You may have recently married, started a family of your own, or opened a new business. Regardless of your situation, you want a life insurance policy that will be there for your family and loved ones after you're gone. What life insurance options are best for you and your circumstances?
Before you search for life insurance quotes, there are several factors to consider.
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How Long Do Arizona Residents Live?
The life expectancy of Arizona residents is 79.6, a bit higher than the national average of 78.9
The leading causes of early death include:
- Heart disease
- Chronic lung disease
Some of these causes of death are preventable, while others are not. No matter how healthy your lifestyle, accidents can happen to anyone at any time. When the unexpected happens, you want to protect your family and loved ones from financial hardships following your passing.
When Should I Buy Life Insurance?
As people reach their 30s they start doing things that warrant life insurance. Whatever your life choices and circumstances, the best time to buy life insurance is when you're young, as premium quotes increase with age. These life events are a good indications of when you need life insurance:
- Getting married
- Having children
- Buying a house
- Starting your own business
Life insurance can help those you leave behind continue making mortgage payments, afford college tuition at the University of Arizona, and avoid the financial burden of your burial expenses.
What Does Life Insurance Cover?
Insurance companies offer a wide range of policy options for life insurance plans. A basic life insurance policy provides death benefits and is designed to cover loss of income, end-of-life expenses, funeral costs, and other immediate financial needs should you die suddenly or unexpectedly.
More comprehensive life insurance policies extend their coverage to other areas as well:
- Cost of living: Life insurance benefits can cover your family's living expenses after your death, such as the payment of your mortgage, outstanding debts, and children’s college tuition.
- Trusts and charities: You can also use your life insurance policy to create a trust as a financial legacy for your dependents, or a charity or other organization.
- Retirement and estate planning: A permanent life insurance policy can be created to save for your retirement or for estate planning.
- Business continuation: Business owners can establish a buy-sell agreement that pays benefits to one or more surviving co-owners who can then purchase the policyholder's share of the enterprise should they die before retirement.
What is Term Life Insurance?
As you review life insurance policies from AZ providers, you will notice the choice between term and whole, or permanent, life insurance. We will discuss term life insurance first.
Term life insurance: A policy that is in force for a specific time and has a limited value that you specify when you buy the policy. In the event that you die within the specified term, the insurance company pays the exact value of the policy as a death benefit to your beneficiaries.
Terms can be renewed on a yearly basis, every five years, or even up to 30 years and everything in between. The most common type is the 20-year term policy.
Typically, the premium for a term policy will be based on your age and health conditions at the time you purchase the policy. The premium will be locked in at the same rate during the length of the term. For example, your premium for a five-year renewable term will not change for five years. Once the five-year term is up, your premium will be updated to a new rate that reflects your new age and health. Some longer term policies will guarantee that your premium will not increase during the term; others don’t make this guarantee, which means the insurance company could raise your rate during the policy’s term.
Some term policies are convertible, meaning that you can change them into permanent life insurance policies without having to prove your insurability. Be sure to ask your insurance agent about this feature, especially if you anticipate significant life changes in the future, such as getting married and having children.
What is Permanent Life Insurance?
The second option you will see from AZ insurance companies is permanent life insurance, which is more complex and comprehensive than most term policies.
Permanent life insurance: A permanent life insurance policy is in force for your lifetime as long as you continue to make your premium payments. Like term life insurance, permanent life insurance pays a death benefit, but it also has an accumulating cash value.
There are several types of permanent life insurance, including:
- Whole life insurance: The most common type of permanent policy, this option offers a death benefit and a savings account. With whole life insurance you will pay a fixed amount in premiums on a regular basis for a specific death benefit (for example, $200,000). The policy’s savings vehicle will grow based on dividends the company pays to you.
- Universal or adjustable life insurance: This option provides more flexibility than whole life insurance. You may be able to increase the death benefit if you pass a medical examination. The savings vehicle, called a cash-value account, generally earns interest. After money has accumulated in your account, you will also have the option of altering your premium payments — if there is enough money in your account to cover the costs.
- Variable life insurance: This option combines a death benefit with a savings account that you can invest in stocks, bonds, and mutual funds. You have the possibility of building your savings quickly, but you also face more risk. The best types of variable life insurance policies guarantee that your death benefit will not fall below a minimum level so you do not risk too much.
- Variable-universal life: This option offers the combined features of variable and universal life insurance. You have the investment risks and rewards characteristic of variable life insurance, coupled with the appealing ability to adjust your premiums and death benefit provided by universal life insurance.
The type of permanent life insurance policy you may want to purchase will depend on what other types of retirement or stock options you may have, how much risk you are willing to take, and what kind of options you want to leave your beneficiaries.
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What Will My Life Insurance Quote Look Like?
Insurance providers will take several factors into account when they calculate your life insurance quote, including:
- The type of life insurance you need: Term insurance will yield lower quotes than permanent life insurance because it only pays a death benefit and does not build up cash value.
- How much life insurance you need: A $20,000 term policy will receive far lower quotes than a $1 million term insurance policy.
- Your age: The cost of life insurance significantly increases as you age. The younger you are, the lower your quotes will be.
- Your health: If you have no health problems, your quotes will be lower than if you have heart disease, diabetes, or other chronic conditions.
- If you buy a medically underwritten policy: While it is possible to find life insurance without submitting to a medical exam, your quotes and premiums will be much higher because the life insurance company is taking a higher risk. If you do submit to a medical exam and no underlying conditions are found, your quote and premium rates could be much lower.
The cost of life insurance varies considerably based on these factors and more. A five-year term life insurance policy can be quoted from $15 a month for a young, non-smoking female to $1,000 or more a month for a middle-aged, male smoker. Because so many variables are used in calculating life insurance premiums, it's a good idea to compare several quotes from a variety of Arizona insurance companies in order to find the best rates.
Where Can I Find Life Insurance?
You don't want your sudden or unexpected death to financially burden those you leave behind, or you may wish to leave a legacy for your dependents. No matter your reasons, life insurance is the best way to care for your loved ones long after your death.
Life insurance is complex and sometimes confusing, and it's important to work with an experienced insurance agent. Knowledgeable, independent insurance agents on the Trusted Choice® network are always available to answer your questions, suggest coverage options, and even assist your loved ones in filing a claim.
These agents have years of experience working with Arizona insurance companies, enabling them to find a number of quotes from several providers, ensuring you only receive those quotes with the best coverage options and the most affordable rates. Contact a Trusted Choice member agent near you to find out how you can leave a lasting gift to your family with a life insurance policy that meets your needs and budget.
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