The Insurance Literacy Institute
Tony Steuer, CLU, LA has led the way in establishing a path for Insurance Literacy through his award winning books (Questions and Answers on Life Insurance: The Life Insurance Toolbook and The Questions and Answers on Life Insurance Workbook), both having been awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy along with The Questions and Answers on Disability Insurance Workbook and The Questions and Answers on Insurance Planner. Forbes named Questions and Answers on Life Insurance: The Life Insurance Toolbook as 1 of their top 9 great investment books.
Tony Steuer, CLU, LA provides resources for educating and connecting consumers and professional insurance agents through simple answers to complex questions on insurance. Tony Steuer is the founder of the Insurance Literacy Institute and creator of The Insurance Bill of Rights designed to empower consumers and to identify members of the Insurance Industry dedicated to strong professional standards.
Understanding how insurance works is a complex topic that Tony thoughtfully writes about with clarity and humor. Tony is a past member of the California Department of Insurance Curriculum Board and the National Financial Educator’s Council (NFEC) Curriculum Advisory Board.
Tony is regularly featured in the media. He has appeared in interviews for New York Times, Washington Post, U.S. News & World Report, Slate.com, BottomLine Personal, BankRate.com, Insure.com, InsuranceQuotes.com, Mint.com, and BenefitsPro.com. He has appeared as a guest on the Wall Street Journal Morning Radio Show, Prudent Money Show, Your Financial Editor, Insider Secrets, Suzy G. in the Morning Show, Financial Finesse, GrowingMoney.com, Nolo.com, TheNest.com, LovetoKnow.com, and LifeInsuranceSelling.com. Tony also served as a technical editor for The Retirement Bible and The Investing Bible.
Tony is involved with many worthwhile causes including: DYF (Board Member), Alameda Community Learning Center (ACLC Board Member), St. Joseph’s Elementary School (former School Advisory Board member) and a member of the Lucille Packard Children’s Hospital Foundation Advisory Council. Tony has also been a coach for his son’s CYO Basketball team and Little League Baseball Team along with teaching taught wilderness first aid and white water rescue, volunteered as a whitewater raft guide and performed improvisational comedy. Tony Steuer lives in Alameda, California.
California State University- Chico
Answers given on Advisor Network are intended for general purposes and do not cover all potential scenarios or options. Advisor Network questions and answers will probably not apply directly to each situation. Before implementing any advice on Advisor Network, you should seek the advice of a professional expert.
Great question. With any type of insurance, the first question that you should ask is if you have a risk that needs to be covered. If you have someone who is financially dependent upon you and you do not have other sufficient assets, then you would need life insurance (this applies also to a business that is dependent upon you). However, if you not have a child, a domestic partner, etc., then you don't have a need for life insurance.
For example, would you buy auto insurance on a car that you might buy some day? There is no certainty that you will buy that car, just a plan that you might do so. In fact, an auto insurance company will only sell you a policy if you own the car. Buying life insurance because you may need it in the future really doesn't make sense. Your need may not materialize.
If you do have a need for life insurance, you should buy it as soon as possible since the premiums to purchase a policy do increase with age. Here are some factors to keep in mind:
1) Consider coverage that matches your need. For example, if you are protecting a 30 year mortgage, you most likely need coverage for 30 years.
2) Coverage amount should provide a sufficient income stream to replace the income that your beneficiary relies on. So for example, if your beneficiary would need $50,000 a year and you are comfortable that they could earn a 5% return rate, then you should consider a policy with a $1 million death benefit. $1 million invested and earning 5% per year would yield an income stream of $50,000 a year (before taxes). For example, you may be told to buy enough coverage to pay off your mortage, however, that usually doesn't make sense if you have a low mortage rate and are deducting mortgage interest. Consider cash flow.
3) You should always check multiple companies, so work with an agent or entity that represents multiple companies especially if you have a health issue. Each company has their own rating criteria so where one company may offer you their best available rate, another company would offer you their 3rd best tier. it's important to disclose all information so you can get an accurate quote based upon your specific situation.
4) Review the financial strength of the company with the four major rating services: A.M. Best, Fitch, Moody's and Standard & Poor's.
5) In terms of an agent, check their qualifications and see if they have a professional designation and/or experience. LInkedIn & Google Search are good places to start. You can also check with the appropriate state insurance department.
6) Judging if an agent is working in your best interest is partially relying on determining if they are a professional (see #5 above) and trusting your instincts. Learning about life insurance before purchasing a policy will allow you to ask informed questions.
The most important coverage for you at age 25, especially with a steady income is disability insurance income. Statistics on a disability occuring that would be longer than 90 days can be close to one in three.
Hope this helps,
Great question. It's all in the name, whole life insurance is designed to be in-force for your whole life. Term life insurance is for a certain period of time and is the type of coverage that most people need. Either there is a defined period of time for which coverage is needed such as for children; protecting them to a certain age, protecting a mortgage, or protecting your income. Term life insurance makes sense since over the years, you will accumulate other assets which will offset your need for life insurance.
In today's financial world, the need for whole life insurance is minimal. Whole life is a type of permanent cash value life insurance and is one of the oldest types of life insurance. Whole life pre-dates mutual funds, exchange traded funds, and so on, and as such, it can be used to be an effective means to accumulate a cash value on a tax deferred basis. Today, as you point out, there are many other vehicles to use to accumulate cash which minimizes the need for whole life insurance.
If there is a need for permanent life insurance such as for offsetting potential estate taxes or taking care of a special needs child, the recommended coverage is guaranteed universal life which is basically designed as life long-term. GUL does not build up any cash value and thus, has a significantly lower premium than whole life. If you have a permanent need for life insurance with no intent to cash in the policy, then there is no need for a whole life insurance policy.