If you have loved ones whose well-being is dependent on you, you might be considering life insurance to protect them financially. Yet, life insurance is not just for covering a spouse, a child, or an aging parent; it is a financial tool that can be used to build wealth and endow families and favorite causes. So, whether you are young or old, solo or not, there is some form of insurance that can help you reach your goals.
As you think about your goals, here are some points that you might want to consider:
? Who do I want to cover?
? How much insurance do I want/need?
? Are my coverage needs near or long term?
? How much insurance can I afford?
? How much life insurance, if any, can I obtain through my employer?
? What is my life expectancy?
Term versus Whole Life
In general, term life insurance premiums are less expensive than whole life premiums. That is good news for people who need coverage but are on a limited budget. But term insurance is like renting a house instead of buying one; you are not building any equity. When the term is up, if you want coverage again, you must hope that you can renew your existing policy without a huge premium increase, and that the insurer will accept you again. Some term policies may be convertible to whole life coverage.
If you know you'll want coverage for years to come, you might want to consider a whole life policy. As long as you pay your premiums, not only are your dependents covered in case of your demise but you will usually not have to submit to medical exams once your policy is issued. In addition, whole life policies can be considered assets--they can be cashed in, or "surrendered," borrowed against, or sold. As investments, however, their performance is not as good as many other products.
Getting and Staying Covered
Not everyone who applies for life insurance is issued a policy. Insurers routinely deny coverage to those with severe medical problems and exclude payouts for death due to high-risk activities such as SCUBA diving, skydiving, spelunking and dirt biking. There are also age caps on coverage. If you want coverage you may have to curtail favorite activities.
And when you fill out your application, be sure to answer all questions thoroughly, as even unintentional omission of information (a past accident, surgery, etc.) can lead to denial of your beneficiaries' claims.
Shop, Shop, Shop
Even if you tend to buy from a referral, shopping for insurance is smart. Every life insurance company wants to compete for your business, which means that you will find different acceptance criteria and different premiums from company to company and from state to state.
By understanding your lifestyle and goals, and then shopping for life insurance, you will be able to get the most benefit from your policy.
Lorraine Watkins is a communications professional who has managed marketing and public relations for Parasoft, Symantec, Candle and several other high tech companies. Her previous experience includes managing the Baskin Robbins franchisee training program and teaching college level English. Lorraine holds an MA in English from Cal State East Bay.
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