Hello everyone, as Crystal already introduced me in the previous post I won’t take up too much room doing the same. Just a quick recap: my name is Liran Hirschkorn and I’ve been an independent life insurance agent for over 12 years now. I specialize in high risk and term life insurance and I’m outreaching to sites such as Budgeting in the Fun Stuff because I’m trying to dispel many of the myths that surround life insurance, and ultimately make it more approachable for Americans who largely go under or uninsured.

Life Insurance Q&A with Liran Hirschkorn

From: Lance @ Money Life and More

How much do term life policies go up as you get older? Male and Female at 25 vs 30 vs 35 for a 25 or 30 year term policy. I know there are many variables, but just a percentage estimate would be great. I think it makes more sense to wait until I’m going to have kids to get a policy.

Lance, you’re right. Rates do vary by age. Let me give you an example of a $500,000 policy at the best rates (preferred plus). To keep things simple I’ll quote a 25 year old male – female rates are slighlty less, but this should give you an idea.

25 year old male 500k 25 year term = $26 per month, 30 year term = $30 per month

30 year old male 500k 25 year term = $28 per month 30 year term = 32 per month

35 year old male 500k 25 year term = $34 per month 30 year term = $37 per month.

If you’re married and your spouse couldn’t pay the bills on her own, I wouldn’t wait to get coverage. If you are going to wait, the one risk you have to weigh in your mind is your health. If your health changes it could affect your rates or the ability to get approved. The benefits of getting a policy earlier, before you have children, is that the cheaper rate will stay with you even if your health should degenerate. You’re basically gambling that you won’t have any maladies or lifestyle changes between age 25 and 35. That being said, if something does go wrong by the time you’re 35 that $37 payment could be far out of reach

From: jenn

This may be an odd one. At one point my nephews were getting 10% of our life insurance policies, for future college funds if we are not around. Their parents were aware of this. We have had a massive falling out to the point of changing wills, removing the nephews as beneficiaries, etc, it was bad. Should something happen to my husband or I, the parents will definitely be expecting something as we haven’t told them they were removed from the policy, do they have any recourse? Do we need to notify them in writing?

No. As long as you have removed them as beneficiaries on the policy they have no recourse. Just make sure that you didn’t make the change only on the will and that the beneficiary designation on the policy is correct because what is on the policy supersedes what is in the will. An insurance policy does not go through the probate process – that means it is outside of your will.

From: Laura S.

How long does it take for someone who has previously had cancer to qualify for term life insurance? My husband had prostate cancer two years ago and I was told by one company five years and a second he may never qualify despite being fairly young (early fifties).

The reason why you received conflicting answers is that both scenarios are possible and the agents may have not asked you the right questions. The key to knowing when you can qualify after cancer depends on several factors. For example, with Prostate cancer we would need to know the stage and grade of the cancer, the pre-cancer PSA, and the Gleason score. If it was very low grade and low Gleason it is possible he could get coverage right after or within 6 months of completed treatment. In other cases it could be a longer waiting period.

From: Adam – HireMeHigherEd

My wife and I have a term life insurance policy. I believe the policy is Term 80. Does this mean that the policy will be in place until we reach 80. or will it be in effect for 80 years after the date we signed for it? Also, can the premiums ever rise, or are they generally fixed for the life of the policy?

It sounds to me like you have a term policy that goes until age 80. What you need to check for is how many years is the term “Level” for – meaning is it a 20 year term that goes to age 80? What that means is that your payments could be locked in for 20 years, and after that period they skyrocket each year to age 80. With term policies, premiums are generally fixed for 10, 15, 20 ,25 or 30 years depending on the term you bought. I suggest you review the policy with an agent and get clarification on what you have to avoid shocks down the road.

From: Brick By Brick Investing – Marvin

1.  Are life insurance payouts taxable?

Life insurance death benefits are income tax free, however they are not estate tax free. That means if your estate is subject to federal or state taxes then the insurance proceeds would be subject to estate taxes.

2.  Do you recommend whole life or term life insurance?

I generally recommend term over whole life. It’s cheaper and you can get a lot more coverage for your money. I see insurance as a protection vehicle not an investment vehicle. If you need permanent life insurance, I suggest looking into a “No Lapse Guaranteed Universal Life Insurance” policy, which is significantly cheaper than Whole Life and still provides lifetime protection.

From: Mom @ Three is Plenty

How do insurers look at diagnoses of depression when applying for life insurance? – I’m especially concerned about “temporary” depression such as post-partum depression, and for folks who have their depression managed.

Depression and anxiety are extremely common. If depression is well managed you may still qualify for the best rates, or if you don’t qualify for Preferred Plus, it may bring you down to Preferred instead. The concern is when the depression isn’t well managed, and you have been hospitalized due to it, or aren’t able to work because of it. Besides these big red flags, depression usually isn’t as big of a factor in determining life insurance rates as most people assume.

From: Mike @ WeOnlyDoThisOnce

How early is too early to get started? Cheers and thanks!

And From: Edwin

I am only 20 years old and healthy as far as I know. At what age should I begin to shop around for and concern myself with life insurance? My concern is that I will be funneling money out of my income to pay for something I won’t need for years to come.

Thank you for taking the time out to answer my question.

Thanks again to Crystal for hosting this Question and Answer session. It’s been my pleasure and I love the diversity of questions brought forward. Some were common, and some were pretty unique. I hope I was able to cover everyone’s questions sufficiently – if you have any follow up questions please feel free to contact me via my website, ChooseTerm.com. I’m fortunate enough to work as an independent broker which means I get to work with the best life insurance companies, rather than being limited to one.

Today, I am participating in the huge Life Insurance Movement in the blogging world that was started by Good Financial Cents. 

Our Life Insurance History

When Mr. BFS and I first started out together after college, we did not buy extra life insurance.  We didn’t own anything, we had maybe $5000 to our names by the end of the year we graduated, and we had no dependents.  It made sense to us to just take the $10,000 policies our jobs provided and move on.  We figured if one of us died, the other could afford our cheap lifestyle on our own and the $10,000 would cover the funeral.  We left it that way for the next 3 years out of pure laziness.

In 2008, we realized that we had a house, some investments, cash, and were living on about $35,000 a year instead of $20,000 a year.  So we each bought some extra term insurance through our jobs to cover ourselves for $100,000 each.  That could pay off our remaining mortgage and cover a year of expenses.  It cost like $15 a month total, so it seemed more than worth it.

But this year, in January 2012, my husband joined me in self-employment.  Seeing as we both need each other to get all the work done, we knew we would need to increase our coverage to cover all of our mortgage debt, at least 2 years of basic expenses, and the funeral expenses.  So we are both covered with a term insurance policy for $250,000 for about $35 a month total.

Why I Think Life Insurance is Worth It

Do I think I’m going to keel over tomorrow or that Mr. BFS is going to die for sure next time he officiates a highschool football game?  No.  But what if one of us did just die?  The other one would be completely screwed.

We don’t have kids, but we will soon own two homes and we’ve split our online ad business responsibilities pretty evenly.  So the person left behind needs a little help to allow themselves time to grieve.  $250,000 will cover our living expenses for 3-5 years depending on how the survivor continues to live.  That should buy the survivor enough time to hopefully take some deep breaths, rebuild their life, and find their stride.  Since we’ve been together since we were 18 years old, that would probably be necessary.

Overall, paying a few hundred dollars a year for the peace of mind is totally worth it to me.  I would never want my husband or me to have to handle a HUGE loss and be stuck in a financially sucky position too.  Did we want to pay a premium for a million dollar policy?  No.  But we both knew we needed at least 3-4 years of expenses covered if the worst ever happened.

What’s your take on life insurance?