What do mortgage interest rates have to do with life insurance?

You may have heard that, or even capitalized on, mortgage loan interest rates being at historic lows lately. That has in turn resulted in more homes being purchased. And what do people consider their biggest financial asset and also their financial safe haven? Their home. Many new homeowners will obtain life insurance upon purchasing a home, with the thought that their biggest bill (the mortgage) would be covered in the event that they pass away. Are you seeing the connections now between homes, mortgages and life insurance?

Let’s dive a little deeper… Let’s talk about a form of term life insurance that may connect the dots even more called mortgage protection life insurance. Any new home owner is inundated with information on this but very few bite, for good reason. Mortgage protection life insurance operates just like a regular insurance policy: an individual buys coverage, pays premiums and if the policyholder dies during the term, the policy pays a death benefit.

There are some significant differences though. Unlike a traditional life insurance policy, the death benefit of a mortgage protection policy goes directly to the mortgage company or lender, not the policyholder. Also, the total death benefit is designed to decrease year after year as the mortgage is paid down. And lastly, mortgage protection insurance tends to be more expensive than a comparable term life insurance policy.

On the flip side, regular term life insurance is typically low cost and gives policyholders the flexibility to use its benefits any way they wish — and they can set their own benefit amount. In a payout event, term life insurance provides beneficiaries with a tax-free lump sum of cash (annuities are also available) that can be used for mortgage repayment… or other things such as retirement savings, college savings, or day-to-day bills. That is up to the discretion of the beneficiary. And the coverage amount stays the same, regardless of how long or what may have occurred from the time it was purchased.

Another reason that now, rather than later, is a good time to consider life insurance in any form or fashion is that the premiums are typically much lower for a younger individual and there can also be little to no medical underwriting. So while you may view a new home as an asset, it’s also a debt (until paid for, of course) that your family would be stuck with unless you prepare accordingly.

Whether or not you’re in the market to purchase a home, or if you already have and just skipped the next step of life insurance… We’re happy to help guide you and help you rest assured that your family is well taken care of. That peace of mind is a much larger asset than any home in the world could ever be.

Key Person Insurance: How it Works and Why it’s Important

Most of us understand the importance of life insurance when you consider your family’s well-being and financial security. But what about the businesses left behind when an owner or principal passes, no longer able to maintain that company’s success? Or having the financial burden of finding a replacement for that person?

Key person life insurance is when a business purchases life insurance on an individual that is an asset to the company’s operation and success. Often times, this is an owner or principal in which not just anyone can replace at any given time. A “key person†is someone that contributes creativity, operational management, knowledge, inspiration, relationships, etc that is crucial to the viability of the company.
A business can be the beneficiary and also pay the premium of the policy. Sometimes this is also referred to as “business life insurance†because it’s protecting the business in the event this very important and necessary person is deceased.

There are a couple of very real circumstances in which this type of coverage is considered:

• If a financial institution or creditor needs collateral for a loan that the business is applying for and requires the option of putting a lien on a key person policy. This is also called “collateral assignmentâ€.

• If there are two or more partners that co-own the business together, this type of coverage would assist the partners in buying out the other’s shares if they die. This is also considered part of the buy-sell agreement as the life insurance would help fund buying out the deceased partners’ family members.

There isn’t a perfect formula to calculate how much key person insurance a company needs. One good way to estimate it is to have an idea of the immediate financial burdens the company could face if that person stops doing what they’re doing. An example would be someone in a Business Development role that could bring any growth to a screeching halt. Or someone with a reputation or connection that is the sole reason a big client does business with them. Another consideration, more for sole proprietors, is what amount of debt the company has that would need to be paid off if its doors were to close unexpectedly.

It’s highly likely that this “key†type of person has invested a large amount of time, effort, energy and heart into the company they either own or work for. There’s no better way to be sure their legacy lives on than having that business protected and stable when their time comes to leave it behind.

Achieving Financial Peace of Mind – Even in a Year Like 2020

You may be thinking to yourself that 2020 hasn’t been very kind or generous to us. It’s been an interesting year full of unknowns, fears, hardship and change for so many. But let’s highlight and be thankful for the silver lining of this year so far. 2020 has given us time to reflect, prioritize and think about what matters most. But back to the reality is that it’s also given us some fear and anxiety about potential, unexpected illness. In that regard, the positive takeaway we can focus on is that we should be as prepared as possible in the event something bad happens to us. While this can mean lots of different things, a key point is that we need to feel certain that our family would be okay and financially stable if we were to leave this place sooner than planned. In comes the importance of life insurance.

September is Life Insurance Awareness Month and what better time to remind ourselves, given this year’s pandemic circumstances, how terrible it would be on our loved ones if we didn’t have them taken care of when we pass.

Life insurance is often times less expensive than people realize, especially if you apply sooner than later at a young age. It can help pay off debts that you leave behind that would be a significant financial burden to your family such as a mortgage, credit cards, car loans and even funeral expenses. Help with those bills sounds pretty priceless, right?

Just in July, Lincoln Financial surveyed 1,004 U.S. adults ages 18 or older. 36% said the pandemic makes owning life insurance more important. 9% said they had changed the type of coverage they own in response to COVID-19. 12% said they had increased their life insurance coverage in response to COVID-19.

Even in a year unlike 2020 that maybe hasn’t presented risk or susceptibility to illness, it’s still something everyone should at least consider. Now that things have slowed down a little, it’s the perfect time to look into it. Here’s a great tool to get an idea of what your premium would be for a life insurance policy tailored to your needs: Quick life quote

Benefits of Auto Pay for Your Insurance Premiums

We currently happen to be in a time of uncertainty with some businesses temporarily closing or being short staffed due to Covid-19 social distancing recommendations. One of the concerns that has developed is people still being able to pay their bills, such as insurance premiums.

Thankfully, most insurance carriers accept payment either online or via an automated phone system but Auto Pay could alleviate any worry or doubt you might have about these payments being processed correctly and on time. There are several benefits to Auto Pay, depending on what type of policy it is.

• When it comes to life or disability insurance, a lapse without timely reinstatement could mean that you will now require an underwriting review, sometimes involving medical evidence… or you could even have to secure new coverage at your current, older age and possibly lesser health.

• For a health insurance policy that cancels due to late or non-payment, it cannot be reinstated at all and you would be left without coverage until the next open enrollment period for the following year. Scary, right?!

• For auto or home insurance, it would depend on the company if they were willing to reinstate or rewrite the coverage. The biggest risk here is that something detrimental and very expensive could happen in that lapse period where you would have no coverage at all.

Auto Pay is convenient, yes. It saves paper and printing costs, yes. It’s peace of mind and one less thing to worry about, yes. But it’s also imperative for maintaining some pretty important coverage. This is coverage that you may not be able to get back if you elect to receive a paper bill that gets lost or doesn’t get paid. An Added bonus is cost savings as well… you can almost always save on installment fees by going this route.

If you’re able to arrange Auto Pay either through EFT (electronic funds transfer from a checking account), recurring credit card, online bill pay with your bank, or whatever options there are… it’s definitely the safest way to ensure that your coverage will not be interrupted or affected.

If you have questions about a specific policy or company that we work with, please let us know anytime at [email protected] or (352) 371-7977.

Misconceptions of Life Insurance

September is Life Insurance Awareness Month so what better time to clarify a few misconceptions.

According to LIMRA (Life Insurance and Market Research Association), Life Insurance Ownership in Focus, U.S. Household Trends, there are approximately 37.5 million households in the U.S. that have no life insurance coverage at all. And almost half of households that do have it, don’t have enough to replace their income in the event they needed it.

But why is that? It seems like a no-brainer to have coverage for your family’s financial burdens if something happens to you, right? So why do so many Americans go without?

Lincoln Financial Group’s research shows that the #1 reason people say they don’t have it is because it’s too expensive. But it doesn’t have to be. In some instances, it can cost less than your monthly utility or cell phone bill.

Another LIMRA study showed that about 108 million Americans say that they have coverage through their employer but they may not even know how much or what company it’s with. That won’t do you much good!

Some people may be so intimidated by the process that they just avoid it. However, there are some life insurance policies available now that can be bound within 24 hours with no blood test or medical exam.

Others may think it isn’t necessary if they don’t have children or they aren’t sure who to make the beneficiary, but you can always have multiple people as beneficiaries and it doesn’t have to be a blood relative.

Same goes for those that think because they don’t own a home, life insurance isn’t necessary. That’s a common misunderstanding that we hear often. However, a mortgage isn’t the only financial burden your loved ones could face in your absence.

Stay-at-home Moms tend to think they don’t need coverage because Dad’s income wouldn’t stop if something happened to Mom. Who will care for the kids? Mom was awfully nice to do it for free but it’s highly likely to cost a pretty penny for anyone else to step in.

We think life insurance is extremely important all year round but wanted to share these tidbits to hopefully spread some awareness this month in particular. Make smart choices and don’t let unpaid bills overshadow the legacy you’ll leave when you’re gone.

As always, we’re happy to help guide you on your life insurance journey and can answer questions anytime: 352-371-7977 or [email protected].