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Two Ways That Life Insurance Helps Our Communities

What would your family do if you were no longer there to help support them? For many families throughout the country, this is a question that is sometimes asked too late. Maintaining a way of life can become extremely difficult after the death of a spouse or partner — not just emotionally, but financially as well.

But did you know that life insurance also plays a role in our communities and national economy?

Reduces Poverty Levels

Losing a loved one is hard enough without the added stress of associated financial hardship. Life insurance can help ease that burden. Payouts from life insurance policies can provide essential financial resources to help lift a family out of poverty or prevent them from entering into poverty altogether after the death of a loved one.

In 2018, the life insurance industry paid out more than $120 billion to beneficiaries. These payouts are designed to help families maintain their current way of life while they adjust to their new reality — helping to pay for everything from mortgages and estate taxes to child care.

Increases Home and Neighborhood Value

No one should be forced into making life-changing decisions while grieving the loss of a family member. In many households, this sudden loss may mean uprooting a family altogether to somewhere more easily supported by a single income.

With the help of life insurance payouts, families can take their time when deciding whether to relocate due to loss of income – while still being able to make necessary repairs and keep up with maintenance. Homes that have been properly maintained and cared for over the years not only result in higher property values, they also increase desirability of the overall neighborhood.

According to Prudential’s The Socioeconomic Impact of Life Insurance 2017-2018 report, “a $1 permanent increase in payouts results in a 47-cent reduction in federal spending on poverty and unemployment programs — plus a $22 increase in the aggregate value of home prices.”

Taking the Next Step

Are you interested in taking the next step to help protect your family?

Our licensed benefits counselors are standing by to help whether you are ready to enroll or have a few questions first.

To learn more about term life insurance, or the other benefits and services available to members of the Washington State Bar Association, please visit wsba.memberbenefits.com/term-life-insurance/.

young happy couple in a kitchen

4 Questions to Ask When Purchasing Term Life Insurance

Once you have determined you need term life insurance, it’s time to choose a policy. Be aware that many policies differ on certain points, so you’ll want to ask a few important questions before purchasing a plan. The following questions can be answered by your agent or found within the information that has been provided to you concerning the policy.

How Long Should My Policy Last?

Term life insurance policies last for a specific amount of time — most policies last for 10, 20, or 30 years. Your decision on which length of time to pick depends on why you need life insurance in the first place. Some people purchase term life insurance just to make sure that short-term debts would be covered in the event of their death. Other people are looking to take care of long-term obligations such as paying off a mortgage or putting children through college. For these types of goals, a 20 or 30-year plan can be more beneficial. Insurance providers offer a variety of terms to help meet the individual needs of each client. This makes it easy to find a plan that fits your particular goals and needs.

What are the Exclusions?

All insurance policies will have exclusions or special circumstances that could affect your family’s ability to receive payments at the time of your death. Some exclusions can nullify your death benefits altogether. These exclusions will vary from carrier to carrier, so it is important to ask specifically which exclusions are included in the policy you are reviewing.

Some of the most common exclusions are suicide, dangerous hobbies or occupations, an aviation exclusion, and an act of war exclusion. Hobbies are one of the most varied types of exclusions, so make sure you check the details on this if you participate in any hobbies that could be deemed risky.

What Happens When My Policy Expires?

Because term life insurance policies are for a set period of time, most individuals who purchase them will live to see their expiration. If you think you may want to continue having life insurance coverage after it expires, you’ll want to review the options for continuing your coverage on the chosen policy with your agent. Certain term policies have a renewable or convertible benefit to make sure you can continue life insurance coverage in some form once it expires, even though you’re older and possibly in a different state of health than when you first bought your term policy.

What If I Can’t Pay My Premium?

Although your premium might seem affordable now if your financial situation changes in the future it might be difficult to pay your premium. you should be aware of the consequences for missing payments on the policy in question. Each carrier will have different types of penalties for lapsed payments. You should only purchase a policy with consequences you can live with.

Purchasing term life insurance is a great way to help ensure your family’s financial security. Visit the WSBA Private Health Insurance for more information on term life insurance plans.

couple applying for life insurance

How Age Affects Life Insurance Rates

When considering a new life insurance policy, many people have the misconception that any time is a good time to purchase life insurance — that waiting for a major life event or when it’s convenient won’t affect their premium rates. This actually is not the case. In order to know when to buy life insurance, you’ll need to understand some of the factors that insurance companies use to determine your policy’s rates. Depending on the type of life insurance, rates are determined and influenced by certain factors that can and do change over time.

Age & Life Insurance Premiums

One of the most significant and ever-changing factors that will affect your annual premium is age.  The premium, or rate, for your new policy, will be set at the time of purchase based on your age at that time. The rate is then set for the duration of the policy. Most life insurance policies will see an annual premium rate difference of 8% to 10% for each year of age. Thus, waiting a year to purchase your life insurance policy could mean a significant increase in annual premiums. For example, a 45-year-old man in excellent health could purchase a $1,000,000 term life insurance policy with a 20-year term for around $250 less per year than the same policy purchased by a 47-year-old man of equal health. That’s an extra $5,000 paid out over the term of the policy!

These increases may seem extreme, but the reason behind it is quite simple. Each birthday is putting you one year closer to your life expectancy. Those who are closer to their life expectancy are more expensive to insure. A little time makes a big difference.

You now understand why it is very important to not put off this important decision. Putting off your life insurance purchase even for a few years could result in a much more expensive policy. Another factor to consider is that as you age, you are also running the risk of decreasing your chances of qualifying for life insurance due to declining health.

Health Also Plays a Role

Health is another qualifying factor closely related to age. There are certain underwriting requirements that involve health-related tests. In most cases, the older you are, the more likely you are to have some of the health problems that would disqualify you. Life insurance carriers will require more tests for older applicants, and the more testing you undergo the more likely the carrier is to find issues that would affect your rate. Because testing requirements differ from carrier to carrier, and because each carrier updates these testing requirements frequently, it is impossible to know what types of health tests would be performed at any given time.

Other Contributing Factors

Some additional factors that contribute to a policy’s rate are your gender and if you are (or ever were) a smoker. Even things like family health history, occupation, and hobbies that you participate in can also become a qualifying factor.

These are all reasons why it is wise to purchase your life insurance policy as soon as possible. You are younger now than you will be next year, and you have no way of knowing what types of health problems you could be facing in a year or two. Learn more about term life insurance policy options available to you through the WSBA Private Health Insurance Exchange, and easily apply online today.

happy family enjoying a picnic in a park

When Should You Review Your Life Insurance Needs?

Life insurance is often thought of as a one-time thing that should be taken care of and then forgotten about. This is not a wise way to view your life insurance goals. Individuals should review their life insurance policies and needs because your life changes, and when your life changes, your life insurance needs change as well. However, reviewing and updating your life insurance policies does not have to be a hassle. There are quick and easy ways to review your life insurance needs when any of the following take place.

Income Changes

If your life insurance policy is less than seven times your annual salary, you may want to consider updating your amount. According to the Wall Street Journal, a general rule of thumb is that your insurance policy should be equal to five to ten times your annual salary. Most people go for an average of seven. Keep in mind, however, that this is a general rule and may not take into consideration any special circumstances that your family has.

If your income has increased substantially since you established your policy, then you will want to reevaluate your insurance needs. An increase in income is usually associated with a change in standard of living. You want to make sure that in the event of your death, your family will be able to maintain their standard of living.

Family Changes

Family changes will definitely warrant a reevaluation of your insurance policy. The birth of a child or the event of getting married will have a huge impact on the future goals for your family. Other events that can have an impact on your insurance policy needs include getting a divorce, the death of a family member, or a child leaving home. In some cases, these changes may warrant a decrease of insurance policy coverage as your responsibilities to your family change over the years.

Change of Beneficiaries

As changes in our lives take place, we may decide to change the beneficiaries of our policies. Keeping beneficiaries updated to your current wishes is very important. When there are changes such as a divorce and beneficiaries are not updated legally, your family could wind up in a very confusing situation with your ex-spouse. Keep beneficiaries updated to align with your current situation and wishes for the future.

Health Changes

Changes in health could provoke you to reevaluate your insurance needs, especially in the event of a terminal illness. In most cases, people secure an insurance policy with the idea that it will be in the distant future when the policy will actually be needed. However, a health change could bring a distant future closer to the present. If you are concerned about the welfare of your family due to your health problems, you should update your policy to bring peace of mind both to yourself and to your family.

Retirement

Retirement changes everything, and it is a great time to look over your financial plans to make sure you have accomplished what you intended when you started out. In most cases, once you reach retirement, your children have moved out of the home and are established in their own homes. So, your financial responsibilities to them will have changed and your insurance policy may need to change as well.

When life changes, your insurance policies will need to change as well. Life may feel like a whirlwind at times, but don’t let that stop you from re-evaluating your plans to make sure you are covered properly. Visit the WSBA Private Health Insurance Exchange today to learn more about available life insurance policies and to easily apply online.