| Purpose of Life Insurance | | | | a detriment because the range of choices can |
| | | | make finding the right policy from the best |
| If you die, life insurance is designed to | | | | company daunting. Your search will be easier |
| provide financially for those you have left | | | | if you consider four basic criteria in making |
| behind and have listed as your beneficiaries. | | | | your selection-rates, budget, service, and |
| In buying life insurance you, the insured, | | | | stability. |
| enter into a legal contract with the | | | | |
| insurance company, also known as the insurer. | | | | Rates: Because it is such a competitive |
| Basically, the contract states that if you | | | | business, life insurance rates vary greatly |
| make your monthly insurance payments in a | | | | from company to company. Find three to five |
| timely manner, your family or other | | | | policies with attractive rates for the amount |
| beneficiaries will receive a specific amount | | | | of coverage you desire. |
| of money when you pass on. | | | | |
| | | | Budget: Once you've found these policies, be |
| Although some may find the idea of life | | | | sure the premiums are within your budget. It |
| insurance distasteful, it is considered to be | | | | doesn't make any sense to go forward with any |
| essential in protecting the fiscal health of | | | | of these contracts if you aren't going to be |
| your spouse and children should they find | | | | able to afford them. |
| themselves fiscally taxed due to your death. | | | | |
| | | | Service: In determining the quality of each |
| Types of Life Insurance | | | | company's service, you can do two things. If |
| | | | you are going through an agent, you'll be |
| There are two primary types of insurance: | | | | determining the quality of that person's |
| permanent life and term life insurance. Each | | | | service when you talk to them about the |
| provides specific types of protection for | | | | benefits of buying specific policies. The |
| your loved ones. | | | | same is true if you buy directly from an |
| | | | insurance company without going through an |
| Term life insurance, the simplest form of | | | | agent. Do they answer your questions clearly? |
| life insurance, is designed to protect your | | | | Do they seem to know what they are talking |
| family for a specified length of time or | | | | about? Do they leave out important |
| "term." Term policies, which range from 1 to | | | | information? |
| thirty years, provide a one-time death | | | | |
| benefit but no cash savings. This means term | | | | By considering at least three companies and |
| policies only provide benefits as long as the | | | | or agents, you'll be able to compare their |
| insured has paid the premium, which is the | | | | ability to answer questions and to give you |
| cost of the insurance. Premiums are divided | | | | their undivided attention. Along with |
| into equal monthly payments that are assessed | | | | interviewing potential agents and companies, |
| for the entire period of coverage. If you | | | | you can check with your state insurance |
| bought a policy that covered you for a | | | | department to see how many complaints, if |
| three-year term, then you would make 36 equal | | | | any, they have received concerning the |
| premium payments on that policy. | | | | company and/or agent. |
| | | | |
| Permanent insurance is designed to offer both | | | | Stability: An insurance company's economic |
| a death benefit and an investment return | | | | stability is directly connected to their |
| after a length of time. Because this type of | | | | ability to meet their future financial |
| insurance offers a long-term savings plan, | | | | obligations. In other words, you want to make |
| premiums are higher than those for term life | | | | sure an insurance company will be able to pay |
| insurance. Common types of permanent | | | | your death benefit. The following companies |
| insurance are whole life, universal life, and | | | | rate insurance providers' fiscal soundness. |
| variable universal life. | | | | |
| | | | A.M. Best |
| Term vs. Permanent | | | | |
| | | | Oldwick, New Jersey 08858 |
| Term life insurance is especially appropriate | | | | |
| for those who desire coverage for a specific | | | | 908-439-2200 |
| length of time and who have limited funds. | | | | |
| Because it is less expensive than permanent | | | | Moody's Investors Services |
| insurance, term can offer more coverage for | | | | |
| less money. This is useful to people who have | | | | 99 Church Street |
| children, mortgages, and various types of | | | | |
| loans. The right amount of term can cover | | | | New York, New York 10007 |
| these expenses and more. However, if you | | | | |
| still desire coverage after a term policy's | | | | 212-553-0300 |
| period ends, factors such as poor health and | | | | |
| age will result in higher premiums when you | | | | Standard & Poor's Insurance Ratings Service |
| buy a new policy. | | | | |
| | | | 55 Water Street |
| Permanent insurance, although more expensive, | | | | |
| allows policyholders various benefits, | | | | New York, New York 10041 |
| including a premium that will not change as | | | | |
| you age or if your health deteriorates. Also, | | | | 212-438-2000 |
| permanent insurance will usually accrue | | | | |
| monetary value, offering the policyholder a | | | | Weiss Research |
| return on their investment that they can | | | | |
| access as worth builds. | | | | 4176 Burns Road |
| | | | |
| Whole or ordinary life is the most common | | | | Palm Beach Gardens, Florida 33410 |
| form of permanent insurance. With whole life | | | | |
| your premiums and the face amount of the | | | | 800-289-9222 |
| policy are fixed over the life of the policy. | | | | |
| Your premiums must be paid regularly. A more | | | | After going through these four steps you |
| flexible policy, where you can pay premiums | | | | should be able to compare each company, |
| at any time in just about any amount, is | | | | agent, and policy and make an informed |
| universal life. With this kind of coverage, | | | | choice. |
| you're allowed to modify the death benefit | | | | |
| amount according to your needs. | | | | One more important place to check for |
| | | | affordable life insurance is your employer. |
| A variable life policy carries both a death | | | | Many businesses offer very competitive group |
| benefit and monetary value. The value of this | | | | rates, usually for term life policies. |
| policy is dependent upon the performance of | | | | |
| investments. You select the investments for | | | | How Much Life Insurance is Enough? |
| your portfolio and the better they perform | | | | |
| the higher the death benefit and cash value | | | | Some people will say that you can never have |
| of the policy. Some policies offer a minimum | | | | enough life insurance. However a common rule |
| death benefit regardless of how your | | | | of thumb is to buy at least five times your |
| portfolio functions. | | | | yearly income. Many policies include a double |
| | | | indemnity clause, which means your |
| Variable-universal life carries elements | | | | beneficiaries receive double the value of |
| found in both variable and universal life. | | | | your death benefit if you should die suddenly |
| You get the risks and possible rewards of a | | | | in an accident or due to some violent event. |
| variable policy and the flexibility of | | | | |
| universal coverage. | | | | In asking yourself "how much is enough," |
| | | | you'll want to make a list that includes |
| Choosing a Life Insurance Company and Policy | | | | yearly expenses, large debts (such as a |
| | | | mortgage), and long-term or future expenses |
| There are some important things to consider | | | | (such as college tuition). You'll know you're |
| when buying a policy. Be sure to shop around | | | | adequately covered if your death benefit |
| before buying life insurance. Consumers can | | | | provides for large debts, with enough left |
| buy insurance directly from an insurance | | | | over for at least one year of living expenses |
| company via the Internet or over the phone. | | | | and for investing or sheltering for long-term |
| Buying this way is usually cheaper than going | | | | or future expenses. |
| through an insurance agent because the agent | | | | |
| receives a commission, called a "load," when | | | | Finally, you need to decide what you want to |
| they sell a policy. | | | | get out of your life insurance. Is it simply |
| | | | a specific period of coverage with a large |
| The life insurance industry is very | | | | death benefit or do you want your life |
| competitive with hundreds of companies | | | | insurance to be part of your long range |
| offering policies. This is a benefit for the | | | | fiscal planning? Considering and answering |
| consumer, because competition tends to aid | | | | all of these questions will help you find the |
| the buyer; however, this can also be seen as | | | | policy that's right for you. |