Everything About Life insurance!

I want to start off this 2010 with an article regarding Life insurance. Many people find this topic morbid but believe me when i say this contract can be as important as a Will and may be studied just as seriously as health insurance. Due to the length in details of this article I have provided chapters for easy reading. I hope this will coach you on Life insurance and the incredible importance of its necessity. (Note: For better understanding “You” is the policy owner and the insured)

1) About general Life insurance:
This is a contract between you and an insurance citrus county company to pay a percentage (the premium) to a company in return for a benefit (called the Death Benefit, face amount, or policy amount) to the beneficiary (the person you want to get paid in the time of your death). This can range based on the type of policy (which will be discussed momentarily), your health, your interests, the Insurance company, how much you can afford in premiums, AND the amount of the advantage. It sounds overwhelming but it is not if you have the right agent or broker.

Now many people can say that Life insurance is like playing. You are bets you will die in a specific time and the insurance company table bets you won’t. If the insurance organisation wins, they keep the premiums, if you win… well you die and the death benefit goes to the beneficiary. This is a very morbid way of looking at it and if that is the case you can say the same for health insurance, car insurance, and rental insurance. The truth is, you need life insurance in order to ease the responsibility of your death. Example 1: A married couple, both professionals that earn very well for a living have a child and like any other family has monthly expenses and one of the couple has a death. The odds of the spouse going back to work in the morning is very slim. Chances have been that your capacity to function in your career will lower which RISK the explanation for not being able to pay expenses or having to use one’s savings or investments in order to pay for these expenses NOT INCLUDING the death tax and memorial expenses. This can be financially devastating. Example 2: lower middle income family, a death occurs to one of the income earners. How will the household manage to maintaining their current financial lifestyle?

2) When/If you have Life insurance:
First, you should review your beneficiaries every year and your policy approximately once every 2-3 years. This is free! You have to be sure the beneficiaries are the people/person you want to get paid! Divorce, death, a disagreement, or anything of the sort can make you change your brain about somebody to obtain the advantage so make sure you have the right people, estate/trust, AND/OR organization (non-profit preferably) to obtain the advantage. Furthermore, you need to review every 2-3 years because many companies can offer a lesser premium OR improve the benefit if you restore your policy or if you discover a rival that sees you have been paying the premiums may compete for your business. Either way, this is something you should think about to either save money or improve the policy amount! This is a win-win for you so there should be no reason not to do this.

3) Life insurance Agent or Broker, what is the difference?:
The major difference is an Agent is usually an impartial sales man that usually works together with different insurance companies in order to give the client perfect policy while the Broker works for a particular company. The advice: always choose a representative. Not because I am one myself BUT because a representative can look out for your benefit by providing different quotes, types, cyclists that are available (explained later), AND pros/cons regarding each insurance company. If you don’t like a particular insurance company, tell the agent and he should move about the next carrier (if he continue for some odd reason, fire him). Buyers BEWARE: The Agent should get paid by the carrier that is chosen, not by you specifically. If a representative asks for money in advance for anything, RUN! There are also Insurance consultants that you pay but to keep things simple, see a representative. Consultants and Agents are also great in reviewing current policies in order to lower premiums or increase benefits.

4) Types of Policies:
There are 2 main categories: Term and Permanent Insurance. Within all the 2 categories have sub-categories. I will explain them at a glance in order for you to make perfect choice for you and your loved ones. Remember, you can have estate/trust or a organization as the beneficiary. (Note: There are even more sub-sub-categories within these sub-categories but the difference are so small and self informative that we haven’t included it in this article. Once you speak to a representative you will have enough knowledge by this article you will know what questions to ask and know if you agent is right for you).

Term Insurance: A temporary policy in which the beneficiary is paid only upon death of the insured (you) within a specific time period (hence the word “Term”). Term Insurance is usually less expensive with a smaller death benefit. Some do not require medical assessments BUT expect you’ll pay a higher premium since the risk of the insurance company is unknown. Also, term insurance normally does not accumulate cash value (explained in permanent insurance) but can be purchased on top of your permanent policy (for those that may have coverage already):