Whole life insurance is well suited for Arizona residents. However, there are times when you should NOT get whole life insurance. This article will provide a desirable list of life insurance alternatives, and when you should choose them, instead of whole life insurance. To clarify, the same pro’s and cons in this article apply to all states; Not just Arizona.
Article Table of Contents
Who IS Whole Life Insurance For?
There are many life insurance options. Whole life insurance is built for someone who wants some or all of the following:
Life insurance that will never expire
A policy that has locked coverage until death
Accumulating cash value
Easier to qualify for
In most cases, locked COST until death (The exception is universal whole life insurance)
Death benefit between $5,000 – $40,000. Affordable, simple issue
Death benefit $50,000 – $500,000 if extremely healthy. More expensive.
Cover final expense costs, such as cremation, butial, funeral and financial gift
For people under the age of 86.
As you can see from this list, whole life insurance is versatile. It is well rounded, designed for flexibility and it is quite simple. A lump sum, between $5,000 – $40,000 is sent to your beneficiaries upon your death, so that the burden of your final expenses is covered by the insurance policy. Many insured “beef up” their policies a bit, so that they include a financial gift to their loved ones.
In most cases, those who choose whole life insurance, select an amount from $5,000 – $40,000. However, in a small number of cases, people qualify for $50,000 – $200,000 whole life insurance at greatly reduced cost- IF, they are extremely healthy and an ideal height and weight build.
When NOT to get Whole Life Insurance
As mentioned, there are times to choose other life insurance options, depending on your specific needs and the needs of your loved ones.
Term Life Insurance “Bridge Policy”
The first common example of when not to get whole life insurance, is if you are under 65, quite healthy, and you just want temporary coverage. Temporary coverage is anything under 31 years. Many clients refer to this kind of a life insurance policy as a “Bridge policy”.
It’s a temporary stop gap. It is ideal for any length between 3 months – 30 years. If this meets your needs, then a term policy is by far going to be the least expensive option, per $1,000 of coverage. You need to be quite healthy in order to qualify for this. As an approximation, you should have 3 or less active prescription medicines. Many medical conditions automatically decline coverage. If you have medical conditions that you are concerned will decline your coverage, but you have 3 or less prescription medicines, call us. 50% of the time, we are able to find a good fit and get approval.
Therefore, whole life insurance is a bad solution when you’re looking for a bridge policy. HOWEVER…
If you have medical conditions, complicated medical history or prescription medicines that keep you from getting a term policy (which is very common), you can always get whole life insurance, temporarily. At any time, you can stop utilizing the policy by canceling, when you feel you no longer need it.
Accidental Life Insurance
If you already have sufficient medical death coverage and you have a policy that excludes accidental coverage, consider:
1) Changing policies, to a full coverage whole life insurance policy
2) Get accidental only coverage
Approximately one-third of deaths, fall within the accidental death category.
Most accidental death policies, include:
- Motor vehicles- The leading cause of deaths within this category.
- Falls- Each year there are roughly 13,000 death falls.
- Poison- This consists of 2 subcategories: Poison via gas/vapor (Such as carbon monoxide), and poison by solids/liquids (Such as medication).
- Drowning- This may exclude drownings that occur as a result of natural disasters.
- Fire- Including burns and asphyxiation
- Suffocation- Including choking on food or other objects.
- Firearms- This does not include people who are killed in combat or any form of suicide.
- Industrial- This can include explosions, equipment malfunctions, mining accidents, and any other work related deaths.
- Other accidental deaths- Important category. This includes anything resulting in mistakes made by medical professionals (Surgery, etc.), air transportation , machines, mechanical suffocation, and impact from a falling object.
If you don’t have accidental coverage and that’s all you need, just pick up an accidental only policy. They’re very economical. Depending on your age, you can get $500,000 in accidental life insurance coverage for approximately $50 – $100 per month. You can place/apply for these policies until the age of 70 and they last until age 80.
If you’re experiencing some “hiccups” while looking for ideal life insurance, make sure that you’re very open with your agent. Choose an Arizona life insurance agent that you trust, so your loved ones are well looked after. If we can help you with any questions or concerns please reach out to us.