Recently, a survey showed that Ohioans are among the most insured residents of the country, with
Cincinnati being close to the top 10 most comprehensively covered city. But even in Cincinnati life insurance coverage is not as high as it could or should be. Often that’s because people feel like they don’t need life insurance yet, or are unaware of all the benefits a life insurance policy can offer.
Let’s take a look at why you should purchase a life insurance policy from a local Cincinnati broker, and what specific questions you should be asking, or have answers to when making your decision.
Why is it Important to have Life Insurance?
1. Peace of Mind
You’re proud of your ability to care for your family. The last thing you want to think about is what would happen to them if you’re gone. It’s also the first thing you should plan for, and much easier than you think.
If the unfortunate happens, life insurance can provide your family with financial security. It can be as simple as making sure they’re able to handle the debts left by your passing, or you can take extra steps to preserve the standards of living they’re used to having.
The key is for beneficiaries to have enough to cover the major expenses, like car loans, a mortgage and credit card debt if you’re gone. Life insurance can ensure your family has stability after you’re gone.
If you’re the primary or sole breadwinner for your family, you’re carrying a lot of weight on your shoulders. And there’s always going to be the concern of what would happen to your dependents if you’re gone. Knowing that you’ve left them with enough resources to carry on in your absence will grant you, and them, peace of mind.
And peace is priceless.
2. Leave An Inheritance To Family
Just as important as the stability that you’re providing now is the guidance and support you hope to offer in the future. You hope to be able to pay for college, support financial endeavors and even help your loved ones strike out on their own.
Of course, those plans depend on being able to continue to work and increase your earning potential through investments and other careful planning and diligent work throughout the rest of your life. Your ability to do so isn’t guaranteed, and if you’re suddenly and tragically no longer in the picture, the plans you have for leaving a better life for your family could be destroyed. Working with a Cincinnati life insurance agency allows you to still ensure that you’re leaving that better life for your family, even if the worst happens.
With life insurance, you can still provide for your family in a tragic situation. Life insurance benefits are tax-free and can be allocated as you see fit, allowing you to secure your family’s financial future.
3. Life Insurance Through Your Employer Is Not Enough
It’s more common for employers to offer health insurance (through a MEWA or level funded plan) or dental insurance, than life insurance as part of their benefits package. Having the extra coverage, especially if it’s being paid in whole or in part by your employer is a good thing. There’s no such thing as too much life insurance, and we’re not afraid to say it.
However, the life insurance packages offered by employers are typically only 1-3 years worth of income, and it’s best to be insured for 10-15 times your current income. There’s a pretty obvious discrepancy there if you’re only covered by your employer’s plan.
The other problem with employer insurance is that it most likely won’t go with you if you change jobs. In the modern workforce, you could likely change jobs up to ten times throughout your life. Benefits can take months to fully kick in after you change jobs, so it’s important to have a life insurance policy that can travel with you.
Purchasing a life insurance policy independently will solve both of those issues. It allows you to select a level of coverage that will adequately care for your family in your absence. It’s also far more portable and will travel with you if (or rather when) you change jobs.
Problems That Stem From No Life Insurance
The consequences of not having life insurance are unpleasant to think about but are even more unpleasant to experience. If you pass away, leaving no death benefits for your family, they could struggle to pay for things such as food, rent, mortgage, car loans, and more.
That could mean that your family has to start the difficult process of finding work in the middle of grieving. Having the time and emotional space to grieve is important, and also something that we aren’t always afforded in the modern world. It’s a luxury that your family almost certainly won’t have if you don’t have life insurance.
The absence of life insurance could mean that your family has to sell the house you lived in together. Severing them from the precious memories that you had shared. A mortgage is a significant expense, but in many ways, it’s cheaper than an apartment. Your family’s quality of life could take a massive dive if they suddenly lose the income required to keep making payments on a house.
If they can’t afford car payments, it can make finding or keeping a job even harder. Things that your family currently takes for granted could be ripped away, throwing even more chaos into their lives than your passing already caused.
These are all horrible situations that can be easily avoided with a carefully selected life insurance policy. Be proactive instead of making your family be reactive in a tragic event.
Life Insurance Options
There are three primary options for life insurance: Term Life Insurance, Universal Life Insurance, and Whole Life Insurance. There are advantages and disadvantages to each of these options, and it’s important to understand what they are when making your choice. At Wilson Insurance Group, we understand that your needs are unique, so we offer every Cincinnati resident life insurance that works for them.
Term Insurance
Term Life Insurance is, as the name might suggest, a relatively short-term policy. The length of a Term Life Insurance policy is typically between 10 to 30 years, but can be longer or shorter depending on specific circumstances. It can be renewed as often as you’d like, but the premiums will increase each time.
Term life insurance is best if you’re looking to protect your family's financial security until major expenses (most notably your mortgage) have been paid off.
Pros:
Lower Premiums (To Start). The premiums for Term Life Insurance are typically lower, especially when you’re younger.
Larger Payouts. Relative to the premiums you pay, a Term Life Insurance policy will offer higher payouts to your beneficiaries than other types of life insurance.
More Flexibility. A Term Life Insurance policy can be renewed, converted to another type of policy, or allow you to change providers.
Cons:
No Cash Value. Other types of insurance may allow you to make withdrawals or take loans against the value of your life insurance policy.
Premiums increase with renewal. With each renewal, more time has passed, and so there may be a greater risk associated with insuring you.
You Need To Qualify For Renewal. With each renewal, you need to undergo an additional renewal, and the chance of being rejected or having your premiums significantly increased is extremely high if you have a major health issue.
Universal Life Insurance
Universal Life Insurance is meant to provide both the flexibility of a Term Life policy and the Stability of a Whole Life policy. This type of life insurance allows you to adjust the premium and death benefit of your policy, but this is largely in your control, so you’re not likely to see the same spikes in premium as you would with renewing a Term Life policy at a higher benefit.
Pros:
Flexible. Universal Life Insurance policies allow you to make adjustments to your policy without penalty.
Variable Rates. Variable rates mean that you could see a higher benefit or higher cash value of your policy.
Easier To Increase. You’re able to increase the cash value and death benefit of your policy more easily than a Whole Life Insurance policy, and (typically) at a lower cost than a Term Life Insurance policy.
Cons:
Premiums Can Change. Unlike a Whole Life Insurance policy, whose premiums will remain stable throughout your life, the variable rates and coverages of a Universal Life policy mean that your premium could increase.
Variable Rates. This is both a pro and a con because adjustments to the policy can also decrease the payout, interest, or cash value.
Positive Cash Value Needed. While a Universal Life policy has a cash value, that value typically needs to remain positive for the policy to remain active. This could limit your ability to leverage your policy in ways that do not exist with a whole life policy.
Whole Life Insurance
Whole Life Insurance is probably the type of life insurance you’re most familiar with. It’s what you’re likely thinking about when you consider life insurance. It’s a policy that remains active for as long as it’s paid. The premiums and death benefits remain stable throughout your life.
Pros:
Stable Premiums. Once your policy is active, you will always pay the same monthly or annual premium.
Cash Value. A whole life insurance policy will gain cash value, and may even pay dividends.
Tax Benefits. The value of a Whole Life Insurance policy is not taxable, and its dividends and tax benefits are non-taxable.
Cons:
(Relatively) High Premiums. Compared to what you would pay for a Term Life Policy, especially at a younger age, the premiums for a Whole Life Policy are higher.
(Relatively) Low Payout. Compared to the death benefit of a Term Life payout, especially at lower rates or a younger age, a whole life policy may not have as large of a payout.
More Complex. Fully understanding and utilizing a whole life policy can often require greater insight, possibly even the assistance of a financial advisor.
Other Considerations When Choosing Life Insurance
Much of the conversation around choosing life insurance involves financial calculations. Making sure that you have a large enough death benefit to replace your income, as well as cover your mortgage and other debts. The reality though, is that those questions and calculations are just a stand-in (and a poor one at that), for the real questions that surround purchasing life insurance.
The real goal of life insurance is to provide you with peace of min. Calculating what the benefits should be, in terms of covering debts and expenses, is just one of the more direct paths towards ensuring that goal.
Knowing that you’ve made the necessary preparations to ensure that your family can maintain their current quality of life will allow you to rest easy and will take a load off your mind that you might not have even noticed was there.
Your loved ones will miss you when you’re gone no matter what. The best thing that you can do for them is to make sure that they won’t have even more pain or stress when that happens. Exactly what that looks like can depend on what you’re providing or planning currently.
So, the most important part of choosing what life insurance policy is right for you is taking a careful inventory of what your family means to you, what you’re providing them with currently, as well as what you’d like to be able to offer in the future, and how you can make sure that still happens in a worst-case scenario.
How Wilson Insurance Group Can Help You
Of course, we can help you find the perfect policy.
Wilson Insurance Group is a Cincinnati life insurance company with decades of experience specifically serving the community.
Hop and his family currently provide life insurance, as well as health insurance, medicare, disability, and much more to the city of Cincinnati.
Contact Wilson Insurance Group today, either by phone at (513)984-5991 or by emailing matt@wilsonbg.com.
See the difference that a local Cincinnati life insurance broker can make.