From the September 2010 issue of Benefits Selling Magazine •Subscribe!

You're going to need life insurance

A healthy young female, non-smoker typically will receive the lowest life insurance premiums.

On average, smokers pay more than twice as much for life insurance coverage than non-smokers.

Importance of life insurance

Refinements to the process of underwriting have made life insurance accessible to more consumers today than ever before. The expanded use of blood profiles following the emergence of AIDS in the mid-1980s, for example, and the advent of tests measuring cholesterol and liver function have enabled more accurate evaluations of risk factors, leading to increased segmentation of risk classifications. In addition, people who were once considered uninsurable, such as breast cancer survivors, are now able to qualify for coverage.

What kind of life insurance?

There are a number of medical and non-medical personal characteristics that have been proven to affect life expectancy. The factors most closely evaluated during the life insurance underwriting process include age, gender, smoking habits, physical condition, medical history, occupation, avocation, financial stability and the use of alcohol and drugs.

The average adult American has coverage equal to 4x her income.

The actual coverage needed is often 10x - 15x annual income.


A policy's cash value can be surrendered, in total or in part, for cash that can be put toward important uses like a child's education, a business opportunity or supplemental retirement income. Also, you can borrow from your insurer at relatively low interest rates and use the cash value as collateral. The loan is not dependent on credit checks or other restrictions like loans from most financial institutions. Keep in mind that borrowing or withdrawing funds from your policy will reduce its cash value and death benefit if not repaid.

If you need to stop paying premiums, the cash value can keep your insurance protection in force for a period of time.

Cash value accumulates on a tax-deferred basis, similar to assets in most retirement and college savings plans. Death benefits paid to the beneficiary generally are not subject to federal income tax.

As long as you don't allow your policy to lapse, you'll have the coverage for life and won't need to worry about being unable to afford coverage if your health deteriorates.

With many types of permanent insurance, premiums will remain constant or stable over your lifetime. With term insurance, premiums often increase as you age.

Calculating life insurance needs

How individuals qualify for life insurance

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