: Go with a no-name label and save $50 or more on jeans that looks just as great.
•    Entertainment: Digital movie memberships, gaming subscriptions, magazines, theater tickets, books and more add up month after month.
•    Cigarettes: Households with smokers may spend close to 14 percent of their budgets on tobacco products.
•    Alcohol: Even if you pick up the cheaper bottles of wine, you could be spending a hefty amount of your weekly budget on alcohol.

Buying Life Insurance Coverage

Do I have enough life insurance coverage?
According to Bankrate’s Money Pulse Survey, only about 60 percent of Americans own life insurance. What’s worse, nearly have of that number may not have enough insurance coverage. Twenty one percent of people with coverage have policies worth $25,000 or less, while 47 percent reported that their policies’ death benefits are $100,000 or less.

How do I know how much life insurance I need?
There is not a "one-size-fits-all" answer when it comes to knowing how much life insurance you need. Everyone buys life insurance coverage for different reasons. The right amount of coverage for you will depend on your current and estimated future financial situation, and on your goals for the insurance proceeds (i.e. pay final expenses, provide estate liquidity, leave a charitable legacy, pay off debts at death, save for children's college expenses, replace your income for a period of years, etc.) Talk to your insurance agent to discuss what amount of life insurance will help you meet your goals and needs.

What is important to know when buying life insurance coverage?
When you buy an insurance policy, you are entering into a legal agreement with the insurance company. Your obligations are to be truthful during the application process and to pay the policy premiums on time. The insurance company, in return, promises to pay policy benefits according to what’s stated in the underlying policy.

For a life insurance policy, the insurance company will pay your named beneficiary the death benefit amount as long as you kept up your end of the agreement by keeping the policy in force, and as long as the manner of your death was not specifically excluded in the policy. For example, life insurance policies typically will not pay benefits if the insured person commits suicide within a two-year period after the policy is issued.

The amount you will pay for life insurance protection is based largely on your age when you apply for coverage, and on your health. If you are a smoker or have an underlying health condition, you may pay more for premiums. People with certain types of health conditions may be denied coverage from some insurance companies but approved by others.

As part of the application process, you may be required to undergo a medical examination. This helps insurance companies offer you the most competitive rates based on your current state of health.

Can I calculate the amount life insurance coverage should I buy?
There are different approaches to determining how much life insurance protection to buy. Some people suggest multiplying your current income by 10, which would theoretically provide years of protection for a spouse or significant other to continue their current style of living after you die. If you have minor children and would want to help fund their college educations even if you died prematurely, consider adding a set dollar amount to the number you come up with when multiplying your income by 10.

Another approach is to add up the cost of final expenses, valid debts including outstanding mortgage balances, the estimated cost of paying for your children’s college education, and an income figure designed to replace your income for a specified period of years.
Everyone’s situation is different. Your insurance professional can help you evaluate various approaches to come up with a coverage number that makes sense for your situation.

Can I use life insurance to pay for long-term care?
If you don't have a stand-along long-term care insurance policy, you may be wondering what your options are for paying for your own long-term medical care, should the need arise. There are actually several ways you can use life insurance to pay for long-term care. First, you may want to explore a combination life insurance/long-term care insurance policy.These types of policies are designed to allow you to receive policy benefits in some form, whether that's through payment of your long-term health care, or through death benefits to your named beneficiaries after you die. Your life insurance policy may also include a provision allowing you to take accelerated death benefits to pay for your own long-term care, under certain circumstances. Life settlement options may also be available. Talk to your insurance professional to explore what options are available to you.

The amount of life insurance one person needs will likely differ from what their friend, neighbor or co-worker needs. Your Symmetry Financial Group Independent Insurance Agent will help you determine your coverage needs based on a variety of factors, including the following:

  1. Your income
  2. Your age
  3. Family (i.e. spouse, minor children, other dependents)
  4. Debts and types of debts
  5. Your monthly financial expenses
  6. Average final expense cost in your area
  7. Charitable goals or other legacy wishes
  8. Existing insurance coverage, including employer-sponsored coverage

Getting Approved for Life Insurance

How long does it take to get approved for life insurance?
The length of time between when you apply for life insurance coverage and when your policy is approved and issued can vary, depending on a number of circumstances. Life insurance applications go through an "underwriting" process. This is an opportunity for the insurance company to evaluate their potential risk in issuing the policy. In certain cases, underwriting is streamlined and automatic, so you may be approved for coverage almost immediately after applying without having to provide evidence of insurability. In other cases, underwriting can take any where from a couple of weeks to a couple of months.

What are some common reasons life insurance claims are denied?
Life insurance is designed to provide death benefits after the named insured person on the policy dies. However, there are certain circumstances where death benefit claims will be denied. The most common of these is because sufficient premiums were not paid to keep the policy in force. Other potential reasons for denying a claim is a finding that the insured person lied or materially misrepresented a fact on the application for coverage, or when the beneficiaries fail to submit required documentation to support their claim. Finally, suicide in the early years of a policy (usually the first two years) is also usually not covered.

Is it possible to get life insurance with diabetes?
Life insurance underwriting decisions are based on a number of factors. Having diabetes or other health conditions is not necessarily a bar to getting coverage. However, someone with significant health issues or underlying conditions may not be approved. If you are approved for coverage, you may need to agree to pay higher premiums to keep the policy in force.

Why is life insurance for children important?
When you buy life insurance on a child's life, you are doing more than ensuring funds would be available to cover the child's final expenses, if he or she died prematurely. You are also helping to protect your child's future insurability.  Nobody knows what lies ahead for your child's health; when he or she has permanent life insurance in place at an early age, that policy can remain in force for your child's entire lifetime, as long as sufficient premium payments are made - even if they later develop a health condition that makes them uninsurable.

Can you get life insurance with pre existing medical conditions?
Possibly. Having a pre-existing health condition is not an automatic bar to being able to obtain life insurance coverage. When you apply for coverage, you will need to provide information and answer questions about the condition, and if approved for coverage, you may pay higher premiums to obtain the policy. One of the benefits of working with an independent insurance agent is that he or she can easily shop around to find different policy options for you to consider, so you can evaluate them and make an informed decision. Even if one carrier says "no", odds are good that another carrier will say "yes!"

What are some reasons for not getting approved for a life insurance policy?
Each insurance company is different, but these are some potential reasons you could get denied a life insurance policy:

  • Obesity: Obesity is associated with many serious health complications, such as heart disease and diabetes, and may lead to a denial.
  • Income Disparity: If you make less than $25,000 a year, there’s no justifiable reason for you to need a million dollar plus insurance policy.
  • Substance Abuse: Certain medical tests may demonstrate that you’re struggling with addiction. For instance, high liver function levels could be a marker for alcoholism.
  • Spotty Driving Record: If you have a history of getting into multiple accidents behind the wheel, that could be a reason for coverage being denied.
  • Hazardous Job: If a life insurance carrier considers your line of work dangerous, you could be denied coverage. Examples include fisherman, loggers, truck drivers and electricians.

Life Insurance Beneficiary

How does life insurance work when someone dies?
Life insurance is designed to cover someone's life, providing a cash death benefit when the insured person dies. After someone dies, the named policy beneficiaries will need to submit the insurance company's required death claim forms, a certified copy of the decedent's death certificate, and other information as required by the insurer. Your independent insurance agent can help your beneficiaries through every step of the process, helping them select insurance policy settlement options that make sense.

Does a beneficiary receive annuities?
An annuity owner can assign a beneficiary upon his or her death. Within the contract, the owner may be asked to specify who will receive any money left over in the event of his or her death. The insurance company would then either distribute the money as a lump sum or over a set period of time in installments.

How do you select a beneficiary for your life insurance policy?
When you apply for a life insurance policy, you will be asked to name one or more policy beneficiaries. Your beneficiaries are the people who will receive the policy's death benefit, if you die while the policy is in force. The choice of beneficiary is an individual decision. However, most married people or people in committed relationships name their spouse or partner as their primary beneficiary. You may also name one or more secondary or tertiary (third) beneficiaries, who will inherit if your first-named beneficiary dies before you. For example, the beneficiary designation for a married person with two children might say: Primary beneficiary: 100% to my spouse; Secondary (or contingent) beneficiary: 50% to my son and 50% to my daughter. Talk to your insurance agent about the best way to ensure your policy beneficiary designations accurately reflect your wishes for the distribution of policy proceeds.

How does someone know if they are the beneficiary of a life insurance policy?
Insurance companies are obligated to honor the terms of life insurance contracts by paying death benefits to the named beneficiaries when the insured person dies. In some cases, family members or other beneficiaries know they have been named, and they reach out to the insurance company to begin the claims process. In other cases, family members might find an old policy statement or premium bill in their deceased loved ones' records and may reach out to the insurer to find out if the policy was in force. In still other cases, insurance companies themselves need to make a concerted effort to locate policy beneficiaries after a policyholder dies. If you purchase a life insurance policy, try to provide as much current contact information as possible about your beneficiaries, in order to help facilitate payment of policy benefits in the event of your death.

Can you have multiple beneficiaries?
In some cases, you could assign a single beneficiary with 100 percent of the payout going directly to the one person. However, you also have the option of dividing payouts among multiple beneficiaries. For instance, if you have four children, you could give each of your children 25 percent of the proceeds. Another option is to assign secondary and tertiary beneficiaries. These are backups in case the primary beneficiary is unable to receive the money.

What are some things to consider when choosing your beneficiary?
Life insurance plans are meant to benefit others in case of your death. Consider the people in your life whose welfare is most important to you. For instance, you want to make sure your spouse and children are well provided for. If you are a business owner, you may want to ensure any partners can keep the company afloat. Another option when it comes to assigning beneficiaries is creating a trust and having someone manage the trust. Trusts are a good idea when beneficiaries are small children. The trust manager will use the money in the trust to provide for them until they become of age.

Life Insurance Agents

Who sells life insurance?
Life, disability, and critical illness insurance are complex financial products, regulated by state laws. Licensed insurance agents contract with insurance carriers to provide their products to consumers. At Symmetry Financial Group, our independent insurance agents have completed all required pre-licensing training and post-licensing continuing education to understand the complexities and nuances of various insurance products. Our insurance professionals are licensed and contracted to offer life insurance and other insurance products from more than 30 well-respected insurance carriers.

How are life insurance companies regulated?
Each state in the U.S. has its own insurance department, which regulates life insurance companies, policies, agencies and producers (salespeople.) Rules, regulations and laws are state-specific and vary from state-to-state. Variable life insurance products, which are considered hybrid insurance/securities products, are regulated by both state insurance departments and the Securities and Exchange Commission (SEC.) To learn more about how your state regulates life insurance products and services, you can use this resource provided by the National Association of Insurance Commissioners to find your state's insurance department online.

How do you become a life insurance agent?
Each state has different requirements in order to become a life insurance agent. In many states, you need to pass a licensing examination. Prior to the examination, you complete a certain number of course hours. The course hours prepare you for the examination and are also typically a pre-requisite. Background checks may also be required by state law and include fingerprinting. The state may require a certain number of continuing education credits to ensure you stay informed about laws that could affect life insurance policies.

Do you need a license to sell life insurance?
Yes. Most states require a licensing examination to sell life insurance. Furthermore, you may need to apply for a license renewal after a set period of time to remain active as an agent.

What does a life insurance agent do on a daily basis?
A large part of a life insurance agent’s day involves getting in touch with prospective clients. This means reaching out via phone, email or social media. In-person meetings may be scheduled with clients to discuss coverage options and determine ways they can meet long-term financial goals. Presentations could be given to businesses who are looking at group coverage options. Heavy research is also required since agents want to present clients with competitive rates. Paperwork will also need to be reviewed and processed by a life insurance agent.

What are the top reasons to be a life insurance agent?

  • You are helping others. Protecting others from experiencing financial strain is a noble profession. Insurance benefits can help a child get through college or prevent the family home from going into foreclosure.
  • You can have solid earnings year after year. According to the Bureau of Labor Statistics, insurance agents at the top of their field earn more than $125,000 annually.
  • You have scheduling flexibility. Insurance agents may have the option to work on a part-time or full-time basis. You could also have the ability to work from home part of the time.
  • You can get started quickly. Only a few months of preparation are required for agent licensing.