Key Person Insurance also known as Key Man Insurance is a life insurance policy on an employee that is deemed as vital to the ongoing success of a business. If that employee dies, the business receives the death benefit.

Basic Partnership Example:

Jenny and Audrey are business partners at an internet startup. Both are vital to the ongoing success of the business. If for any reason one of them were to die, the business would suffer dramatically in the short-term. To protect against this, Jenny takes out an insurance policy on Audrey and names herself as the beneficiary. Likewise, Audrey takes out an insurance policy on Jenny and names herself as the beneficiary. In this way, the business has protection.

Corporate Example:

The owner of a software company wants to insure the business against the potential death of his most skilled programmer and also against the potential death of his most skilled salesman. Both employees are instrumental to the success of the business. The owner makes sure that life insurance policies are taken out on both of these important employees and names the corporation as the beneficiary of these policies.

Term Life Insurance as Key Person Insurance

The type of insurance that is a great fit as ‘key person insurance’ is term insurance. There are three reasons for this.

1) You can set a length of time for how long you want the policy to last.

2) Term insurance is relatively inexpensive compared to Whole Life Insurance.

3) The policy can be dropped for any reason at any time. For instance, if the key man leaves the company or the need for the policy simply no longer exists, the business can simply stop paying the premiums and effectively drop the policy.

Customized Structure

Key person insurance is beneficial to many different types of businesses including but not limited to partnerships, corporations, family businesses, law firms, small businesses, sole proprietorships, etc. The policy can be customized in terms of the length of time the policy lasts and the amount of death benefit provided, so as to fit the needs of each business.

Free Quotes and Personalized Service

At Secure Term Insurance we are insurance brokers offering free quotes and personalized service with step by step guidance throughout the application process, underwriting process, and any assistance you may need thereafter. Contact us today and get the coverage that is right for you!

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Term Insurance Rates for a 30 Year Old

A healthy 30 year old male can get a 20 year term policy with a death benefit of $1,000,000 from Banner Life for just $422.50 a year. This is approximately $35 a month and approximately $1.15 a day. That is less than a Caffè Latte per day.

Another option for a healthy 30 year old male is a 20 year term policy with a death benefit of $1,000,000 from Principal National Life Insurance Company for $455.00 a year. This is approximately $38 a month.

Term Insurance Rates Analysis:

The quotes above are both competitively priced. Both of the companies have A+ financial ratings from A.M. Best ratings agency. In purchasing a life insurance policy, pricing and financial strength are both factors to consider. You will want to buy a policy from a company that is most certainly going to be around for many years to come. In this scenario, the Banner Life policy is slightly less expensive. However, Principal has an accelerated underwriting program that allows the possibility of waiving the paramedical exam, which is almost always an underwriting requirement. For this reason, the 30 year old may consider the Principal policy even though it is slightly more expensive. This example demonstrates the importance of having a broker that is familiar with the insurance carriers in the industry and their underwriting guidelines.

A healthy 30 year old female can get a 20 year term policy with a death benefit of $1,000,000 from Banner Life for $347.36 per year. This is roughly $29 a month.

Another option for a 30 year old female is a 20 year term policy with a death benefit of $1,000,000 from Transamerica Life Insurance Co. for $350 per year. This is roughly $29 a month as well.

Term Insurance Rates Analysis:

The above quotes are both competitively priced and from companies that have high financial ratings. As you can see, these quotes are less than the quotes for the 30 year old male. This is because women have a greater life expectancy than men.

Term Insurance Rates for a 40 Year Old

A healthy 40 year old male can get a 20 year term policy with a death benefit of $1,000,000 from John Hancock for $643.00 a year.

Another option for a healthy 40 year old male is a 20 year term policy with a death benefit of $1,000,000 from MetLife for $649.00 a year.

A healthy 40 year old female can get a 20 year term policy with a death benefit of $1,000,000 from MetLife for $519.00 a year.

Another option for a healthy 40 year old female is a 20 year term policy with a death benefit of $1,000,000 from Banner Life for $549.98 a year.

Term Insurance Rates Analysis:

It is important to note that the quotes above are from companies with A+ financial ratings from A.M. Best ratings agency. Also, notice that MetLife is the least expensive option for the 40 year old female but not the least expensive option for the 40 year old male. Sometimes if a married couple are both seeking life insurance, they might purchase from different companies in order to maximize savings. Insurance carrier prices all vary based on age, gender, health, etc. An insurance carrier might be priced the best for a certain age group and gender and have relatively higher prices for another age group and gender. This is yet another reason that it is important to go to a broker when looking for term life insurance. Brokers can compare prices from the various insurance carriers and find the best pricing. Also, some insurance carriers have better pricing for whole life insurance and much worse pricing for term insurance. So again, there is an advantage to going to a broker, as it is important to compare prices to get the best rate.

Term Insurance Rates for a 50 Year Old

A healthy 50 year old male can get a 20 year term policy with a death benefit of $1,000,000 from Lincoln National Life Insurance Company for $1,688 per year.

Another option for a healthy 50 year old male is a 20 year term policy with a death benefit of $1,000,000 from John Hancock for $1,710 per year.

A healthy 50 year old female can get a 20 year term policy with a death benefit of $1,000,000 from Lincoln National Life Insurance Company for $1,244 per year.

Another option for a healthy 50 year old female is a 20 year term policy with a death benefit of $1,000,000 from Banner Life $1,249.99 per year.

Term Insurance Rates Analysis:

The above quotes are from companies with A+ financial ratings from A.M. Best ratings agency. Notice that for both a 50 year old male and 50 year old female, Lincoln National Life Insurance Company had the best pricing. However, in the 40 and 30 year old age groups, Lincoln National Life Insurance Company was not priced that low. No insurance carrier has the best term insurance rates across the board in every age group, health class, gender, etc. For this reason it is important to go to a broker to get price comparisons to find the product that is right for you.

At Secure Term Insurance we are insurance brokers offering free quotes and personalized service with step by step guidance throughout the application process, underwriting process, and any assistance you may need thereafter.

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1. Getting a Quote

As an example, Greg is a married 29 year old with a newborn child. He is interested in getting a term life insurance policy to protect his family in the event of his death. Greg can go directly to an insurance company and will receive a quote from just that company. Or he can go to an insurance broker and receive quotes from multiple companies so as to compare them. For this reason it is advisable to go to an insurance broker when shopping for term life insurance. Term life insurance quotes are based on age, health, term length desired, and death benefit amount desired.

2. Choosing a Term Length

Greg has a wife, a newborn child, and also a 30 year mortgage. In choosing a term length, he would like a term policy that lasts for the duration of his mortgage. He also hopes to one day send his child to college and potentially graduate school, so he wants the policy to last at least until his child is an adult. Therefore, a 30 year term policy seems like a good term length. If Greg dies at some point within the next 30 years the death benefit will go to the beneficiary of his choice, which in this case is his wife Kimberly.

3. Choosing a Death Benefit Amount

Greg is the main breadwinner of his family. He currently makes $100,000 a year. After assessing his financial situation including his income amount, outstanding debt, junior’s educational costs, and potential final expenses, he decides that he should have a policy with at least $1,000,000 of death benefit. Here is a needs assessment test to take if you are considering term life insurance. Greg’s insurance broker presents him quotes with 30 year term lengths with a death benefit of $1,000,000. The best quote comes in at $700 per year, assuming that Greg is in good health. Keep in mind that the pricing and the financial stability of the insurance company are both important factors to consider when shopping for term life insurance.

4. Underwriting Process

Greg decides to pursue the policy at which point the broker sets him up with a paramedical exam. The paramedical exam can be taken at his home, his work, or wherever he chooses. It includes a blood test, and a urine test. The results are sent to the insurance company. The insurance company may also request doctor records.

5. Policy Approval & Delivery

Once Greg is approved the policy is issued and the broker delivers it to him in exchange for the first premium amount, which in this case is $700. Keep in mind, you can opt to pay the premiums monthly if you would like.

6. How Does Term Life Insurance Work?

Once the check is received, the coverage is bound. Greg’s premiums are level at $700 per year for 30 years. As long as he pays the premium every year his $1,000,000 of death benefit is in force. If he dies within the 30 year period, the $1,000,000 will go to his beneficiary. If he does not die within the 30 year term the policy ends after year 30. At that point, if he wants to get a new policy he will need to reapply and go through underwriting again.

7. Know Your Rights

Many term policies can be converted to whole life policies within a certain amount of time with no additional underwriting required. You can change the beneficiaries of your term life insurance policy at any time. You can also drop your term life insurance policy at any time. For instance, if you buy a 30 year term policy you are not required to keep the policy for the entire 30 year term. There is no penalty for dropping a policy. Once you discontinue paying premiums the policy terminates and there is no death benefit coverage. However, if you do wish to keep the policy for the entire 30 year period, the premium amount is level and will never increase during the entire term length. You can add another policy at any time. As your financial needs change you can buy another term life insurance policy. It is a good idea to review your coverage to maintain the proper amount of life insurance.

8. Term Insurance is Relatively Inexpensive

It is very important for young families that have not been able to accumulate a lot of savings to buy term insurance.  Often, a term life insurance policy costs less than it costs to buy a cup of coffee per day. Proceeds from the policy create an estate for the benefit of the surviving spouse and children.

At Secure Term Insurance we are insurance brokers offering free quotes and personalized service with step by step guidance throughout the application process, underwriting process, and any assistance you may need thereafter.

The post How Does Term Life Insurance Work? appeared first on Secure Term Insurance.

Knowing the difference between the two is a key to helping you get an overall perspective on the insurance industry and also will help when it comes time for you to buy insurance.

What is a Life Insurance Agent?

‘Life Insurance Agent’ is often used as an umbrella term to describe a person who sells insurance. Although used loosely and for simplicity when describing those who sell insurance, ‘insurance agent’ has a specific and important implication.

Technically, a life insurance agent refers to a person who sells insurance for only one insurance company. For instance, a life insurance agent with MetLife only sells MetLife insurance products… a life insurance agent with Prudential only sells Prudential insurance products…etc. This is why true insurance agents are often described as ‘captive agents’. They are captive in the sense that they only sell insurance products from their respective insurance companies.

What is an Insurance Broker?

Alternatively, a life insurance broker, also known as an independent agent, is not captive to selling insurance from just one company. A life insurance broker can sell insurance products from any insurance company and can provide a potential client with price comparisons.

The Myth of Buying Insurance Directly

It is important to note that when you purchase insurance it is mandated by law that a licensed insurance agent or a broker be involved in the transaction. There is no such thing as buying insurance directly from an insurance company so as to avoid paying a commission to an agent or a broker. Commissions are already built-in to the costs of all insurance policies. So choosing to purchase insurance through a life insurance agent or through a life insurance broker will not change the cost you pay for any policy. Keep in mind that if you are being charged a fee to get quotes then there is something wrong.

Why do some insurance salespersons become agents and others become brokers?

People entering the insurance sales profession often become agents first. Agents often receive sales training, an office space, sales incentive, and employee benefits from working with just one company. Those salespersons who become brokers typically have been in the insurance business for an extended period of time. Brokers rely solely on commissions to sustain themselves. They forego the benefits of being contracted with one company, but get the added benefit of being able to sell from multiple insurance companies.

Life Insurance Rate Comparison

It is important to get the most quality information you can when shopping and purchasing insurance. Comparing prices and getting a sense of the overall marketplace before you contact an agent or a broker is easy and beneficial.

At Secure Term Insurance we offer free quotes and personalized service with step by step guidance throughout the application process, underwriting process, and any assistance you may need thereafter.

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