|
If
you have dependents or other people with whom you share your life, life
insurance can play a vital and valuable role at virtually every stage
of your life. It’s not just for the young, nor is it only for parents
or guardians of young children.
Why buy life insurance? The
main reason for insuring your life is to replace an income you are
generating that someone else relies on. The most common case is a one-
or two-earner family with young children. If an earner dies, life
insurance can enable the survivors to go on without having to make
financial sacrifices.
Life insurance can also pay for
one-time costs that are connected with death, such as funeral and
burial costs, administration costs (e.g., for probate and transferring
title to property to the heirs), estate and inheritance taxes, and
outstanding debts (such as final medical expenses not covered by health
insurance). There are several other reasons to buy life insurance as
well.
You have to make many choices when
buying life insurance: how much to buy, which type of product to buy;
and which one of the hundreds of life insurance companies to choose.
Even if you “shop” online, it is in your interest to work with a
knowledgeable professional who can understand your needs and
constraints, answer your questions, and help you find the most
appropriate solutions. |
| |
| Life Insurance |
|
| If you have dependents or other people with whom you share your life, life insurance can play a vital and valuable role at virtually every stage of your life. It’s not just for the young, nor is it only for parents or guardians of young children.
Why buy life insurance? The main reason for insuring your l... |
| Read more |
|
|
|
| Why should I buy life insurance? |
|
Many financial experts consider life insurance to be the cornerstone of sound financial planning. It can be an important tool in the following situations:
- Replace income for dependents
If people depend on your income, life insurance can ... |
| Read more |
|
|
|
| How much life insurance do I need? |
|
In most cases, if you have no dependents and have enough money to pay your final expenses, you don’t need any life insurance. However, if you want to create an inheritance or make a charitable contribution, you should buy enough life insurance to achieve those goals.
If you have dependents, you should buy enough life insurance so that... |
| Read more |
|
|
|
| What are the principal types of life insurance? |
|
| There are two major types of life insurance—term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. In 2003, about 6.4 million individual life insurance policies bought were term and about 7.1 m... |
| Read more |
|
|
|
| How is life insurance sold? |
|
| How is life insurance sold? You can buy life insurance either as an “individual” or as part of a “group” plan.
Individual Policy
When you buy an individual policy, you choose the company, the plan, and the benefits and features that... |
| Read more |
|
|
|
| What is a beneficiary? |
|
A beneficiary is the person or entity you name in a life insurance policy to receive the death benefit. You can name:
- One person
- Two or more people
- The trustee of a trust you&rs...
|
| Read more |
|
|
|
| What are the types of term insurance policies? |
|
| Term insurance comes in two basic varieties—level term and decreasing term. These days, almost everyone buys level term insurance. The terms “level” and “decreasing” refer to the death benefit amount during the term of the policy. A level term policy pays the same benefit amount if death occurs at any point during the term. |
| Read more |
|
|
|
| What are the different types of permanent policies? |
|
Whole or ordinary life
This is the most common type of permanent insurance policy. It offers a death benefit along with a savings account. If you pick this type of life insurance policy, you are agreeing to pay a certain amount in premiums on a regular basis for a specific death benefit. The savings element woul... |
| Read more |
|
|
|
| Why should I purchase permanent insurance? |
|
| A permanent life policy provides lifelong insurance protection. The policy pays a death benefit if you die tomorrow or if you live to be a hundred. There is also a savings element that will grow on a tax-deferred basis and may become substantial over time. Because of the savings element, premiums are generally higher for permanent than for term insurance.... |
| Read more |
|
|
|
| How should I choose what type of life insurance to buy? |
|
You should consider term life insurance if:
- You need life insurance for a specific period of time. Term life insurance enables you to match the length of the term policy to the length of the need. For example, if you have young children and want to ensure that there will b...
|
| Read more |
|
|
|
| How do I pick a life insurance company? |
|
| Roughly 1,000 life insurance companies sell life insurance in the U.S., but many are members of groups of companies and so aren’t really competitors with each other. Having separate companies enables a group to offer its products through separate distribution channels, to more efficiently meet the regulatory requirements of particular states, or to ac... |
| Read more |
|
|
|
| How can I assess the financial strength of an insurance company? |
|
| Five independent agencies—A.M. Best, Fitch, Moody’s, Standard & Poor’s, and Weiss—rate the financial strength of insurance companies. Each has its own rating scale, its own rating standards, its own population of rated companies, and its own distribution of companies across its scale. Each agency uses numbers or plusses and min... |
| Read more |
|
|
|
| How should I choose a life insurance agent? |
|
| When you’re considering buying life insurance, it’s important to choose an agent or broker who can help you. Buying life insurance can be complicated or confusing. The key to buying the right amount and the right type of policy at a good rate is a good agent or broker. You should choose one who:
|
| Read more |
|
|
|
| How can I save money on life insurance? |
|
There are ways to save money when buying life insurance, but they don’t always entail paying a lower premium immediately. As your top priority, look for a policy that meets your needs. Buying the wrong benefits for a low premium is a waste, not a saving. Beyond that, here are some ways to maximize your life insurance dollars.
Be... |
| Read more |
|
|
|
| Do I need life insurance after my kids are grown? |
|
Quite possibly. Here are 10 reasons to own life insurance after your kids have left home:
- To meet goals
If your children are in college and/or not completely financially independent, life insurance can help &ldquo... |
| Read more |
|
|
|
| How should I organize and store my life insurance records? |
|
| The last thing you want to happen after you die is for your beneficiaries to be unable to locate and submit a claim on your life insurance. To prevent this, you should have copies of your life insurance records in at least two places. This is to make it less likely that you’ll lose them (to fire, flood, accidental discarding, etc.) and more likely t... |
| Read more |
|
|
|
| How often should I review my policy? |
|
You should review all of your insurance needs at least once a year. If you have a major life change, you should contact your insurance agent or company representative. The change in your life may have a significant impact on your insurance needs. Life changes may include:
|
| Read more |
|
|
|
| If I can’t pay my premium, what should I do? |
|
If unexpected expenses come up and you can’t pay your life insurance premium, you should know the possible consequences. The effect depends on the type of policy and coverage you have and the policy terms and conditions.
Term: If you stop payi... |
| Read more |
|
|
|
| How do I file a life insurance claim? |
|
To begin the claims process:
- Get several copies of the death certificate.
- Call your insurance agent. He or she can help you fill out the necessary forms and act as an intermediary with the insurance company. (Don’t keep li...
|
| Read more |
|
|
|
| How can I locate a lost life insurance policy? |
|
If a family member dies and you are unable to locate his or her life insurance policies, there is, unfortunately, no national or statewide database of all life insurance policies that you can consult. However, you can try to determine:
- which insurance company might have issued the policy
|
| Read more |
|
|
|
| Where can I get additional information on life insurance? |
|
For more information on life insurance, you can contact:
- American Council of Life Insurers
1001 Pennsylvania Avenue
N.W., Washington, D.C. 20004-2599
202-624-2000
- Life and Health Insurance Foundation f...
|
| Read more |
|
|
|
