Olga Dadressan, Vice President of the financial company Primerica (Florida), talks about why it is so important to insure your life, how to do it with the maximum benefit for yourself and why you should not count on insurance from an employer.
Life insurance in the USA is about loving your loved ones
People don’t always understand why you need to ensure your life. Especially those who came from the former Soviet Union. We have a lot of superstitions related to death, talk about it. We are so superstitious that we are afraid that if we are prepared, we will jinx ourselves and immediately die. But thinking about life insurance is no more superstitious than thinking about a fire extinguisher. You don’t think that if you have a fire extinguisher in your house, a fire will start. It just means that if there is a fire, you are prepared, you always have a chance to save yourself. Also, with life insurance. If you have it, it doesn’t mean that you will die. It just means that if something really happens to you, it provides your family for and prepared for this tragedy.
To get life insurance in the USA, it is enough to have legal status. The company does not ask for residency or citizenship, but you must legally reside in the United States and have a social security number.
Young people need insurance more than the elderly
What is life insurance? Most people think that this is necessary for older people who are likely to die soon. You may need insurance in your old age for funerals, for the last expenses of a cemetery, for a Wake. In fact, it is at this age that life insurance is not important. Because when a person dies in their old age, no one depends on them financially. And all that he has accumulated in his life remains to his relatives, who can use these savings for funerals. But even if an elderly relative has nothing, the family, of course, will strain, pay for the last trip, but it will not be so critical for her.
It is much more important when someone depends on us financially. This usually happens while we are still young, healthy, and working. We bring income to the family. Most often, life insurance is important for parents.
If dad goes to work and mom stays at home, then if suddenly the family breadwinner does not come home from work, mom will have nothing else to feed the family, pay the bills, and so on. What should she do if her dead dad didn’t have insurance?
Therefore, life insurance in the USA is very important to replace the income of the person who brings it to the house.
If you have two or three children 3-5 years old, even if something happens unexpectedly to one parent, the children need to be supported for another 15-20 years. The same income that dad brought should come to the house for another 15-20 years.
I often give an example to make people understand. A husband and wife, or one of them, generate income. For example, one of them, let’s say, dad was transferred to work from Florida to Texas. He went to Texas, and the family stayed in Florida. Does he send money to his family every month? Of course, yes. His income goes to the family. What if dad was transferred to heaven? His family’s expenses remained the same. If you have a family, it is your responsibility to provide expenses for your family and friends after a sudden departure.
Non-working people also need life insurance in the USA
My friend died of an aneurysm suddenly. She left a loving husband and a young son. Now her husband should be both mom and dad to his son, and instead, he is forced to work, go on business trips and find strangers to take his son to and from school. The costs of sudden death, hospital, funeral are also huge.
If my friend had insurance, he would have been able to replace his income for at least a few months, if not years, take care of his son, grieve, hire the right people, and so on.
It is very important to have insurance even for a non-working person. Maybe not so big, for 200-250 thousand dollars. This is often very inexpensive but will help with needs such as paying bills. For example, for a non-working 35-year-old mother, a $ 250,000 30-year policy costs between $20 and $35 a month. This is not much, but what a peace of mind in the family.
The less we pay for insurance, the better
Life insurance companies in the USA are assigned A. M. Best ratings. It is advisable to work with companies that have an A+ rating. This is the highest rating. And it rarely affects the cost of insurance.
There is a very large conflict of interest in the insurance industry. The more the client pays for their insurance, the more the agent earns. There are a lot of policies created in such a way that they are profitable for the insurance company, but not for the client. They encourage agents to sell these policies to their clients. Because of some unnecessary options, instead of paying $50 for the same amount of insurance coverage, the customer pays $300. And it turns out that even when an agent sells a policy that is not very profitable for the client, he does not think that he is doing something unethical. Because the company trains its customers well enough.
But we need to be realistic. The less we pay for insurance, the better. Because, most likely, we hope that for many years we will not need it and we will live happily ever after.
We need insurance for a certain period–until the children have grown until there are no savings.
Choose long-term life insurance in the USA
There are two main types of policies in America. The first one covers long-term insurance for 10, 20, 30 years. If someone has children who are now 4-5 years old, in 30 years, they will be 35, respectively. It is likely that by this time the children will have figured out how to subsidise themselves.
If we are already 55-70 years old, the need for insurance has already passed. At this age, we no longer need insurance, but money for old age, savings.
If we buy cheap insurance for 30 years and actively save money, then when the insurance period ends, we have the same savings that the policy provided about half a million dollars. And if we have these savings, insurance becomes less important. Therefore, the cheapest way to get life insurance in the USA is temporary insurance.
I recommend you take out insurance for the longest period so it can ensure you until old age, and at the same time invest money for the future.
Insurance is more expensive for smokers
For a family-a wife and husband who are 35 years old, a policy for 500 thousand dollars for 30 years will cost from 50 to 80 dollars a month, depending on the state of health. Usually, those who want to get a policy must pass a medical examination, which is paid for by the insurance company, and it awards them a rating that determines the rate. There is a standard rating that most people get, there is a rating of smokers, it is usually 2-3 times more expensive than the standard one.
And sometimes, depending on the insurance company, customers are awarded a rating that gives a discount for good shape and excellent health.
The cost of insurance depends on the amount, on the period for which it insures a person.
Avoid cumulative insurance policies
The second insurance in the United States is different savings policies. They are much more expensive. In fact, the insurance industry has figured out how to make a boring and intimidating product attractive. This is a savings policy. The company offers to keep her money, which will be paid to your family after your death.
These policies are much more expensive than temporary insurance. For the same money that a person could buy, say, 500 thousand dollars of long-term insurance, a savings policy will offer them 100 or 50 thousand, or even less. With this money, the family cannot hold out for 10-15 years, it will only be enough for the funeral.
The second drawback of this offer is savings within the policy. They pass into the ownership of the insurance company, which is never explained to the client. This is called a savings account inside any insurance policy. Insurers always say: you will be able to access your money, but they do not say-this money will be yours. But the bottom line is that having access to your money means you can borrow it at interest. In other words, you can take your money from the insurance company, but then return it with interest. Therefore, keep your money and savings away from insurance companies, contact them only for insurance.
It is because of this insurance that many people get confused, think that insurance is expensive and they can’t afford it.
Savings policies such as Universal Life, Index Universal Life, Variable Universal Life, Flexible Universal Life and others are three to four times more expensive than long-term ones, and such as Whole Life sometimes 10-12 times more expensive.
Don’t count on employer insurance
First, such insurance is often minimal. It starts from 10 thousand dollars, if it is a small company, and if the company is larger, then the insurance covers the amount of annual income once. That is, if you get 70 thousand dollars a year, the insurance payment will be exactly this amount. Once. But this money is not enough to replace the family income for over one year.
Second, if you are counting on employer insurance, ask for a certificate and read the coverage terms. More often than not, to get through an employer, you must die, actively being at work (actively employed and actively at work). This includes paid vacation and the time you spend commuting to and from work. But if we get sick with a serious illness, such as cancer, and begin to receive treatment, we are no longer actively at work. In this case, they lay us off because the employer needs to hire another employee to replace you.
In large companies, you may give you a disability, but even in this case, you are no longer considered an active employee, so they cancel your life insurance. And you can’t get personal insurance, because you need to be healthy for it.
Therefore, consider life insurance in the USA from an employer as basic, and the main coverage should be through an individual policy, regardless of where you work or whether you work at all. In addition, insurance through an employer usually increases in value every year, rather than being fixed for the long term.