Jacobson Insurance Brokers

Term Life Insurance Buyers' Guide with Money-Saving Tips and Free Instant Term Life Insurance Quoter

"Helping North Vancouver and Lower Mainland consumers
save money on term life insurance and living benefits for 27 years
."

Kent N. Jacobson, CFP, C.F.S.B.
Phone: (604) 988-2433

Make sure you study these money-saving tips first. They could save you hundreds, even thousands of dollars on your term life insurance!

Note: at any time, you may navigate by the use of these buttons, which will either take you to the top of this page, or to the previous (Home) page.

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If you require assistance or have any questions, please feel free to send me an e-mail.

Go to:

1. How much life insurance should I have?

2. Money-Savings Tips for Term Life Insurance

3. Money-Saving Tips for Permanent Life Insurance

4. Money-Saving Tips for Universal Life Insurance

5. Money-Saving Tips for Smokers

6. Money-Saving Tips for all types of Life Insurance


7. Show Me My Life Insurance Quotes




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1. How much life insurance should I have?

If your paycheck were to die along with you, would your family miss it?

Most people greatly underestimate the amount of coverage they need. Sadly, many people just pick a number out of the blue without giving it careful thought.

Consider this. To put it very bluntly, if one spouse dies, the only expenses that go down are for the food the person used to eat, and possibly the second car they used to drive. That's it!

The electricity bill doesn't go down. The property taxes don't go down. Neither does the gas bill. The roof will still need to be fixed, the furnace repaired. The children will still need to buy school supplies and clothes, and have money for a university or college education. The surviving parent will still need to save for retirement.

Many families find that AT LEAST 70% of the income that a person USED to earn is still needed to support the family, not in luxury, but merely to provide the bare necessities.

Another mistake that people make is to assume that insurance is not needed when the lower income spouse dies. If there are children, what about child care? Will help be needed to maintain the home? This must be considered when calculating your needs.

Life insurance is not like "winning the lottery." The check from the life insurance company may have to keep a family going for 20 years or more! If your spouse has not worked and has no pension plan, or limited retirement savings, or your child has a special need, an income may be needed for your spouse's or child's lifetime.

We recommend putting the life insurance proceeds in some form of conservative savings, and drawing from it the amount that will be needed each year for family expenses.

Income will need to rise each year with the rate of inflation, in order to meet the steadily-increasing cost of living.

CLICK HERE to use our handy Life Insurance Needs Calculator now! It will help you estimate how much insurance YOU need to keep an income flowing to your family if you were to die.

If you require assistance or have any questions, please feel free to send me an e-mail.


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2. Money-Saving Tips for Term Life Insurance

Term life insurance provides the most coverage for the least short term cost.

Term Life Insurance is best suited to TEMPORARY needs. Example: the time until your mortgage or other debt is paid off, until your children finish university and leave home, or until you retire.

(Note: some types of insurance can allow you to take a higher-paying income option from your pension plan when you retire, to keep assets like a cottage or business within the family instead of a forced sale to pay taxes at death, or to cover the huge tax bill on your RRIF when passing it to your children after you die. These needs are better handled by pre-planning with Permanent Insurance).

Why is Term Life Insurance best suited to TEMPORARY NEEDS? The reason is that Term life rates go up like a staircase with your age. Preferred-health term life rates in particular are very aggressively priced for the initial term period, but rise VERY sharply at renewal. The "age staircase" gets very steep, very fast, and reflects the heightened risk of you dying with each year you get older!

Example: 10 year term has an initial rate that stays the same for the first 10 years, 15 year term has an initial rate that stays the same for 15 years, 20 year term for 20 years, etc.

As we age, unexpected health events happen, no matter how healthy we feel right now! A brush with cancer or a heart attack could make you uninsurable when your renewal is due, and you would have no alternative other than to stay with the same company and pay a MUCH higher premium.

MONEY-SAVING TIP:
Match the length of the term to the time you need the insurance!
Select the initial term guarantee period that completely covers the period of time you need the coverage, WITHOUT having to go through a renewal at an older age. This will save you a great deal of money on your life insurance.

Renewal rates are VERY important when deciding between terms of different lengths. We can provide greater detail on renewal rates with our own, much more sophisticated software. To see renewals for a 35 year old male in perfect health, see the examples below.

Both require Adobe Reader to view.

CLICK HERE to view "Kent's High-Tech Drawing" that will quickly and simply show you the difference between different types of coverage over time. Graphical comparison of 10 Year Term, 20 Year Term, and Term to 100 (permanent coverage).

CLICK HERE to see the numbers including actual renewal rates between 3 different types of coverage, 10 Year Term, 20 Year Term, and Term to 100. (For those who like detail). Requires Adobe Reader to view.

Remember! When you take a longer term to save money, you are NOT locked in like a mortgage. You can cancel at ANY time during the term, though the life insurance company is not allowed to cancel the coverage on YOU!

It's as if the life insurance company bit down on a big fish hook, and you are holding on to the blunt end. You can "let go" at any time, but they are "on the hook" as long as you keep them there, up to the maximum age stated in your policy and for as long as you can afford the renewal rates.

FACT: Many families have a high insurance need and not much money for premiums.

FACT: As mentioned in the links above, even if rates will rise sharply over time with term, the greatest danger is not having ENOUGH insurance in the vulnerable years. Most people with families and a high, temporary need end up purchasing term insurance.

CLICK HERE for our handy pop-up life insurance needs calculator. It will help you estimate how much insurance you need to keep an income flowing to your family if you were to die.

Money-Saving Tip:
Some term life insurance policies will let you switch later to a permanent lifetime rate, though this is best done at an early age so the premium is as low as possible. You can do this afterward, while still affording all the low-cost term coverage you need right now.

Of course, you need to know that the company you are dealing with has competitively-priced permanent plans to convert your coverage to over time. This is where you will need professional advice.

If you require assistance or have any questions, please feel free to send me an e-mail.

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3. Permanent Insurance

What if you don't want your insurance rates to go up? For example, if you want LIFETIME coverage that pays WHEN you die instead of IF you die during the early years?

Money-Saving Tip:
Permanent Life Insurance premiums will be higher in the beginning but MUCH lower over the life of the policy if you will keep the policy for your expected lifetime.

Rates are flat instead of climbing like a staircase with your age, as term insurance rates do.

If you didn't already see this in the previous section, check it now, as it is important to your understanding of life insurance!

REMINDER: For dial-up modem users, please note the following files are large, please be patient as they download if you wish to view them. The first one is 149K in size. Both require Adobe Reader to view.

CLICK HERE to view "Kent's High-Tech Drawing" that will quickly and simply show you the difference between different types of coverage over time. Graphical comparison of 10 Year Term, 20 Year Term, and Term to 100 (permanent coverage).

CLICK HERE to see the numbers including actual renewal rates between 3 different types of coverage, 10 Year Term, 20 Year Term, and Term to 100. (For those who like detail). Requires Adobe Reader to view.

Permanent Insurance isn't for everybody. Families with a very high life insurance need and not many premium dollars to spend usually buy term out of necessity, and trade off the rising rate for the MOST important need, which is to FULLY and ADEQUATELY cover the family in its most vulnerable years.

If you skipped ahead to this section and haven't already done so, check out our Life Insurance Needs Calculator now! In years past, there were some very overpriced, poorly designed permanent policies that were generically lumped together as "whole life." Some permanent policies began to emerge that were extremely competitive and an excellent bargain for the consumer.

In one case, we were able to replace an uncompetitive, old-style whole life policy for $50,000 with another, highly competitive style of whole life policy that had a face amount of $875,000 for the SAME premium! That was 17 and a half TIMES the coverage for the same premium dollar!

While uncompetitive whole life policies still exist, a current quote will quickly show you the new, competitive whole life policies that are an excellent bargain. This is why a widespread market comparison is so valuable to consumers - it quickly identifies the best life insurance bargains for your particular situation.

If you wish to quote this coverage you should select between
1) Term to 100,
2) Whole Life and
3) 20-Pay Life.

as there is strong competition between the companies in these categories.

(Universal Life is more complex, but the better policies typically offer an underlying level cost of insurance, and an investment savings account along with it to help pay for the coverage in later years. The cost of insurance SHOULD be fully guaranteed! This is important. In most cases, a level insurance cost is the practical situation cases where the greatest amount of insurance is desired, at the lowest possible cost. Some more complex situations deliberately employ a higher amount of cash value relative to the cost of the insurance).

1) Term to 100 provides a level lifetime rate for pure insurance coverage. The best plans have rates that are fully guaranteed. Many people wonder what "to 100" means! Depending on the company, the coverage will be considered fully paid up if you live to age 100, or some companies will pay you the full face amount of the policy at that time, even if you are still alive!

2) Whole life is very similar to Term to 100, but has an exit strategy if, for example, one spouse dies and the other no longer needs a policy. We suggest you only select policies that are fully guaranteed. A whole life policy will have a forfeiture benefit that allows a graceful exit with a refund of a portion of your premiums if you cancel your policy after a certain number of years. Some policies will also allow you to keep a reduced level of coverage in force if you stop paying premiums, in case you don't want to cash in the policy but merely want to stop paying premiums.

3) "20-Pay Life" means a type of coverage that lasts all of your life, but you deliberately pay it off more quickly with a higher premium. The end result is that your premiums are all paid off at the end of 20 years, and the life insurance continues for the rest of your life. It will also allow a refund of a portion of your premiums if you cancel your policy after a certain number of years. Again, select only policies that are fully guaranteed.

Money-Saving Tip:
If you want a comparison of "what would happen if I bought short term insurance with a rate that climbs like a staircase vs. a policy with a level rate for life (and investing the difference)" we'll be happy to run a spreadsheet that shows you the difference, just include a comment when you are finished this quote. If you have the Adobe Reader we can even send it by e-mail.

If you require assistance or have any questions, please feel free to send me an e-mail.

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4. Money-Saving Tips for Universal Life Insurance

There is another type of permanent life insurance that we have touched upon briefly.

Universal Life policies work best for people who are already maximizing their RRSP and need a tax-efficient way to pay for life insurance that they intend to keep for their lifetime.

Universal Life policies combine a tax-sheltered fund with life insurance coverage. The tax-sheltered fund may be linked to external indexes, or deposited at a fixed or floating rate of interest. Over time, the tax-sheltered fund may build to the point where its earnings can cover your insurance costs. The advantage is that you are able to do this with pre-tax dollars from within the plan, instead of paying tax on your investment earnings first. There are some tax changes in the allowable sheltered amount that are coming into effect in the fall of 2016.

Money-Saving Tip:
People who wish to transfer wealth between generations while avoiding excess tax may be wise to study this type of coverage more carefully.

Universal Life quotes are very specialized. Please e-mail for a manual quote.

If you require assistance or have any questions, please feel free to send me an e-mail.


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5. Money-Saving Tips for Smokers

If you a smoker who meets certain criteria, you may qualify for additional discounts. Money-Saving Tip:
If you only smoke cigars or a pipe, SOME companies will treat you as a non-smoker and will give you a much better rate than a smoker would usually receive.
Money-Saving Tip:
Are you planning to quit smoking cigarettes SOMETIME in the future? If you are in good health, you can get a "headstart" non-smoker rate...even BEFORE you quit!

If you require assistance or have any questions, please feel free to send me an e-mail.


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6. Money-Saving Tips for all types of Life Insurance

Money-Saving Tip:
It makes sense to combine policies to get a volume discount. If, for example, you have obtained coverage through the bank on your mortgage, or have another insurance policy in force, you may often save a great deal of money by combining your coverages and enjoying the savings of volume discounts.

Money-Saving Tip:
Get coverage on your spouse along with your own. Many companies will give you a "spousal discount" which REALLY adds up! When doing your quote, simply return and do a second quote on your spouse. The quoter is not sophisticated enough to determine this for you, but is used to give you an estimate. We can guide you to the companies that offer this valuable discount and save you money.

Money-Saving Tip:
Most companies calculate your "insurance age" by the age you are NEAREST to, though a few still use ACTUAL age.

Example: if you are 185 days past age 45, your AGE NEAREST for calculating insurance rates with most companies is 46. If you are 180 days past age 45, your AGE NEAREST is 45.

Make sure you take care of applying for insurance well before your next AGE NEAREST and you could save a great deal of money on your life insurance!

Money-Saving Tip:
Make sure to allow for the time it takes a company to finish underwriting your policy. Some people wait until the last minute before they have an expensive renewal with an uncompetitive policy, and end up paying unnecessarily high premiums while waiting for the new policy to be underwritten.

The most competitive companies handle large volumes of new business, so may at times have a backlog. You should allow about a month and a half before you need the coverage to get the process started. If you have any health conditions, need for medication, etc., you should allow longer because if the insurance company needs to write your doctor (depending on how FAST your doctor handles reports - they ARE paid well to do so) this can be the factor that adds the most time to the underwriting and issue of your policy.

Money-Saving Tip:
You can get FREE INSURANCE during the time it takes the company to underwrite and issue your policy. If you are in reasonably good health, many companies will give you FREE INSURANCE on a temporary business. HOWEVER, please be aware that you MUST BE HEALTHY at the time the policy is delivered. If you have a health condition that manifests itself during the underwriting period, the company will not allow the policy to be delivered.

Money-Saving Tip:
Make sure you have coverage that nobody can take away from you!

Why is this important? Consider this. Most people now have several career changes through their lifetime. The "job for life" is gone!

More than ever, insurance needs to be "portable." Group insurance at work is a ball and chain; you can't drag it with you, and you can only cut it off.

More and more we see people pushed out into consultant work, and their benefits vanish overnight! They may only have a VERY expensive option to keep some life insurance, and lose all rights to the other insurance, such as disability, etc.

In fact, people starting in a new business find it very hard to get a good disability contract even if they ARE healthy, because insurance companies are reluctant to provide coverage when so many new businesses do not make it past the first 2 years, and this time period is very challenging for someone who thinks of getting coverage AFTER the fact! See our Home Page to request a quote by e-mail.

Perhaps you WANT to go out on your own. There are greater opportunities to increase your income and enjoy your independence. There's just one problem! You've had a bout with cancer, which you have survived. You have had a heart attack, or other health problem. You are uninsurable and afraid to go out on your own!

Group insurance at your place of employment cannot be relied upon for your financial security. Remember the principle of the "hook and the stick!"

The group plan you have at work is like the "stick." Your employer holds onto one end. The insurance company holds onto the other end. Neither one can say they have a firm hold on the other. Either one can "let go."

You have NO say in the matter. You are relegated to the status of an "interested bystander." You do not possess a contract, but only a "third party" certificate. The plan may be cancelled, the premiums may be increased, and you have NO security at all!

Private coverage puts the insurance company "on the hook!"
The companies (for most types of coverage) cannot take your policy away once you have met the delivery requirements and the policy has been delivered to you. At the instant this takes place, you're holding onto the blunt end of a "fishhook" and the company has just bitten down on the sharp end!

You can keep the company "on the hook" as long as you choose (or have the ability in the case of rising cost term) to keep your premiums up to date, until the maximum age of the policy. At this point, the barbs finally fall off the "fishhook" and the company is "off the hook." With a permanent policy, you have the company "on the hook" forever!

Congratulations! You've read through the Money-Saving Tips and you now know more about life insurance than 99% of consumers in the life insurance marketplace! It's time to see your quote, just proceed to the next, and final section. We'll be happy to help you put the best bargain into place once you're done!

If you require assistance or have any questions, please feel free to send me an e-mail.


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7. Show me my Life Insurance Quotes!

You've read through the Money-Saving Tips and used the Life Insurance Needs Calculator to figure out how much insurance you need to keep income flowing to your family. Now, it's time to see your quote. Please e-mail with a description of the purpose of your intended insurance, and the length of time that you require it. We will help you calculate the amount, and best type, of insurance to satisfy your need.

If you require assistance or have any questions, please feel free to send me an e-mail.


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E & O.E. - Errors and Omissions Excepted
Copyright © 2002-2016 Jacobson Insurance Brokers and
Kent N. Jacobson, Certified Financial Planner
# 265 - 1000 Roosevelt Cres., North Vancouver BC V7P 3R4 Canada