Life Insurance 101 with Steve Wagar

I recently had the pleasure of talking with Steve Wagar, Financial Representative with Northwestern Mutual, about life insurance and the benefits that life insurance provides. He offered some really great insight that you should listen to if you’ve been considering protecting your family by getting life insurance.

If you would like to talk to Steve about life insurance or other financial topics here is his contact info:
Steven M Wagar | Financial Representative
117 East Yakima Ave.
Yakima, WA 98901
P: 509-457-1660 | F: 509-248-3552
E: steve.m.wagar@nm.com   Website: www.stevemwagar.nm.com

Points Steve made from the interview:
• Life insurance is a contract between you and the insurer that, if premiums are paid, and the policy is in-force, meaning in effect, when the insured party passes away, a benefit is to be paid to the beneficiary.

There are three basic types of life insurance: Term, Whole life, and Universal Life.
Term insurance is great for covering a need for a specific period of time, like 10, 20 years or longer. Generally, it is the lowest price of the three types and allows families with any income to protect themselves.
Whole Life insurance is an insurance that is with you until the day you pass away, not for a specific time. It also can be a tax-deferred cash accumulation vehicle. Whole Life insurance has a bad reputation, given by a few people who have used it in a manner it was not intended for. If you buy a quality whole life insurance product from a quality company, it can be a worry-free asset down the road that can serve a lot of purposes. Here, it pays to do some research about the insurance company’s performance.
Universal Life policies are a sort of hybrid policy between Whole Life and Term insurance. They have flexible premiums, but not the guarantees of traditional whole life insurance. They work like Whole Life insurance policies, but can have certain pitfalls if not designed and executed properly. In other words, they require more maintenance generally, than traditional Whole Life policies.

• One of the most common questions I hear about life insurance is: If someone has a good chunk of money saved up, can this suffice as a “self insured” policy? Steve answered this question by asking another question:

“Do you think someone with a $300,000 house that is paid off, meaning they own it outright, would have home owner’s insurance still, just in case it was destroyed somehow?”

Questions to ask if you’re looking for life insurance:                                           • The best way to find a financial representative that you can trust will do what’s right for you, is to talk to those you love, respect, and trust yourself and ask them who they go through. If someone you know has had a very positive experience, and has trusted their representative, that is probably a good sign!
• What are the financial strength ratings of the company or companies you represent? Ultimately, when it becomes time to submit a claim for life insurance, you want a company that will be there, do the right thing, and be able to pay the claim. Look for companies with high financial strength ratings.
• Ask if these companies do financial planning as well. Life insurance is not usually a standalone product; it is something we use as part of a larger financial plan in order to insure your family’s financial security are met no matter the things life throws at us.
• Ask if the company the representative works with is a mutual company. Mutual companies by definition have no stock holders, only policy owners. So as someone who owns a policy with these companies, if a dividend is paid, it is paid to those who have policies with the company, not an outside stock holder. What this translates to, is the mutual company then has an incentive to perform well for those people who own the company, those who actually own policies with them. Historically mutual companies have provided life insurance at a lower cost than stock companies.
• Ask if the representative has professional distinctions pertaining to life insurance and financial planning, such as a CLU, ChFC, CFP, or are working towards such designations. Having these designations, or having a mentor of the representative holding these designations, shows that the representative has gone above and beyond to learn the ins and outs of life insurance to best provide for your needs.