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Life Insurance 101

How to Get Started ?

First, congratulations! You’ve made a smart and responsible decision to protect the ones you love. The next step is simple: Pick up the phone and call us toll-free at (800) 461-3305.  A knowledgeable and friendly Wayne Direct insurance specialist will be there to assist you, every step of the way! You can also click here to request a quote online!

What is life insurance?

Life insurance can be a resource of funds for your loved ones to meet their needs in the event of your death. You enter into a contract with an insurance company, which promises to provide your beneficiary(ies) with a certain amount of money (the death benefit) upon your death. In return, you make periodic payments, known as premiums. The amount of the premiums generally depends on factors such as your age, gender, occupation, medical history and whether you intend to build up cash value in your policy. Some policies may require a medical exam.

Do I need life insurance?

Yes, if you have bills, own a business, have a business partner, estate tax obligations, dependents, or a mortgage, you may need life insurance. If you are the primary earner and your income is necessary to maintain the family household, your dependents may suffer financially if you die. The policy’s death benefit can fund your dependents’ needs.

How much life insurance should I carry on myself?

Your income can be considered your family’s most valuable asset because it allows you to obtain the necessities of life. Some day you may not be here to provide that income, yet the need for income may continue for those who are financially dependent upon you. Your need for life insurance and the amount required will depend on your personal and financial circumstances. If any of the following statements applies to you, you probably do need to consider life insurance:

  • You have a spouse.
  • You have dependent children.
  • You have an aging parent or disabled relative who depends on you for support.
  • Your retirement pension and savings are not enough to insure your spouse’s future against a rising cost of living.
  • You have a sizeable estate.
  • You own a business.
  • You have a business partner depending on you.
  • You have estate tax obligations that need to be covered.

How do I determine which policy is right for me?

Life insurance is a long-term commitment. Before buying any policy, ask yourself these very important questions:

  • How much insurance do I need?
  • If I were to die, what would my spouse and dependents need in order to live comfortably?
  • In addition to protection, what am I trying to accomplish with life insurance?
  • Am I accumulating funds for education costs?
  • Providing a way to pay estate taxes?
  • Do I need some additional supplemental income for my retirement or emergencies?
  • Remember that term life pays a death benefit only, while whole life, universal life and variable life policies can supplement your income through withdrawals or loans against a policy’s cash value.
  • How much can I afford to pay for a policy?
  • Is the insurance company I’m considering financially secure?
  • Do they have a good claims payment history, good customer service and competitive prices?
  • If I were to die, what would my spouse and dependents need in order to live comfortably?
  • In addition to protection, what am I trying to accomplish with life insurance?
  • Am I accumulating funds for education costs?
  • Providing a way to pay estate taxes?
  • Do I need some additional supplemental income for my retirement or emergencies? Remember that term life pays a death benefit only, while whole life, universal life and variable life policies can supplement your income through withdrawals or loans against a policy’s cash value.
  • How much can I afford to pay for a policy?
  • Is the insurance company I’m considering financially secure?
  • Do they have a good claims payment history, good customer service and competitive prices?
  • Independent companies such as Standard & Poor’s, A.M. Best, Moody's, Fitch and Weiss rate insurance companies on these issues. Their publications can be found in your local library or may be available on the Internet.

What is the difference between term and permanent insurance?

  • Term life insurance is typically the least expensive type of coverage, at least initially, and the simplest. These policies do not build up a cash value. Coverage is in effect for a fixed term or period of time, usually one to 30 years, and typically may be renewed after the initial term. The policy pays your beneficiary a fixed death benefit if you die while the policy is in force. The premiums are lowest when you are young and increase upon renewal as you age. Be sure to check your policy for age or other renewal restrictions.
  • Permanent life insurance includes whole life, universal life and variable life insurance.
  • Whole life provides protection as well as a guaranteed cash value. The premiums remain at a fixed level for the duration of the policy.  Over time, the policy generally builds up cash value on a tax-deferred basis. Some companies pay a dividend, which is a return of excess premiums.
  • Universal life insurance is a flexible life insurance policy. These policies are interest-sensitive and give the owner the option to adjust the death benefit and/or premium payments, within limits, to fit the owner’s situation. The net premium payments are applied to the accumulation fund, which earns a guaranteed interest rate. As with whole life insurance, the cash value belongs to the policy owner, who may withdraw it or borrow against it as provided for in the policy.
  • Variable life insurance is a life insurance policy that is based, in part, on the performance of the financial markets. The policy offers several professionally managed investment options and the policy owner decides how the net policy values are to be invested. The values may accumulate more rapidly than with other cash value policies, but the policy owner incurs additional risk. If market performance is poor, the death benefit may decrease, and/or the policy owner may have to pay higher premiums to keep the policy in effect. As with whole life and universal life policies, policy owners may borrow against or withdraw the cash value at any time. Loans and withdrawals may reduce cash values and the death benefit.
  • Always read your policy carefully for any possible charges associated with these transactions. Variable life insurance policies are sold by prospectus, a valuable disclosure document that should be read carefully.

What is Whole Life Insurance?

Life insurance under which coverage is intended to remain in force during the Insured’s entire lifetime, generally to age 95 or 100, providing premiums are paid as specified in the policy. A whole life insurance policy can build cash value on a tax-deferred basis. Both the premiums to pay and the cash values that result are predetermined and found in the policy contract. The cash value is an amount of money available to the policy owner for policy loans or as the surrender value if the policy is canceled and returned to the company.

Cash Value

The amount of money which the policy owner will receive if the policy owner cancels the coverage and returns the policy to the company. With pure whole life insurance, the cash value is guaranteed; the investment risk is the company’s. As an added benefit, cash value can be used by the policy owner as a “cash reserve” for emergencies, extra income, or college expenses. This is considered a loan (interest charges accrue). What’s more, you’re not obligated to repay the loan, but any amount not repaid will be deducted from the policy’s death benefit.

What is Term Life Insurance?

As its name indicates, term life insurance insures you for a specific term or span of years. If you die during the term, your beneficiary is paid the coverage amount subject to your policy terms. Because it provides “pure” insurance without any cash value accumulation, term life insurance coverage is generally less expensive initially than permanent coverage. Term life insurance provides a great answer to the question: How will your family manage financially if you die prematurely?

The Advantages of Term Life Insurance

Term life insurance helps to provide peace of mind for you and your family. It also helps you protect the assets you’ve worked so hard to attain. And all this security reaches up to 30 years into the future, at guaranteed level premiums that are competitively priced today. The Trendsetter® Super Series policies offer valuable protection for your family or business partnership with attractive premiums.

Is it possible to change my life insurance policy if I already have one?

You can replace your current policy, however there are several issues to consider when determining to change coverage. New policies typically have high costs the first few years. If you want to increase your total life insurance, it may be wiser to keep your old policy and simply add a new one, or increase your specified face amount under the same life insurance policy. Your existing policy premiums will generally be less than those for a new policy, because you bought it when you were younger and you won’t lose any existing cash value. A new policy will contain a contestable clause, which will permit the insurance company the option to contest any material misrepresentation. (The two year period on your current policy’s contestable clause may have expired.) Be sure to ask your agent, financial advisor or insurance company about the best alternative for your specific situation.

Underwriting Guidelines

Underwriting guidelines and the health and lifestyle criteria for the proposed insured that the insurance companies use to determine the appropriate rate classification upon which to base the premiums for the coverage.  These criteria typically include age, gender, tobacco use, height/weight build, family history of heart disease or cancer, cholesterol levels, blood pressure levels, specific health conditions driving record, hazardous occupation or activities, military service, aviation, foreign travel or residency, US citizenship and felony criminal activity.  It is important that all of these underwriting guidelines are taken into consideration when evaluation any premiums quoted for life insurance.

Term Life Insurance – New York

For younger individuals and families, term life insurance is especially useful to support loved ones and help with financial obligations if you die prematurely. Transamerica Financial Life Insurance Company provides flexible term life insurance policies with coverage through age 80 and competitive premiums.

What are the two different Transamerica companies in the United States and who do they service?

Transamerica Life Insurance Company is an AEGON company, a multinational organization headquartered in The Hague, The Netherlands., Transamerica Financial Life Insurance Company serves residents of New York

Getting Started

Contact us and let a Transamerica representative help you determine which type of life insurance policy may be right for you.

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