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Group Term Life Insurance

 

Relying on group term life insurance vs individual term life insurance is a huge mistake

 


employer provided life insurance is a must have benefit, but should it be the only life insurance you own?  definitely not! here's why...


The importance of employer paid life insurance can't be stressed enough.  Here's the question most employees should consider, especially when they land at a new job- whether group term life insurance vs individual term life insurance is better...



Companies must have it to attract and retain their workforce. Here in Silicon Valley even the earliest stage startups have life insurance as part of their employee benefit plans.  

They need group term life insurance to compete with the biggest of tech firms.(They also all have dental insurance plans which are a waste of money, but that's for another story)...

Even though most employers offer at least a minimal group life insurance benefit, families truly need to review these benefits often.

Make sure the amount of group term life offered by workplace benefit plans are adequate to protect them from financial ruin in the case of an accident or sudden death of the family's primary and secondary breadwinners.  It's rare that existing group life benefits will be enough for the the survivors to maintain their lifestyles without major disruption and hardship.


here are 4 big reasons why you should consider whether group term life insurance vs individual life insurance makes more sense and why you should buy your own


  1. group term life insurance stays with the Company even when you don't!-- face it, most 25-35 year old workers don't envision themselves retiring with the same company.  when you leave a job, all of those "free" employee lunches and your group term policies and medical insurance stay with the company you just left!
  2. Employer paid life insurance policies usually cover a flat dollar amount or a multiple of salary up to a plan maximum.-- Smaller firms, those under say, 50 employees, can't offer huge life insurance benefits.  A startup can't offer Google-sized benefits because they simply don't have a large enough population to spread the risk.  Google self-insures its plans to a point and has 10's of thousands of employees.  A startup relies completely on the group life company's risk pools and those companies don't want to offer unlimited group term amounts because they fear bad claims experience on a small number of employees-called "adverse selection".
  3. Group term life insurance premiums are taxable to the employees above $50,000.-- This point is often forgotten, but these excess premium taxes are based on the IRS Table I rates, which are extremely high.  Any group term benefits in excess of $50,000 are taxable at those rates and they add up!  If you're 50+ years old and have a group term benefit of 5x salary, you could be taxed on $5000+ of term insurance premiums.  This goes on your W-2 in box 13 and most folks don't even know it.  Some group term life plans allow you to opt-out of this work provided life insurance amount. Here's the verbiage from the IRS web site:IRC section 79 provides an exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amount of such policies does not exceed $50,000. The imputed cost of coverage in excess of $50,000 must be included in income, using the IRS Premium Table, and are subject to social security and Medicare taxes.
  4. group term life vs individual life rates are usually much more expensive-- Face it, if they give you life insurance at work, that's easy!  Everybody loves EASY.  No one likes to research term life insurance when they get to a new job, but this one really can pay off big time! If you're healthy and can pass a physical exam you can save hundreds, if not thousands of dollars per year simply for going outside of you company's benefit plan.  even if the group term plan is a voluntary life insurance plan where you pay the premium but there's no medical exam you will still save a LOT of money most of the time.  


taxable cost of group term life vs individual insurance 


You can see,on the IRS table below, just how expensive these taxable premium amounts can be.  If you're in you're a Millennial then it's not so bad YET... If you're in your 50's or 60's, these taxable premiums start to ramp up quickly.  If you are able, my advice would be to ditch the group term life insurance altogether if you are healthy.

Take this example--A female age 55 who earns $300,000 per year.  Her company gives her 3x salary to a max benefit of $1M, which is a common benefit scheme at large tech companies in Silicon Valley.  Her taxable benefit would be $850,000 ($900k-$50k tax free per IRS regs).  Based on the chart from the IRS, she would pay tax on premiums of $.43 per month x 12 or $5.16 per THOUSAND of group term life insurance!  So, 850( units of $1,000)x$5.16= $4,386!

If this women were healthy, she could get $850,000 of 10 year level premium term life insurance for $950-$1,000 per year!  Assuming she's in a high effective tax bracket, this options would save her a TON OF MONEY.  Group term life rates are typically priced in 5 year increments, so essentially for her, the group term plan is a 5 year level term policy.  I would encourage her to opt-out of the group term benefit at open enrollment if possible.



group term vs individual life IRC TABLE I

SAMPLE FEMALE INDIVIDUAL 10 YEAR TERM LIFE RATES.

SAMPLE FEMALE 10 YEAR TERM LIFE RATES


Group Term life insurance is not always a bad thing.  Here are 3 big reasons why you might keep this life insurance


  1. Group term life is "free"-- Amounts under $50,000 are not considered taxable income.  Remember, that small companies rarely offer group term insurance benefits in excess of this amount anyway, so this would be neutral on your financial picture.
  2. Group term life is easy-- If you don't need to actively do anything to get this stuff, then it's easy.  Simply keep the benefit and figure out where it fits into your overall financial picture.
  3. if you have health problems take the group life option-- Sometimes you won't have a choice because you're uninsurable.  If you are undergoing chemotherapy, if you've recently undergone a major coronary procedure, or are actively abusing controlled substances and /or alcohol, then grab the group insurance ASAP.

The bottom line when it comes to comparing group term life insurance vs individual life insurance is to make sure you do some research before you make an assumption that personal life insurance is too "expensive".  


Most often, it's simply not true and you can save yourself and your family a ton of money.  If you're on a tight budget, then it makes even more sense to get some term insurance quotes. It takes 30 seconds to go to the right side of this page and run some sample term life rates.  You'll find that it's amazingly cheap and EASY.  

Remember, everyone LOVES EASY! 


 

group term life insurance vs individual

Do You Know What To Do When Someone Dies? Read This Guide

We all think we’ll be here forever, then one day there’s an accident or a diagnosis that changes everything in a split second. do we really know the important things to do when someone dies?


Death is no joke and we all get a turn, those with a diagnosis have a bit more time to prepare both emotionally and logistically.  There’s time, at the very least, to say goodbye to loved ones.  

For those left behind, that may very well not be solace at all, but for families who get a call in the middle of the night after an accident, most wish that they had able to say goodbye.  Not having a final conversation with a loved one before he dies can haunt people for the rest of their lives.

So, what can we do about the inevitable outcome at life's end?  We can’t control an accident and for the most part we can’t control a diagnosis, except for lifestyle choices, so what can we control?

 

We, as parents or employers or people with others in our lives we care about, can plan for the future by making sure that our financial house is in order with proper estate planning.

 

This sounds simple, and it is, but most people fail to organize their affairs properly in an on-going manner so that when their time is up it’s not a huge financial and administrative burden to those left behind to pick up the pieces. Where do we start?  well you’ve come to this site in search of term life insurance quotes or something related to life insurance because you know you need to protect your family financially. That’s generally the first and best place to start.

Life insurance is the bedrock foundation of any financial plan.  

For pennies on the dollar you can make sure there’s enough money available when your loved dies AND that it’s available immediately, or within a couple of weeks.  This is crucial because when a death occurs certain things need to happen.  

7 steps to take when someone dies laid out


  1.  First, we need to notify the insurance agent or broker that the client has passed away.  The Broker will notify the life insurance company and initiate the claims process.  If you have multiple life insurance policies, make sure that you call each broker with whom the deceased had a policy.  People can easily have multiple policies.  At this point it doesn’t matter what type of life insurance policy it was, whether term insurance or permanent insurance.  The benefit dollars are all the same color time of claim. Once the claim on the policy is approved, the insurance company, these days, will send the beneficiary a checkbook which has the benefit balance in an interest-bearing account with the insurance company.  
  2. In the old days, people would choose a “settlement option” either before or after death and they still can, but those options do not afford any flexibility. These options include an annuity payment structure, interest-only, periodic sum pay-outs and several others designs for “little old ladies” who didn’t understand finances.  Settlement options are pretty much a thing of the past.  The checkbook option allows you to write a check for the full amount of the policy, or write checks for chunks of the proceeds.  Very flexible.
  3. Call your estate planning attorney!  He or she probably drew up your wills and trusts and they need to know immediately that a death of their client has occurred.  She will “open and estate” and start the ball rolling from the legal end.  If you’ve handled your plans properly, most of your beneficiary designations will dictate where life insurance proceeds go as well as retirement accounts and certain types of real property.  In California where we live, most people have a living trust which would hold title to certain large assets, especially a home, and there would be much less delay in setting the estate.  Often times the insurance agent will know the attorney you have used locally and he can notify the attorney if you desire. 
  4. Make funeral arrangements.  This usually entails clergy.  In my practice, many times it’s the clergy who plays a major role in organizing the family support structure.  If not clergy, then notify your funeral home of choice first.  Funeral homes are in a very good position to help you with certain administrative tasks like ordering death certificates.  Get AT LEAST 10 death certificates! You will need more than you think for credit card companies,etc.
  5. Go to the bank to empty the safe deposit box. The lawyers might not agree with me on this, because the banks are not supposed to let anyone into the box after the death has been certified and they receive the proper permission from the probate court. However,  this minor step could save you a huge headache, especially since many people still keep their valuables, stock certificates(if you actually have the paper anymore), life insurance policies, and wills/trust documents in their safe deposit boxes.  Of course, I can’t give you legal advice, but these ideas are gleaned from my practice over 30+ years of helping people make sure that there is a smooth financial transition when someone dies. 
  6. Notify all of your financial institutions and Social Security of the death.  Remember the 10 death certificates?  They will all want a copy or a sealed original, so don’t forget to get more than you need.  If you are the beneficiary of a retirement account, then the custodian will certainly want a death certificate.
  7. Most important, find a fee-only financial planner who will help guide you with a comprehensive financial plan.  Your new financial life without your loved one will look completely different and rather than spend all of your life insurance proceeds without direction, make a thoughtful plan!  A good fee-only financial planner who does not take compensation on assets under management, but either charges hourly or project-based fees is best.  These planners, though few and far between, will operate without conflicts of interest in your new life insurance account.  

I’ve barely touched the surface on the first things to do when someone dies, but it should give you an idea of where to start.  Stay tuned for some recommendations on how to “get your stuff in order” before something bad happens.  Make sure you get started by getting your instant term insurance quotes here.  See just how easy it is and how inexpensive it can be to protect your family with term life insurance!

7 Important Things To Do When Someone Dies-[Not Life Insuran
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If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

We have trusted Chris with all our insurance needs for several years. He always listens and understands our needs completely and then works hard to design a policy that best fits our needs. He is very personable and easy to work with.

Sanjeev Dharap Architect, Entrepreneur, Technical Advisor
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Expert Advice and Honesty

Chris brings expert advice and honesty to every project we work on. He gets things done in a timely manner and does an excellent job following up.

Brad Branson Partner/Investment Adviser- Cornerstone Capital, Inc
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Didn't Try To Upsell Me!

I found Chris when looking for life insurance brokers. I knew exactly what I wanted and told Chris and he was able to deliver without trying to upsell me on something else. It was very straightforward and exactly how I hoped it would be. I would definitely recommend him for anyone in a similar scenario.

Nathan Netravali Associate Director of Clinical Applications at Think Surgical
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CB Acker Associates Is Extremely Responsive

Chris provided (and continues to provide) excellent service and support for our insurance needs. He is very responsive, knowledgeable and provides specific and efficient solutions to our insurance needs. I highly recommend Chris!

Antonio Altamirano Founder, CEO at Tangelo

2018– Hacks For Life Insurance For People With Health Problems!

I’ve Got Health Problems…Big Deal!  Well, it is if you think you need life insurance!

Sometimes, health issues creep up on us no matter what we do to prevent them. Life plays cruel jokes on the people who eat right, exercise, and live a clean life — none of which can override fate and our genetic code. Sometimes the healthiest people end up with the most problems while the 85-year-old next door sits on her porch smoking, drinking, and laughing, all while using oxygen and wearing diapers for incontinence!


If you’re one of those people who avoids excess, eats right, and lives healthy, only to develop health problems, finding life insurance can be a struggle. Working with a seasoned agent/broker will make it easier to find a policy to suit your financial goals and give you and your family peace of mind.

Are You Serious? my term insurance application was declined for a Hangnail!


A blister on your big toe is not the kind of injury or health issue a life insurance company is concerned about rating. Instead, most companies have a long list of pre-existing and chronic conditions that raise red flags…and insurance rates. Many everyday health issues do not affect how you live your life, but they may affect how much you pay for insurance.


Insurance underwriters will sift through your health history so they can screen for the major risks like heart and kidney disease, certain kinds of cancer, and high-blood pressure. However, people live with a variety of other more common health problems, injuries, and illnesses that may result in higher premiums:

  • Obesity
  • Lung disease
  • Diabetes
  • Hepatitis C
  • Broken bones
  • Surgeries

It’s important for term insurance buyers to know their medical history when shopping for life insurance. Providing a comprehensive health picture may be the difference between an affordable rate and a denial when you have health problems.

If you’re able to provide mitigating facts — like regular treatments, working out, dieting, or even the intent of healthy New Year’s resolutions — that will help control your medical issue, AND it can make a difference in the outcome of your application.

Be prepared to clarify any injuries or past health problems. For instance, if you’ve had a surgery to correct an issue or on-going problem, be sure to provide how long ago, results, and improvements. Involve your doctor if necessary to ensure that the insurer has a complete understanding of your unique health situation.

Healthy Ups and Downs

Life tosses us a curveball when we least expect it. Your health is no different and it can change from one day to the next — for better and, unfortunately, worse. When faced with a new health problem, or saying goodbye to an old one, our health  changes the way your life insurance company sees you.

People with health problems may not always get better, but their conditions can improve. When they receive treatment and have a plan to overcome their ailments, it makes a difference in their quality of life and ability to avoid complications.

If you’ve applied for a life insurance policy and have a questionable health history, demonstrate to the company that your problem has stabilized and that you’re healthy. Show them what steps you’re taking to control the problem and that you have a wellness plan.  Your life insurance broker will also write a strong COVER LETTER to paint as clear a picture to the underwriter as possible.  That’s her job and if she’s not willing or able to provide this important service, FIND A NEW BROKER!

Your health is your greatest asset. Protect it and your family’s financial future and comfort by being a knowledgeable consumer. Buying life insurance when you are young and healthy is the best option, but who does that anymore?  When that’s no longer possible, know that an experienced agent can find alternatives that meet your individual circumstances.

i've got health problems for life insurance big deal!
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If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

If you need an insurance professional who knows the industry, listens to your needs and works hard for you, Chris is your man.

We have trusted Chris with all our insurance needs for several years. He always listens and understands our needs completely and then works hard to design a policy that best fits our needs. He is very personable and easy to work with.

Sanjeev Dharap Architect, Entrepreneur, Technical Advisor
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Expert Advice and Honesty

Chris brings expert advice and honesty to every project we work on. He gets things done in a timely manner and does an excellent job following up.

Brad Branson Partner/Investment Adviser- Cornerstone Capital, Inc
profile-pic

Didn't Try To Upsell Me!

I found Chris when looking for life insurance brokers. I knew exactly what I wanted and told Chris and he was able to deliver without trying to upsell me on something else. It was very straightforward and exactly how I hoped it would be. I would definitely recommend him for anyone in a similar scenario.

Nathan Netravali Associate Director of Clinical Applications at Think Surgical
profile-pic

CB Acker Associates Is Extremely Responsive

Chris provided (and continues to provide) excellent service and support for our insurance needs. He is very responsive, knowledgeable and provides specific and efficient solutions to our insurance needs. I highly recommend Chris!

Antonio Altamirano Founder, CEO at Tangelo

Smart Insurance Resolutions for 2018

2018 Resolutions-The New Year Is Always A Good Time To Review Your Life Insurance Plans

 

I came across this article on Nerdwallet's Advisor site last year and I thought that my readers should take note of some solid general insurance information because the New Year is always a good time to review your life insurance, as well as other types of insurance. 


It's also a good time to review our financial plans, especially insurance, once a year in order to make smart insurance resolutions


it's also a good idea to read some consumer insurance articles to what's happening in the industry/area you're thinking about.


Why not take a look at your own situation and review your life insurance while you're at it.  If you think you're paying too much for your policy, get some term insurance quotes to see where your policy stacks up.  The same goes for your homeowners policy, too.  Also, if you have kids in college who are living off campus in an apartment or house which is not school sponsored, then renters insurance would be a good thing to consider.  Whatever you do, make sure you use an experienced broker who can shop different markets and companies.  This will get you better coverage as well as save you money, or both.

Insurance is a financial safety net for when life just doesn’t go your way, but that doesn’t mean you should ignore it when things are going well. Here are 10 things you can do in 2018 to strengthen your net and avoid common insurance claims.


And, again, please make sure to review your life insurance needs this season!  It only takes a few minutes and it can make or break your financial plans!

10 Smart Insurance Resolutions for 2017
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Excellent Question! What Kind of Life Insurance Should I Buy?

What Kind Of Life Insurance Should I Buy? Term Insurance!

Duh, Need You Ask?

In 1985, when I first started in the life insurance industry, we didn't really ask "what kind of life insurance should I buy?" because we didn't have the choices we have now.

Annually Renewable Term life insurance—ART

There was only one type of term insurance policy available- ART, or "Annually Renewable Term" insurance. Of course we had whole life insurance and the new "Universal Life" insurance, but those policies were typically more expensive and used for different purposes than buying the most affordable life insurance to provide maximum value for families.

ART policies featured premiums that started out low and increased each year at renewal time. Imagine a 45 degree angle where the left hand axis is the premium payment and the right hand axis is time and you'll understand that ART policies become unsustainable pretty quickly. These policies were used as an entryway to longer term products, most notably whole life insurance, which features high premiums, but builds cash value over a period of time. You could, however, switch into one of these whole life policies without proving good health, a feature called a "conversion option".

Enter The Conversion Privilege

The conversion privilege for a term insurance policy means that you can make the switch to a permanent life insurance policy without proof of good health. Chris Huntley, a colleague of mine, has put together a really nice resource for you to read about term insurance conversion and why it's important to make sure your policy has this feature.  One other major resource Chris has is a definitive guide to how brokers select the best life insurance carriers for their clients.  I actually use this resource of I have any questions about a good fit for a specific carrier/client.  

Level Premium Term life Insurance—Life Insurance Heresy!

In the 1990’s insurance companies began to understand that it would be wise to create term insurance policies that didn't require increased premiums each and every year. I remember the first level premium term policy I saw was a three year level premium term insurance policy and that seemed SO revolutionary! It made sense that policyholders would want to keep term insurance instead of expensive whole life insurance, especially here in Palo Alto or the Bay Area, where housing prices and incomes were rising very quickly and folks realized that they needed larger and larger amounts of term insurance to replace the income of the main breadwinner or to pay off a large mortgage at death.

So, after the history lesson, you're asking, "ok, so what kind of life insurance should I buy"? Well, since you've probably searched for life insurance in Palo Alto, or maybe life insurance broker in Palo Alto, or any other Google search terms, then it's fair to say you probably live in the Bay Area, or California. If that's the case, then I firmly believe that you should buy the most cost-effective term life insurance possible to protect your standard of living for your family. With the California economy seeing massive price increases, a cheap term life policy is the only way to go...Especially since term insurance costs less than a new cell phone these days!

Get Term Life Quotes Any Time 24/7

Go to the right side of this page and get your free INSTANT term life insurance quotes.  See how easy it is to protect those you love, even if you have a medical problem!

Don't wait! Get started now!


Excellent Question! What Kind Of Life Insurance Do I Need?
Protect those you love with term life insurance