How much life insurance do I need as a resident of Surprise, Arizona?
Depending on your age bracket between 5 and 25 times your annual earned income.
That is the short and simple answer. Determining what is best for an individual takes a deeper dive into the specifics of that family or individual current and future needs.
Surprise, Arizona is a fast-growing city located in the West Valley of Phoenix off the 303 loop in Maricopa County. It is the 10th largest city in Arizona with a population of 153,505 with a lot more expected growth planned.
The average annual household income in Surprise is $82,212, while the median household income is $69,076 per year. Residents aged 25 to 44 earn $79,921, while those between 45 and 64 years old have a median wage of $77,387. People younger than 25 and those older than 65 earn less, at $48,417 for those under 25 and $57,483 for those over 65.
63,304 households in Surprise are married (58.25%).
When it comes to life insurance, almost half of Americans will leave their families in financial distress when they die. It’s not always because they haven’t planned either. It’s more likely because 50% of people with life insurance are underinsured.
More than half of Americans don’t have life insurance because they think it’s too expensive. Most Americans think it is three times more expensive than it likely will be. Millennials estimate the costs will be six times higher than it actually can be.
(Source: LIMRA)
One of the greatest assets of a working person is their ability to earn to provide for themselves in their household. Here is a list of the income replacement factor multiples considerations from one life insurance company. Most are similar.
| Age | Multiple of Earned Income |
| 18 – 40 | 25 |
| 41-50 | 20 |
| 51-60 | 15 |
| 61-65 | 10 |
| 66-70 | 5 |
| >70 | Individual Consideration |
What about homemaker wanting life insurances in Surprise?
For nonworking spouse amounts up to an equal amount of coverage on the working spouse will be considered. if the working spouse is medically uninsurable they would consider the benefit on the amount of coverage the working spouse would be financially eligible for.
Many times people that call me to review their life insurance policies are people who went online and bought something and have significantly underestimated the true need to replace their financial contribution to the household, especially in the low interest rate environment we have been living in for many years.
From the Surprise, AZ average household income statistics above, most Surprise residents should have between $2,055,300 to 411,060 on the very low side. That is based solely on income, not considering mortgage balances, debts, and future expenses such as college planning, legacy planning, charitable giving, etc.
Do you see why many 40 somethings Surprise residents, in the prime of their working years, many with mortgages and young families, are underinsured?
When is the best time to get life insurance? Yesterday. : )
What factors go into determining how much anyone will spend on their life insurance premium?
- Age
- Gender (go ladies!)
- Health condition
- Build (height and weight)
- Do you smoke or not
- Serious credit issues can impact one’s rating
- High risk hobbies or risky behaviors
Will I pay more if I use a licensed life insurance agent to help me?
No, life insurance agents are paid by the various life insurance companies to market and conduct business according to their standard. I highly recommend having an experienced independent life insurance agent help you rather than a captive agent. What’s the difference? An independent agent represents several or many different life insurance carriers. That benefits you because they can shop different companies to give you the best option for your situation. For example, some carriers might be more lenient on a smoker or a certain health condition such as diabetes or past prostate cancer than others.
A captive agent on the other hand, works for one company only. Their choices and premiums are limited. I don’t care how much they pay for commercials to gain name recognition; I think options are important. I have had a woman go from a decline with one carrier to a preferred plus rating after switching companies. Last year I had a gentleman that went from a substandard rating to standard with another life insurance company, providing him with significant savings each month.
What is the process to get life insurance as a Surprise or West Valley of Phoenix resident?
The most common process consists of meeting with a licensed life insurance who will take an electronic application or finding a site online to do an electronic application yourself. Depending on the amount of death benefit, also called face amount of life insurance you desire, you may or may not need an exam as a requirement.
If an exam is required, a qualified professional will meet you at your home or office at a time that is convenient for you. Most times they will take a blood and urine sample and ask questions about your medical history. Depending on your age and the amount of the death benefit it is possible they will take EKG readings. It is a simple, non-invasive process. There is no cost to you for this process.
More and more companies have options to skip the exam which expanded during Covid 19. It is a common option for death benefit amounts under 1 million and some companies even higher. I find this to be a two-edged sword. What is I mean is, when the underwriter does not have lab results from the blood and urine samples and the medical history in front of them to determine the insured’s risk, they use a more credit based scoring system from a third party to determine a risk class. In certain situations that can backfire. For instance, let’s say you are a healthy 30-year-old homemaker who never established your own credit. Foregoing the paramed exam in favor of the no exam, risk scoring system could result in you receiving a less than optimal risk classification from the life insurance underwriter.
Sometimes the underwriter may request an APS (Attending Physician’s Statement) as well to get a deeper view to determine the insured’s risk class.
Once the underwriter has all the information he/she needs, they will make a determination of an offer to the client. At that point the policy owner will agree to accept the policy as offered or not. If they accept, the first premium will be made, and the life insurance policy will be issued.
The options are to make an annual premium or monthly, quarterly, or bi-annually. Most people choose annually or set up a monthly draft for convenience. The policy is delivered, usually via email and the owner will sign a delivery receipt. There is a 10 day “free look” period to review the contract and make sure you got what you expected. You have the right to cancel the policy within that period for a full refund of any premiums paid.
Arizona provides a 30-day grace period to resolve any missed premium payments before the policy lapses and there is no more coverage.
It is very rare for a life insurance company with strong financials to fail. Personally, I use A rated companies for my clients. Their financials are strong and their ability to pay out in case of death is solid. The Arizona Life and Disability Insurance Guaranty Fund guarantees up to $300,000 in death benefit payments and $100,000 for lost cash surrender value.
Innovations within the field has made life insurance even more valuable.
Several companies offer “living benefits” in addition to the actual death benefit. These riders attached to the policy will pay the owner of the policy if the insured has a trigger event. These events are a critical, chronic, or terminal illness diagnosis. They make the value of a term policy much greater than the normal term policies that only pay out if the insured dies as many times the term ends before the insured’s life does.
One company my life insurance clients love also offers a disability type rider that helps in case the insured becomes disabled and therefore cannot make the premium payments. Using the payout from a critical or chronic illness will reduce the amount of the total death benefit but isn’t it wonderful to have the option to get money when you need it most and take some stress away from a very stressful situation? Getting sick is expensive and health insurance makes sure your doctors and hospitals get paid but if you and/or your spouse become seriously ill and can’t work, that insurance doesn’t help pay your expenses.
Life insurance has a great impact on your family’s future. Please don’t leave it unattended to or take a spin at the wheel on the internet when it doesn’t cost a thing to work with a financial professional.
For a complimentary life insurance policy review go here… https://www.kratos-financial.com/life-insurance-review
