Consider These Factors When Shopping for Life Insurance

If you view shopping for life insurance as a dreaded chore, you aren’t alone. Most people don’t want to think about the end of their life, so they put off planning for their loved ones or skip buying life insurance.

Many people think they’re too young to worry about life insurance or have enough money set aside should they die.

This usually isn’t the case, leaving many without the necessary finances.

The pandemic changed the way people think. It made many people realize the importance of planning for the unexpected. So if you’re in the market for life insurance in Los Angeles, here’s what to consider as you shop around.

How Insurance Agents Help

Insurance agents are there to help you choose the products that your family needs. They solve problems for you that you may never have thought of yourself. A qualified insurance agent will discuss your financial situation, future needs, and the type of legacy you want for your family.

Insurance agents ask many questions and dig deep to ensure you plan for your financial future with their products. They may ask you questions you never thought of and make you aware of situations you should consider when planning your life insurance.

It may feel like they are there to sell you something, but they are more like financial advisors, helping you to understand your big financial picture. Life insurance is one of the most important decisions you’ll make in your lifetime and could make or break the financial future of your loved ones. So finding an agent you connect with and who understands you is essential.

Questions Agents May Ask

Throughout your interview with an insurance agent, they’ll ask you pointed questions to ensure you get the proper coverage. These questions may include:

• What is your annual salary?
• Does your spouse work?
• Are you the breadwinner?
• How old are your children?
• What do you want your children to have financially if you die prematurely? (aka pay for college, money for a house, etc.)
• Do you have children that will need long-term care even into adulthood?
• Do you have a mortgage?
• Do you have any major liabilities?

Answer the questions as openly and honestly as possible. This will ensure you get the policy and coverage that suits your family’s needs. Focus on the premiums you’ll pay and the protection the policy provides your loved ones.

Qualify any Online Policies

If shopping around and interviewing insurance agents in Los Angeles doesn’t interest you, you might consider an online life insurance policy.

These policies are often entirely acceptable, but always ensure you work with a licensed insurance agent. In other words, don’t just apply online; never talk to a human, and pay your insurance premiums.

Most online policies are suitable for supplementation but won’t cover your loved ones’ complete financial needs if you die.

At the very least, qualify the insurance agent on the other end of the phone, ensuring he/she is licensed in California and has the right to sell you life insurance. The last thing you want is to leave your loved ones without financial coverage when you die.

Determine if you can Pass a Medical Exam

Most life insurance policies in Los Angeles require a medical exam. If you can’t pass the exam, you won’t qualify for fully underwritten life insurance. There are other options, but fully underwritten life insurance is the most affordable coverage.

If you know you won’t pass a medical exam because you have a serious pre-existing condition, you could apply for guaranteed life insurance or simplified issue life insurance. Neither policy requires a medical exam, but the premiums are higher, so keep that in mind as you shop around for the right policy.

Decide if you want the Policy to Have a Cash Value

Term life insurance is the most common life insurance policy. This policy is good for a certain number of years, such as 15 years. If you’re alive after the policy expires (it’s a good thing), but your policy expires.

When your policy expires, you can shop for a new term life policy if you need it, but most people carry term insurance to cover life when their children are young, have a mortgage, or don’t have a large amount of money invested or saved yet.

Cash value life insurance policies have higher premiums, but a portion of their balance gets invested. It’s like a forced savings account. You can use the cash value funds while you’re alive. Say, for example, you are diagnosed with a chronic illness and have a policy with a cash value of $500,000. You can use the funds to cover your medical bills or other expenses.

When you use the cash funds, you can use them as a withdrawal (not paying them back) or as a loan. However, if you withdraw the funds and don’t pay them back, your loved ones will receive less of your death benefit. Say, for example, you had a $750,000 death benefit but used $200,000 of your cash value. As a result, your loved ones would receive $550,000 when you die instead of $750,000.

Final Thoughts

When shopping for life insurance in Los Angeles, you have a lot to consider. Do you want a term or cash value policy? Will you pass a medical exam? Do you need coverage that lasts your lifetime or just to get you through a specific period?

Answering these questions honestly will point you in the right direction. Next, it’s important to work with a qualified insurance agent who understands your financial needs, can pick up on any problem areas your family would have if you died, and can provide you with a qualified life insurance policy.

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Purpose and Benefits of an Annuity

An annuity is a long-term financial contract; it requires the person acquiring the annuity to make a series of payments over a time period to earn interest and receive the payments again in the future. The insurance company and the purchaser of the annuity mutually decide and arrange the contract according to the purchaser’s needs.

Purpose of an Annuity

The purpose of an annuity is to provide a safe income stream to the investor in later years of life. The purchaser of an annuity may make one contribution or several contributions regularly for a fixed period. After all the payments are made, the insurer is obliged to start paying the annuity back. An annuity is usually the traditional retirement plan. Social security and pension plans are examples of annuities.

There are hundreds of annuities available, which makes it very difficult to choose the right one. At Yellowbrick financial, the consultants find the best annuity options and explain everything you need to know when purchasing an annuity to make your future financially independent and worry-free.

The annuity payments are supplemented from stocks and bond portfolios generally and are payable for a lifetime as per some annuity plans for retirement. But the annuities pay more as compared to investing directly in bonds.

The payments are fixed and are to be paid on time to the retirees or purchasers of the annuity. Most people start to save in their late fifties for a retirement plan or an annuity. An annuity provides retirees with a safe income stream they can depend upon in old age.

Benefits of an Annuity:

• There are no tax payments involved when paying for the annuity. However, if you withdraw or receive the annuity repayments before the age of 60, a tax payment of 10% might be charged.
• The payment plans for an annuity are not limited. You can add as much after-tax money as you want to the annuity and there are no limitations based on your sources of income and the amount you earn.
• If the purchaser of the annuity dies before receiving any payments, the annuity is passed on to the beneficiaries regardless of the probate.
• The options for receiving payments are diverse. You can modify your annuity plan and also gain payments for the rest of your lifetime or transfer them to beneficiaries.
• The options for receiving payments are diverse. You can modify your annuity plan and also gain payments for the rest of your lifetime or transfer them to beneficiaries.

Guarantees

The future is uncertain and how the markets will perform tomorrow is uncertain as well. There are many guarantees an annuity can provide. With annuities, the principal is highly protected and the minimum payment is fixed. The guarantees an annuity plan may offer to include:

The Guarantee of Lifetime Withdrawals Benefit: This means that even if the contract has ended and the principal along with the accumulated interest is paid, the insurance company pays annually for a specified period, or until the purchaser lives.

Guaranteed Minimum Accumulation Benefit: A minimum account balance is held and guaranteed, even when the markets perform poorly.

Guaranteed Minimum Income Benefit: Even if the market has been performing poorly, the insurer pays a minimum income to the purchaser of the annuity at all times.

Types of Annuities

There are 5 basic types of annuities. The advantages and disadvantages of these annuities differ. Choosing the right type of annuity is important to gain the best benefit from your investment.

Yellowbrick financial consultants help people every day choose what is right for them. Expert knowledge and hands-on experience of the Yellowbrick financial consultants enable them to look at all the options carefully and determine the best annuity for the purchasers.

Here are the types of annuities:

1. Fixed Annuity

The most simple and safe type of annuity is a fixed annuity. The insurance companies fix an interest rate on payments that are accumulated regularly irrespective of change in interest rate.

The interest rates an insurance company offers are higher than a bank’s deposit while the income is also guaranteed. The retires find this option the safest and best. Also, the retiree can defer or withdraw income at times.

2. Variable Annuity

The variable annuities are dependent on how well the mutual funds perform. The purchaser of the annuity chooses subaccounts, that determine the account value. An insurance policy provision is purchased that finalizes the income stream in case of market performance fluctuations. This finalizing of the income diminishes the risk even if the subaccounts perform poorly in the future.

The variable annuity plan works best for retirees who want to earn a guaranteed lifetime profitable income through subaccounts.

3. Fixed-Indexed Annuity

A fixed index income is based on subaccounts. However, it guarantees a minimum income benefit in case of market fluctuations. The principal is protected but in case of rising stocks, the income is trimmed again. It allows the investor to play safe but the downside of the annuity is conservative participation in the potential market. The annuity is for those retirees who don’t want to take any chances as keeping pace with the robust stock market is not going to make the income higher due to the high-risk management offered by the insurer.

4. Deferred Annuity

The deferred annuity as the name suggests is deferred for a specified period. After payment of the premium, the investor waits for a specified period until the interest in accumulated on each installment.

This delay of payments can earn higher interest and increases the income on low principals. Retirees and other people often invest in a deferred annuity to generate higher income in the later period of their life. It attracts retirees and parents who plan to secure finance for their kid’s college expenses.

5. Immediate Annuity

An immediate annuity is like a life insurance policy where the purchaser of an annuity pays a lump-sum amount to receive gradual payments until death. The payments of an immediate annuity are higher than payments of other annuities and are paid to the investor until death. Once the investment is done, the investor can start receiving payments in one month or year.

The principal is sacrificed as a must but the payments are higher. This type of annuity is for retirees who wish to have a higher income in their old days of life until death.

To find the right annuity type for you, contact the Yellowbrick financial consultants, and enjoy a happy retirement.