Published: 13 December 2012
Why do I need life insurance?
You need life insurance if anyone will suffer a financial hardship caused by your death. Our ability to earn an income is what makes us so valuable. If that income stops, your family will suffer. Life insurance can be used to meet your family’s future needs by replacing your income.
Many people will also use life insurance for specific needs such as making sure the mortgage is paid off and leaving the family with a debt-free home. Other people use life insurance as means to pay for burial expenses. It is safe to say that sooner or later we are all going to die; it is our responsibility to prepare for that day so our family won’t suffer financially as well as emotionally.
Why should I have life insurance in addition to my employer benefits?
Employer group life insurance is great as supplemental coverage, but ask yourself this: What happens to my employer coverage when I retire, change jobs, or get laid off? Group coverage is only good when you are part of the group. We have all heard the saying “Don’t put all your eggs in one basket.” Make sure you have planned ahead and bought individual life insurance so no matter what happens, your family will be protected.
How much life insurance do I need?
There are different ways to calculate how much life insurance you need. Below are the major concerns that most experts agree should be used to determine your need for life insurance.
Our needs analysis calculator is a great way to determine how much coverage you need.
What will your family need to enable them to maintain the same standard of living if you should die in the prime of life? Income needs are usually greatest when you have young children. Most experts agree that you will need 5 to 10 times your annual income to replace your income if you die.
Paying off Your Mortgage
Money will be needed to pay off your mortgage. If you rent, you will want to think about putting money aside for a “rent fund.”
If you have a car loan, home improvement loan, credit card balances, etc., these will need to be considered when deciding how much life insurance you need.
Education Fund for Children
Educating children can be very expensive. The average cost of tuition for a four-year, in-state public university is about $3,000 and $17,000 for a private university. Current cost for room and board is about $5,000 per year. Books and other fees should be included as well. You will want to consider this for all children.
Final expenses refers to things such as final medical and hospital costs and funeral expenses. The average funeral in America today costs about $7,500.
You will want to have money set aside for your family to cover major home repairs, auto repairs and medical emergencies. Half of your annual income should cover these emergencies.
You will want to consider more money for this category if you have special needs children, aging parents that are dependent on you, or other important, special needs.
Why should I buy from Farm Bureau Insurance?
Farm Bureau Insurance is one of the largest writers of individual life insurance in the state of Tennessee. We offer competitive rates and have a strong reputation. We have more agents in more communities in Tennessee than any other company. Our financial condition is rated A+ Superior by A.M. Best, the largest company devoted to rating insurance companies, and we have a very conservative approach to managing the company.
With this philosophy in mind, you can rest assured that the trust you put in us will result in Farm Bureau Insurance always being there when you need us.
How do I buy life insurance from Farm Bureau Insurance?
Just contact your Farm Bureau agent and he or she can help you with your purchase. If you don’t have an agent, please use our “Friendly Agent” tool on the right side of this page.
What is term life insurance?
Term life insurance is temporary and is purchased for a set length of time, a term. We offer policies lasting one, 10, 20 or 30 years. Term life insurance is a way to get the most amount of coverage for the lowest cost. It has a low initial premium and the cost stays level for a specified period of time.
Term insurance is most often used to take care of temporary needs like replacing your lost income or paying off the mortgage. The main drawback to term insurance is that after the specified term, the cost will increase.
The good news is that all of our term products can be converted to permanent insurance. Depending on your age, you may not have to complete any medical exams or answer any health questions to convert to a permanent plan.
What is whole life insurance?
Whole life insurance is meant to last your whole lifetime, as long as you keep paying the premium, and it increases in cash value as time passes. The amount of the premium stays the same, and policies guarantee a set death benefit. The policies’ cash value accounts can grow each year and are tax deferred. The cash value can even be borrowed against to help with emergencies or when times get tough.
Another valuable feature of whole life insurance is the opportunity to receive policy dividends.* Dividends can be used to increase your death benefit, increase your cash value, or even help reduce your premium. We can proudly say that we have paid a dividend every year since the company’s inception.
*Not all whole life policies pay dividends and dividends are not guaranteed.
What is cash value?
Cash value is a build up of money inside a whole life or universal life insurance policy. The cash value earns interest and is tax deferred. You can get at the money in the cash value account through policy loans or surrenders.
However, surrendering the cash value or taking a loan on it may reduce the value of your policy, cause your premiums to increase or result in policy cancellation. The cash value account is not a savings account, but it can be a useful way to get funds in the event of an emergency.
What are dividends?
A dividend is a benefit that may be paid to a client who has a whole life policy. The amount of the dividend is based on the profitability of the company.
There are several dividend options a client can choose. Dividends can be used to increase the death benefit, accumulate interest or even reduce premiums. We can proudly say that we have paid a dividend every year since the company’s inception. Not all whole life policies pay dividends, and dividends are not guaranteed.
What are dividend options?
Dividend options are basically how you choose to use the dividend the company has issued on a whole life policy. The following options are available:
- Paid-up additions: The dividend is used to increase the death benefit
- Accumulate at interest: The dividends are put into a side account within the policy and earn interest
- Reduce premiums: The dividend can be applied to any premiums that are due
- Dividends paid in cash: The dividend is paid directly to the owner of the policy
What is universal life insurance?
Universal life is a flexible form of insurance that can last your lifetime and can also increase in cash value over time. Flexibility means that you can change different aspects of the policy – the size of the premiums, whether the death benefit increases with time or stays level – which allows you to change your coverage as your needs change.
Another important feature of universal life is that it can also build up cash value as your premiums are paid. The cash value account earns interest and is tax deferred. With so many products and coverage options, universal life insurance is easily included in budgets of any size.
Will I need a physical if I decide to buy life insurance?
It depends on your age, the amount of coverage, and the type of policy. If you do need a physical, we will work around your schedule to make sure it’s as easy as possible for you. We will pay for the cost of the physical and we will even have someone come to you. Our examiners can come to your home or office. This makes having the examination quick and convenient.
How are death benefits paid?
The benefit can be paid in several ways. For many, there is an immediate need for the entire lump sum to pay for medical expenses and funeral costs. After the loss of loved ones emotions are high, and many beneficiaries choose to avoid making such important decisions in haste. If instructed, Farm Bureau Insurance will allow you to withdraw as much of the death benefit as you wish and leave the remaining balance with the company earning interest, with the understanding that you can withdraw the remaining money at anytime. The money sits in the account and earns interest until you take it out.
The death benefit can also be put into an annuity (see Annuities and Retirement) to create an income for the beneficiary’s lifetime or for a specific period of time.
Can I change my beneficiary later if I need too?
Yes, in most cases. Most of our clients choose a “revocable” beneficiary that can be changed by the owner at anytime. There are some situations where the owner chooses an “irrevocable beneficiary.” In this case, the beneficiary would have to approve the change along with the owner of the policy.
How do I report a death?
Upon the death of an insured person, a Farm Bureau Insurance office should be contacted and told the name of the insured, the date and cause of death, and the name, address, and telephone number of the person who should be contacted. Information on how to file a death claim is then sent to that person.
Do I need life insurance on my spouse if they don’t earn an income?
The answer is “yes.” Even though your spouse may not earn an income, you will suffer financial hardship if your spouse dies. The classic example is the stay-at-home mom. Have you ever thought about what it would cost to hire someone to do all the things mom does on a daily basis? A number of studies suggest it would cost more than $100,000 a year. Just think about the cost of daycare and housekeeping alone.
Do I need life insurance on my children?
In most cases, the answer is “yes.” We don’t depend on our children financially, but should the unthinkable happen, we will suffer financially. Funeral costs can be anywhere from $7,500 and up depending on the arrangements. If you don’t have the ability to pay for that cost out of pocket, life insurance is an affordable alternative.
Life insurance on a child is very inexpensive, and it will be a great gift for them to have later on in life.
Do I need to be a member to have life insurance with Farm Bureau Insurance?
No. There are a lot of great benefits to being a Farm Bureau member, but you are not required to have a membership with us to own a life insurance policy.
What happens if I move out of state? Will my coverage transfer?
Yes, your coverage will follow you wherever you go.
What is an Accelerated Death Benefit option?
This free feature lets you receive part of your death benefit if you are diagnosed as being terminally ill, as defined in the policy. The funds can be used anyway you choose.