How Life Insurance works

 

We understand it can be stressful when researching a product and you're not sure where to start or who to trust to ensure your family is protected. Here at Protect Assets Today, we care for your family as if it were ours.

Don't worry, this page is designed to educate families on how life insurance works and the best type of life insurance out in the market.

The Reality is that at Protect Assets Today, we don't like to call it life insurance but income protection that will leave your family in good hands in the event of a loss in your family.

Call today to Book an Appointment with us to learn what we can do for you.

What is the purpose of life insurance?

Life insurance is a contract between an insurance company and a client which will protect the insured against a loss. Client pays a monthly payment and in the event that the insured passes away during time of coverage, the insurance company agrees to pay out the amount of coverage on the policy.

In order to qualify for life insurance one must have a pure risk (only involves a chance of loss) and not a speculative risk (chance of loss or gain).

Once you're cleared and your insurance policy is approved you are covered based off the terms of your policy. At this time, the agent will hand the client the new policy and that is when the free look period begins (10 days for full refund of policy premium, 20 days for full refund of replacement policy).

We repeat its highly important client thoroughly read the terms of your policy!

Life Insurance Plan Options

Their are several options available for life insurance which consist of:

  • Whole Life Insurance (click on link to learn how policy works)
    • Permanent life insurance that is in force throughout your life when you pay premiums to secure death benefit.
    • Policy has a combination of cash value and life insurance. Cash value can be used to pay off payments
    • Cash value grows between 1-4%
    • Get charged about 8% to with-drawl money from cash value (loan)
    • Cost of insurance is constant
    • Expensive compared to term life insurance
  • Universal Life Insurance  or Flexible Premium (Click on link to learn how policy works)
    • Has a combination of cash value and life insurance
    • Cost of insurance increases
    • Policy will expire on a certain date, once cash value is gone.
  • Term Life Insurance
    • Has a certain time period with usual max of 35 years
    • Cost of insurance is constant during term
    • Living benefits (waiver of premium, Accelerated Death Rider, Child Rider, Increase Benefit Ryder)
    • Affordable
  • Group Life Insurance:
    • Provided by an employer and as a group employees are approved.
    • Employees receive a certificate which states terms of contract
    • Coverage is only one to two times your salary (not enough coverage)
    • Employer has control over the policy
    • Plan is only good when you work for employer

How much life insurance do i need? 

To find out how much you need we use DIME which is a simple equation which sums up Debt, Income, Mortgage, and Expenses. For example:

  • Debt ($40K)
  • Income ($55K)
  • Mortgage ($350K)
  • Expenses ($50K)

Grand total of coverage needed = $495K

Which Plan Makes More Sense?

Just like there are laws that govern the U.S there are also laws in Life Insurance which is plan A and B.

Plan A

  • They keep ALL your money for at least the first year.
  • Earn only 1% to 4%   "return" on your own money.
  • Charged 6% to 8% to "Borrow" your OWN money.
  • May withhold your loan request for up to 6 months. 
  • They keep ALL your savings when you die.

This is Cash Value Life Insurance (whole life, universal life, variable life) - Life insurance & Savings

Plan B

  • You money is credited to you immediately. 
  • Earn only 7% to 12%   potential return on your money.
  • NO FEE to withdraw your money
  • You receive your money within 7 days BY LAW.
  • Your family receives ALL your savings if you die.

Term Life Insurance with a SEPARATE savings investment account

The truth is not all policies in life insurance are the best and by far Plan B is the best route that allows our clients to have more control.

Call To Book an Appointment today to learn what we can do for you.

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