In this article, we will cover 13 questions that immigrants in the US often have about life insurance. There are no dumb questions, only questions that need answers. Because life insurance has so many unique terms and phrases, this article will help you understand concepts that may be new for you.
1. Is life insurance affordable?
“Affordable” means different things to different people. How we define affordable is, will it fit into your budget? You may want $500,000 with life insurance protection, but you may not be able to afford the premium or want to spend that much money.
We recommend you purchase what you can comfortably fit in your budget right now. You can always purchase more life insurance later as your income, family, and responsibilities grow.
2. Can you afford not to have life insurance?
If you’re a male with a wife and two children and you die, owning life insurance doesn’t matter. What matters is if you care about protecting your wife and children from the terrible financial hardship that will engulf your family upon your death.
Do you want your family to have to sell your home? Do you want to have them sell your automobiles? Do you want to have them move out of your community? Do you want your children not to go to college?
If you can’t afford life insurance right now, how will your family be able to afford the crushing debt that will inevitably come after your death?
We recommend you own at least some life insurance coverage. Even a $50,000 life insurance policy will offer your family a tremendous number of options versus zero dollars when you die.
3. Is life insurance guaranteed?
Life insurance policies or contracts are between an insurance company and a private individual. Everything in a life insurance contract is spelled out in detail inside your life insurance policy; the insurance companies don’t like ambiguity or misunderstandings for issuing life insurance policies.
If you apply for a life insurance policy and are accepted, the insurance company will have to pay your beneficiaries for the amount of life insurance you purchased.
4. Is life insurance tax-deductible for business?
If you own a business and offer life insurance as part of the benefit plan, life insurance may be tax-deductible to the business owner as employer provided benefit.
5. Is life insurance tax-deductible for individuals?
For other purchasers of life insurance who are not businesses, life insurance will not be tax-deductible.
When you purchase life insurance as a private individual or immigrant, you purchase life insurance with “after-tax dollars.” This means you buy life insurance with what money is left over after the government and state have pulled out their taxes and other fees. You pay all the rest of your bills in your life insurance premiums with your “take-home pay.”
Because you purchase life insurance with “after-tax dollars,” when you die, life insurance proceeds paid to your beneficiaries and family members are paid to them tax-free.
The benefit of this tax-exempt status is they have more money to work with after your death. If you earn $50,000 a year in income, you may only take-home $35,000 a year after taxes. Therefore, if you purchase a $50,000 life insurance policy, it will pay 1.4 years’ worth of “take-home pay” income.
This benefits your family, as it will give them peace of mind, knowing they have an important financial safety net in place should you unexpectedly die.
6. Is life insurance real?
Life insurance is genuine and real. The life insurance industry is one of the most highly regulated industries in the United States. Because a tremendous amount of money is involved in paying out premiums and death benefits, the government heavily regulates the life insurance industry.
Life insurance is also real to your family members and loved ones when you die. If you don’t have life insurance, you may place your family’s finances and health at risk. If you have life insurance, life insurance will be real for them when they have enough money to live on and thrive after your death.
Life insurance is real…some people just need to get real about life insurance.
7. Is life insurance a retirement plan?
Life insurance policies are not intended to be retirement plans. The proceeds of the life insurance policy can add retirement income to the surviving spouse or family members. Life insurance coverage pays out an agreed amount of money when the policy owner dies.
Some life insurance plans can be structured so that, later in life, you can withdraw money from cash value to supplement your income while still offering life insurance benefits. Any life insurance policy that has an “investment” component will cost more money than a regular term life insurance policy.
For people with high net worth and high-income earners, there are life insurance plans that build cash value and that offer a life insurance component that may make sense. These policies, however, are reserved for income earners with much higher disposable income levels than the average middle-class family.
We recommend you look at term life insurance policies first and then other “retirement” life insurance products second, based on your age and health information.
8. Is life insurance cheap?
“Cheap” is a relative term. What is cheap to one family may be expensive to another family. We have met with families that earn $36,000 a year that think a $120 life insurance policy is a great value. We met families that make $250,000 a year that say they can’t afford a $35 life insurance policy.
The cost of life insurance is a factor in whether you purchase it, but your mindset and wanting to protect your family is a greater determining factor whether you will buy life insurance.
$120 may be cheap to one family, and $35 may be expensive to another family. The best thing to do when considering life insurance is to purchase what you can afford now. As your income increases, you can purchase more life insurance later. If your health changes, you may not qualify for cheap life insurance. Now is the best time to purchase life insurance.
9. Does it matter when I purchase life insurance?
Yes, it does. The younger you are, the more affordable your life insurance premiums will be. The healthier you are, the cheaper your life insurance premiums will be.
Life insurance premiums increase as you get older. This should come as no surprise since, as we get one year older, we get closer to dying. As we grow older, we become more susceptible to having health problems that may have serious consequences to our longevity and lifespan.
A good example is if you are overweight. You could purchase life insurance, right now, and it would be a little more expensive than if you weighed less; purchase life insurance anyway!
When you lose weight and keep it off, we can always help you apply for a more favorable policy that will save you money.
Whether you are overweight or at an average weight, your family will still need life insurance when you die. It truly matters when you purchase life insurance.
10. Life insurance and investment?
Life insurance policies with “investment” components require special licenses to sell. This is because, if a life insurance policy is tied to the stock market or any other variable rate of return, it has a higher amount of risk. Most people and immigrants we help are well-advised to stay away from these products.
We recommend you look at term life insurance policies first and then other life insurance products second, based on your age and health information.
11. Is life insurance a good investment?
We think so. People insure their cars, their homes, the telephones, their boats, their electronics, and many other items and products. People purchase these insurance products and think it’s a sound investment.
If somebody hits the car accidentally, the car will get repaired or replaced. If they dropped their cell phone and it breaks on the ground, they get a new cell phone if they have insurance. If they’re out in their boat and it sinks in the water, the insurance company will repair or replace the boat.
Many insurance policies also offer benefits like critical illness. If you suffer a heart attack, stroke, or other serious illness, you can get paid proceeds from your insurance policy without dying. If you had a $100,000 life insurance policy, and the policy had a critical illness rider, you might get $25,000, $50,000, or $75,000 of the life insurance policy should you suffer a heart attack, stroke, or other serious illness.
If you are diagnosed with a terminal illness, most policies will pay the entire face value of the policy with a diagnosis of one year or less to live. This will allow you to continue to pay your mortgage payments, your medical bills, and all the other expenses while you cannot work and your illness is progressing.
12. Is life insurance cash value?
Some life insurance policies accrue cash value within the policy. Policies with cash value are long-term permanent life insurance policies. They are more expensive than term life insurance policies and are not the first choice unless you are older or have numerous health problems.
13. Is life insurance beneficial?
Yes, life insurance is beneficial. Life insurance does something unique that many people don’t think about. Life insurance creates cash at exactly the right time it is needed. When will your family need significant money? They will need a significant amount of money the day you are diagnosed with a terminal illness or on the day you die.
If you’re diagnosed with a terminal illness, you will need money to pay for medical bills and to replace your income when you cannot work. Having a life insurance policy in place with a terminal illness component included in the policy should be an important part of every family’s financial plan.
If you die unexpectedly, your income dies with you. Your family will no longer have the benefit of you working and earning a paycheck every week. Your family will struggle, your family will suffer, and your family will pay the price of you not purchasing life insurance while you are alive.
Immigrant families often have fewer resources, fewer family members, and less financial reserves than families that have been living in the United States since birth.
The more you struggle financially in life, the more your family will struggle after you die. Life insurance is a perfect product to solve a terrible problem. When you die, your family will need money. Life insurance solves that problem.
While purchasing life insurance may seem overwhelming at first, we make the process easy. Protecting your family or business is one of the most important things you will do in your lifetime.
It’s important to get it right; we are experts in helping green card holders and foreign nationals get the affordable protection they need.
Call us today at (888) 630-9422 and we will find you the best life insurance protection for your needs.