Nashville insurance insight: Your basic life insurance questions, answered


No one ever really wants to talk about life insurance, which is understandable. But no one talking about life insurance is also why there tends to be a steep learning curve related to it.

When I talk to someone who’s shopping for life insurance in Nashville, more often than not, they’re coming into the process confused by premiums and options, and a little intimidated.

Here’s the good news: Getting your head around the best life insurance options for you and your family isn’t that hard, with some basic information and a little guidance. I’m glad to provide both (just call/email me).

If you’d like to skim the surface before you talk to an independent insurance agent in Nashville, I’m happy to help there too.

Here are some quick answers to frequently asked life insurance questions, meant to give you a little more life-insurance confidence, as you dig in and find the right policy for you.


When should I get life insurance?

I went into this a little bit when I wrote about the most common insurance mistakes people make. My answer, by and large, is yesterday — when you’re young, life insurance rates are really affordable, to the point where you’ll honestly barely notice you’re paying them. For a healthy 25-year-old, it’ll probably be the monthly equivalent of a halfway decent lunch out.

If you want more specifics, I tend to look at it this way: If anyone is depending on you or linked up with you financially, it’s a good time to get life insurance. If you get married, if you buy a home, if you have kids, if you’ve started a business… Any grown-up stuff enters your life, it’s time.


What kind of life insurance do I need?

OK, the basics. For this post, we'll focus on two main types of life insurance: term life, and whole life.  

They differ in some self-explanatory/some less obvious ways.

Term life policies are written to cover a specific period of time, usually one to 30 years. The beneficiary can make a claim only during that term, while the policy is current. Pretty cut and dry.

Whole life insurance is meant to cover you for, conveniently enough, your whole life, whether it’s 10 years or until you’re 112. Because there’s no set term, the rates are much higher than term life policies (it can be by as much as a multiple of 10). Without getting too deep in the weeds, insurance companies defray the increased risk of advanced age by charging higher premiums in your younger years.

There’s an investment component to whole life policies, which some people feel drawn to. Essentially, over your years of paying those higher premiums, a cash value builds up, which you could withdraw or borrow against. There are fees and charges, so it’s not a simple, liquid investment. But it’s not like term life, where, even if you’re paying for 30 years, no value accrues.

You might see these key kinds of life insurance broken down into other subsects — Decreasing Term, Declining Balance Term, Return of Premium Term, Variable Life, Universal Life, etc. — and I'd be glad to dig deeper with you if you're interested/curious. Just give me a call. For simplicity's sake, I'll stop there.

Probably nine times out of 10, I’d recommend term life to clients. It’s usually very affordable, (reasonably) uncomplicated, and it does what you need: ensures that the people who need you are taken care of financially. But if you’re drawn to the longer-term/investment aspects of whole life, I’d be glad to go over your options with you there, too.


How much life insurance do I need?


This can get fairly complicated, especially if you're a high-net-worth person, as things like tax strategies and estate planning come into play. (In those cases, you'd probably want a whole team of advisors, including an estate attorney, working to determine the optimum coverage amount.)

For most of us, though, we're estimating/calculating based mostly on annual salary, an inflation factor going forward, what kind of social security your family may be due and when, potential funeral expenses, other financial goals such as college expenses for children, and generally a few other things, too.

Let’s simplify a little, for a ballpark idea.

One method a lot of professionals use: the D.I.M.E. formula. Debt, income, mortgage and education. Essentially, you’d:

— calculate all your non-mortgage debts (including expected funeral expenses)
— multiply your annual income by the number of years your beneficiaries would theoretically need it
— add in the balance of your mortgage
— tack on what you expect to pay for your dependents’ education

This isn’t perfect either, but it’s a good place to start. I’m happy to go deeper with you, and find a figure that makes you feel really comfortable.


What’s the process of buying life insurance like?


To get a life insurance quote, we start with your birthdate and a guesstimate of how you rank in health compared to other people your age. (People generally have a pretty good sense of whether they're pretty healthy, or have health issues worth noting.)  

Once we have a quote you're comfortable with, aside from a few needles, it's pretty painless. You’ll answer questions over the phone with the proposed carrier, undergo a health assessment, and sign the policy when it’s delivered.

The more complicated your health situation is, the more complicated the life-insurance process is, but on the whole, it’s nothing overwhelming. And I’m more than happy to walk you through each step, and share as much or as little detail/insight as you like.

Hope this was helpful. My aim is to make insurance as easy, affordable and thorough as possible for my clients in Nashville. So if you’re looking into a life insurance policy for the first time, or adding/broadening your coverage, I’d be happy to help in any way that I can. 

Call or email Tucker Coverage if you’d like to get started on the life insurance process, or if you have any questions. If you’re in The Gulch, please feel free to come by and see me (1033 Demonbreun St., Suite 300). I’d love to buy you a coffee and talk about what you need.

Any other insurance topics you’d like to know more about? Your feedback is always welcome.