Life insurance is an important overall strategy for smart aging—the older we get, the more important life insurance becomes.
If your parents didn’t obtain life insurance coverage earlier in life, it can be confusing knowing where to find the best policy for their unique situation. In this article, Shell Mutual Insurance is helping with a few tips that can assist you and your parents in finding the best life insurance coverage at a price that won’t break the bank.
[Note: Remember that there is no substitute for a formal quote for life insurance underwritten by a reputable company. Shell Mutual Insurance specializes in shopping the life insurance market for you, bringing you the best of the best in terms of coverage, pricing, and policy benefits. Contact us directly to get your free quote.]
Tip #1: Decide on a policy selection that suits your parents.
The term ‘life insurance’ is very broad, and it covers a wide range of policy options. What’s best for one person may be completely unsuitable for another, which is why it helps to know what the life insurance payout would be used for prior to choosing coverage.
Consider two examples: a life insurance policy that will be used to help pay off a mortgage, and a life insurance policy that will be used to cover final expenses (funeral, burial, cremation, etc.).
In the first example, a much larger payout might be appropriate, putting the insured into a different category of coverage.
For the life insurance policy that will be used to cover final expenses, a total payout of just a few thousand dollars might be adequate.
Also, remember that life insurance comes in two main “flavors”: term and whole. Term life insurance is only in force for a temporary time period—often for just a few years. Whole life insurance is permanent and never expires. Take this variable into consideration when choosing the right policy for your parents.
Tip #2: Get a break on taxes by strategically structuring the policy.
Life insurance policies can be thought of as having three main stakeholders. These are the individuals who have a vested interest in the policy itself.
- The insured. This is the person who is covered by the insurance. When this person dies, the life insurance policy in force converts into a payout for…
- The beneficiary(ies). This is the person or persons who will be receiving the payout after the insured dies.
- The owner. The owner of the life insurance policy is the one who is paying the premiums to maintain coverage.
This tripartite formation of life insurance is often called the Goodman Triangle, named after the court case that birthed the moniker.
Here’s the ‘secret’ that not many people know: when each of the above-listed individuals are different, the death benefit is considered a non-taxable gift to the beneficiaries. If any of the two are the same person, there are tax liabilities involved when the death benefit is issued by the insurance company.
So, by keeping each of the three stakeholders of a life insurance policy different from each other, taxes can be avoided outright, saving a lot of money.
Tip #3: When obtaining a quote, get it from an independent agent.
There are dozens of life insurance companies out there, and every one of them has a profit motive behind the policies they issue.
Only an independent life insurance agent that is unbiased can provide your parents with the best variety of life insurance coverage options that meets all of their needs. Shell Mutual Insurance is 100% removed from the life insurance companies that provide coverage for our customers. When you work with Shell Mutual, you’re dealing with an independent, objective third party that can educate you on all of your options without being partial to one provider above or below another.
The best part about getting a term or whole life insurance quote from an independent agent is that there is no downside. Getting life insurance from an independent agent like Shell Mutual Insurance carries the same costs, benefits, and coverage options as if you were dealing directly with the insurance companies themselves.
Ready to Get Started?
When you’re ready to start comparing the best quotes from the widest variety of life insurance companies, contact us. Our team of insurance professionals is standing by right now, ready and willing to help make the life insurance policy selection process as easy as possible.
We look forward to hearing from you!