Life Insurance Agent Explains: How Does LIFE INSURANCE Work?

Buying life insurance can be somewhat complicated and we want to make sure that you have all the information before you buy your next policy. Or if you have a policy, we want to make sure that you understand it, right? So that you can use it correctly. My name is Carmen and I hope that you please subscribe to our channel and hit that notifications bell so that you can be notified every time the Wealth Nation channel posts new videos. So let's first dive into what is life insurance, right? Because by the end of this video, I want to make sure that you know exactly what you should be doing with your policy if you're going to get one or how to maintain the current policy that you have. So when we think about life insurance, it is a contract that is done between the life insurance company and you, the policy holder, right? Or the policy owner, if you're thinking about how to understand these names when it comes to the life insurance contract. So you are the policy holder or the policy owner. And as long as you pay your fee for insurance, meaning those premiums, it can be monthly, you can be paying it quarterly or annually. As long as you maintain those fees, then the life insurance company will guarantee that they will pay out the death benefit to your heirs or someone who you name as a beneficiary. So what the death benefit is, is every time you pay your premium, the life insurance company is going to say, we will pay X amount of dollars to your family at the time of your death. Now, the one thing that I hope everyone can understand by seeing this video is that life insurance should be one of the most important financial products that you have with within your household. The reason being is because death is guaranteed, unfortunately. And we all tend to have insurance on products, our houses, our cars, all of our electronics. We have health insurance, we have every insurance under the sun, but it seems like 50% of the United States population still doesn't have life insurance. And that really worries me because with what we know as life insurance agents, it can be very, very concerning for the family should you pass, and then they're not able to maintain their current financial lifestyle because the life insurance contract wasn't in place. So that's why I want to, again, make sure that we're all on the same page with life insurance, the purpose of life insurance, first and foremost, so that we can move forward and make sound decisions. So the key takeaways, when we think about life insurance is, again, it's that legally binding contract between you and the insurance company. And as long as you pay your premium payments, then you can guarantee that the death benefit will be paid. The other thing to note is that you can name whomever you want your beneficiary to be, so that the death benefit will be paid to your beneficiary. And your beneficiary can change. If you sign up on day one, and then 10 years later, you decide that you want to change your beneficiary, you can always do that. Just know that you have that flexibility. So we talked about what is life insurance. Now let's talk about the types of life insurance, right? So it's very simple when you think about it. There's only two types of life insurance. There is term life insurance, meaning it's only going to ensure that you have coverage for a specific period of time. Or there's permanent life insurance, meaning that the permanent life insurance is going to cover you for your entire lifetime. Now, the reason why Darius and I talk about permanent life insurance, whole life insurance specifically, is because for us, we value the fact that we have life insurance for our entire lifetime, and we don't have to worry about renewing things. Because what another thing that people tend to forget with life insurance is that my health today may be different next year, may be different six months from now, or even five years from now. So you don't want to gamble with your health with a life insurance contract because you want to make sure that you at least have insurance that's going to cover you for your entire lifetime, regardless of something were to happen with your health. What tends to happen or what can happen with term insurance is say you sign up for term insurance and you get like a, let's say it's a 20 year term policy, right? Meaning you'll be covered for 20 years. So 20 years from now, I'll be in my 50s. And if I need life insurance again, when that contract expires, now I'm 20 years older, which means the cost of insurance is going to be more and who knows what's going to happen with my health between those 20 years. And for us, the value is in whole life insurance because of the fact that we don't have to worry about renewing our insurance as we age, right? So there are several products within the permanent category that you could buy. But the only product that Darius and I talk about on WealthNation channel is whole life insurance, meaning that whole life insurance is going to provide a solid guarantee for your entire lifetime and your money isn't going to fluctuate the way it can with other permanent life insurance products. And for us, when we think about life insurance, at the end of the day, we never want to gamble with our death benefit or what it could grow to because we want to make sure that we have a solid foundation regardless of what the financial market is doing. Okay, so now let's move on and talk about what affects your ability to get insurance. So the things that could keep you from getting life insurance is your age. The reason why I say your age is because say you're 85 years old, and you've had a lot of health ailments throughout your lifetime that could affect your ability to get insurance. But if you're 85 and healthy, that won't affect your ability to get insurance. The difference is it'll be more expensive because you're older. All right. The other thing could be your health, right? We just talked about age. So let's talk about health history. If you've had any health ailments throughout your lifetime that could come up that could keep you from getting life insurance, but it shouldn't deter you from at least applying. Because if you work with the WealthNation team, or if you work with any agent, for example, they should be able to work with you to determine, if you were denied a life insurance policy, then we can move on to looking at a spouse. We can look at you insuring maybe your children, or someone that you may have insurable interest with so that you can still own a life insurance policy, but it's just not on your life. So yes, you can own life insurance even if you are not insurable. You would have to own a policy on somebody else. You get their approval, no shadiness, right? The next thing that could affect your ability to get life insurance is tobacco consumption, right? And the reason why this is important for you to know is because the life insurance company is going to look at you and scrutinize all of your health history, all of your social activity, because they want to know if you're insurable. So if you are a high risk individual, meaning you have some health ailments, you are a tobacco consumer, you skydive, all of those things are risky and the insurance company may decide to deny your contract because they don't want to take that risk. The other thing that can come up is driving records. If you have DUIs, if you have reckless driving records, the insurance company could consider you high risk and could deny your application. So really, again, the summary is age, your health history, tobacco consumption, driving records. We talked about medical history, right? And then lifestyle. Lifestyle going back to, are you skydiving? Are you a rock climber? Are you a helipad skier? All of those things come into play with your application because the insurance company needs to know if they're going to take a risk on your life and insure you. The most important thing that I think you need to know about life insurance is how much do I need? Once you've decided, yes, I need life insurance and I want to work with the Wealth Nation team, you can click on the link below. We would love to serve you. Now, the next thing that I want to talk about is how much do I need, which is probably one of the most important things that you need to consider once you've decided to move forward with life insurance. What we talk about on the Wealth Nation channel is about how to utilize your policy to finance your lifestyle. So there's two plays you can take at this approach. If you want to go the infinite banking approach that we talk about, then your idea for using life insurance is going to be more of a financial play as far as trying to utilize a policy to finance your lifestyle. And if you want more information on that, you can check out this video. The other option that you have if you want life insurance for pure just insurance capabilities to be able to provide a death benefit to your family, then you have to think about things like mortgage. How much is your mortgage currently cost? How much is college tuition if you have children in school? Do you have any debt? How much could potential funeral expenses be should something happen to you? Take into consideration all of your lifestyle accounts and how much it costs and you have to try to create a policy around financing all of that for those who you will leave behind. The major factor that we find that people do is they just check the box to get life insurance, but they don't calculate how much they actually need. They just go, oh, I have life insurance, you know, I'll leave you, you know, 50 grand, 100 grand, whatever the case may be, if something were to happen to me. But if you make 100 grand a year, that's only covering one year's worth of income for your spouse or your family. So the simple equation that we like to say is multiply your at least by 10. So that way, you know, the minimum that you should start out with when it comes to death benefit. Now, this equation will work out very well when it comes to, again, making sure that you can cover all of your costs. And that's why it's important for you to just take time and look at how much does it cost your household to function every single year with or without you? Okay, because the last thing that we ever want to do is to leave our clients in a financial predicament where they didn't have enough insurance to leave their significant other should something happen to you. So that's why again, wrapping up this video, it's important for you to know what is life insurance? What are the types of life insurance products out there? And then what affects your ability to get life insurance? And then how much do you need? These are simple things that we can just have conversations with if you decide to work with the Wealth Nation team. And we can steer you in the right direction to understanding what is it that you want to do, right? Because if you want to go the infinite banking route, or you're using it for creative financing, you may not have enough death benefit to cover your income for 10 years, for example. So that's why we may have to create, you know, a plug and play system to make sure that you have the infinite banking system, but you also have enough death benefit on the back end to ensure that your family could be covered should something happen to you. Now, we're just talking to you, you have to think about your brothers, your sisters, your parents, your spouses, whomever, it is important that everyone understands the purpose of life insurance, because we all know we've been to funerals, you've seen people pass, and it's an unfortunate situation. But we never talk about what happens on the back end after we've lost a loved one. And once the bills start rolling in, that's a completely different game. And like Darius and I said, on our previous video, we know exactly what that feels like when we lost our daughter. So that's why it is crucial that we continue to educate the public so that you all understand the purpose of life insurance, first and foremost, and then understanding your options that you can utilize life insurance for should you decide that you want a more creative play. Now, for those of you who own a policy right now, and you may be out of touch with that policy, it is important that you get that contract out, you read it again, and even phone up your life insurance agent and have them go over the details of the policy again, to make sure that you're in those boundaries that I talked about. Do you have enough death benefit to cover your income should something happen to you? Do you need additional insurance? Just have a conversation around what is it that you need to ensure that your financial lifestyle can be maintained should something happen to you. Now, if you want to work with the Wealth Nation team, definitely click on the link below because we can first understand your goals and then guide you into the products that will most fulfill what it is that you're trying to do. Because with the Wealth Nation team, we all have life insurance, we are all using life insurance differently. And that's why we love to serve the public because it's so important for us to ensure that our families are covered again, should something happen to you. So make sure that you continue to own your own lifestyle or someone else will.