Life insurance is based off of the premise that a person is assuming a risk in life. People that buy insurance are looking for assurance during their lifetime that if the unexpected happens, then their loved ones will be covered. Having insurance is a way to reduce risk and provide the money necessary for survivors to live if the primary earner prematurely passes away. It is done through a contract between the buyer (usually called the “insured’) and insurance carrier (called a “provider” or the “insurer”). The insurer will pay the insured an agreed amount of money (called the “coverage period”) for an agreed number of payments from the insured (called “premiums”) for a certain amount of time (called “the term”).

There is Term Life insurance which is generally the least expensive. It lasts for a term of generally 10, 15, or 30 years. This is generally the cheapest and most competitive option for budget-minded buyers. There is also Whole Life insurance that generally lasts for the life of the policy holder. It is more expensive, but it provides lifetime coverage at level premiums. It also accrues a cash value by splitting your total premium into life insurance and the other into an investment vehicle. You may even borrow against it, pay it back, and keep your coverage amount. This is often used by business professionals that use it insure the life of their partners. Universal Life insurance was popular in the 1980s and 1990s and premiums are tied to market indexes. These were popular when interest rates were much higher, which caused premiums to be much lower. Now these are less often purchased as the premium rates are higher. Universal Life can be less expensive than Whole Life and some people are willing to assume the risk that their monthly payment could potentially go up because it has lifetime coverage. A newer version of Universal Life is Guaranteed Universal Life. It has many of the benefits of traditional Whole Life but removes the market volatility in favor of a fixed premium rate.  There is also AD&D coverage that protects against accidental death, dismemberment, or disability, but it will not pay out for any deaths resulting from natural causes. This is an excellent choice for those who want coverage for death from accidental causes, and the premiums are generally very reasonable. 

There are additional options within individual policies. These options will depend on what type of plan you are interested in, as well as what your age and health circumstances are. 

Add-on features, called “riders,” add significant benefits for a relatively low investment. Some examples include: 

• Child riders which help pay for funeral expenses in the event of an untimely death of a child
• Return of premium riders where you can receive your premiums back after a certain number of years
• Charitable giving riders that provide charities a match for donating
• Accidental death benefit riders that add coverage just in case of accidental death, disability, or dismemberment
• Hospice and medical riders that cover end of life care

Life insurance is regulated by state and federal laws. Every state requires that, at a minimum, insurance agents must be licensed to do business in their home state, be educated on all state and federal laws, and comply with continuing education and laws. Life insurance companies have employees including underwriters and captive agents. Captive agents work only for one specific company selling only that company’s products.

Independent agents (which include all Pembrooke Agency LLC agents) are licensed with the state(s) and have at-will contracts with life insurance companies to sell their products. The advantage of independent agents is that they most often represent many carriers and can provide a wider array of options for their clients. They also act as an underwriter, learning their client’s unique medical history and shopping for preferred insurance carriers.

Pembrooke Agency LLC, powered by Quility Insurance, is independent, non-captive, and represents over 30 insurance companies. This helps us to obtain the best policies out there for our clients.

It is best to work with an insurance agency that represents multiple insurers and not just one. Insurance agents that work for just one agency are called captive agents. One example is a Mutual of Omaha captive agent that is captive to that company only. They can only sell Mutual of Omaha products. Some of their products are great, and in one sense it doesn’t matter which agent you buy those policies from, if you just want only the options available from Mutual of Omaha and no other insurance companies. Agents in this scenario often are salaried employees of the company but may get bonuses for selling a certain amount of their company’s product(s).

There are also providers that sell online. We do this as well in the apply now section where you can get a quote online and sign up, in some cases online in an instant. The insurance provider does the underwriting process and will verify your information. The referral agent usually gets a finder’s fee and generally has to be licensed in the state where the product is sold. The drawback is if you are declined for any reason, it gets reported and can make it harder for you to get coverage from other carriers, when they see your record. A healthy young adult though can usually get approved without incident. 

Another option is independent agents that do not work for only one insurance carrier. Independent (or non-captive) agents can assist you in finding the best coverage options for you and your loved ones. They can look within their group of many different insurance carriers to find policies that are best tailored to your specific needs. Independent agents work for you, (not for a specific company) to win your business. If you find a policy that you agree works for you, then the insurance provider pays the agent a commission for the sale.

Pembrooke Agency LLC believes in providing you assurance for even your family’s worst day by giving all your insurance needs our personal touch. We help get you coverage from birth to death and cover the events in between. We are here for YOU!

Prequalification is a process you walk through with an independent agent to help you qualify for insurance coverage. The benefit of getting prequalified is that the agent representing you can identify any issues, that could arise during underwriting, that may cause your application to be denied. If you were to be denied coverage, then it is possible that the agent can get you through the process by helping clarify issues of concern with the insurance carriers underwriting department.

Then, on the other hand, applying for coverage (as an individual without an agent) is the actual applying with an insurance provider for coverage. If the policy were to be denied then the person applying on their own would be the one responsible to do the work of finding out why they were denied, and then they would need try to address any issues with the insurance company on their own.

As you can see, it is advisable to take advantage of the expertise of an independent insurance agent to help you discover your best options, and so that you have someone to help be an advocate for you. Since independent agents work on commissions, they will often get you the best deal possible, at no charge to you. At Pembrooke Agency LLC we love finding our clients the best coverage for their individual needs.

The insurance provider (also known as the insurance carrier) provides an exchange that is in favor of the client.

For example, Mary, at age 20, buys a 10-year policy for $40.00 a month for $200,000 of coverage.

Mary is preparing for the possibility that she may have an untimely death and is leaving a legacy for her partner and/or children. If Mary dies in that time period, her estate gets $200,000 guaranteed from the insurer. That is a 5000 times return on the monthly investment premium of $40.00. She is protected the entire time that the policy is in place. The terms are binding, insurance policy cannot be changed, for the length of the loan.

Let’s use Mary’s example again. She can decide at any point in the 10 year term of her policy to cancel coverage. She loses coverage but she is not obligated to pay the rest of term period of her contract, if affordability or something else becomes an issue. The insurer is also at that point not required to pay out if something were to happen to Mary, since she would be outside of her coverage period.

If Mary were to die at any period during the term, while she was regularly making her premium payments, then the insurance provider is obligated to pay the policy in full. If Mary cancels and does not pay, then the insurance carrier is no responsible to pay out in the case of an untimely death.

We will us the example of Mary one last time. When she got her initial policy at age 20 at $40 dollars a month, Mary felt that was a fair deal of a 5000 to 1 return on investment. She bought her policy from a captive agent that did a great job explaining the benefits of the plan she purchased. Mary at that time was a smoker and social drinker. She was also 15 pounds overweight. Her premium was thus higher because people that smoke, socially drink, and overweight have higher morbidity rates. 

Mary, now at age 30, is shopping for a new policy. She sees an online advertisement about independent insurance agents, and then responds to a letter in the mail for information on insurance coverage. Mary has been a nonsmoker for seven years, has lost the excess weight, and seldom drinks. Her independent agent gets here a new policy for $250,000 of coverage for $19.43 a month. Mary even covers all her kids for $5.22 a month.

Why did her rate improve? It is because the variable improved in the underwriting process, with a different insurance company that was better suited for Mary. Her independent agent found another company that saw Mary as a low risk and gave her a preferred rate. 

Let’s use a new scenario. Darrell, at 20 years old, takes out a 30-year term life policy for $200,000. He has made every payment for 22 years but is not able to make an upcoming payment. Since he has consistently paid the premiums, his contract remains unchanged. All states require that insurers give a grace period, if a payment is missed for a short period of time. The timeframe differs between states, but 30 days is usually the standard. 

If Darrell were to die on February 15th but missed his payment on January 28th then the insurers would pay the full benefit, though they may opt to deduct the January late payment. If Darrell missed the January and February payments and was now two months past due, then Darrell would likely have the policy cancelled by the insurers for his lack of paying his premium. In this case, he would not be covered.