What is the best Life Insurance?

Question

I am not sure which company to choose from, my husband and I are planning on getting life insurance and we need some ideas or guides. Plus we don't know what benefits or coverage to look for.

Answer 1

First let me disagree with Jkrd156, Insurance should rarely ever be sold as a way to provide income at retirement. Life insurance should always be bought for the life insurance, the cash value is a secondary benefit.  While life insurance could be appropriate after all other tax deferred options have been used.

I also disagree with professor wonderful. I have seen CHFC and CLU agents that make their living selling insurance as investments. These are mostly career agents working for captive agencies who have managers pushing product, usually variable life and whole life, because these are the most profitable life insurance for the agent and the company.

Usually for when people are making their first life purchase they are working with limited funds and need maximum insurance.

Term insurance is like renting, when you rent an apartment at the end of the lease you leave the apartment and you have not built up any equity. With term insurance you buy 20 year term and you pay a set price for 20 years. If you die within that time frame your beneficiary receives the death benefit. If you don't die at the end of the 20 years the term expires and you no longer have life insurance. This can be a problem if you still need insurance and you are no longer in good health or maybe you even have a terminal disease.

Universal life Variable life, whole life are all versions of permanent life that are designed to provide you coverage until you do or reach age 100 or in some cases 120. This is more expensive than term but you will always have some life insurance. These policies have a cash value component, meaning that a portion of the premium you pay gets placed in an account that earns interest . After 20 years it is possible that this cash value could be enough to pay your premiums for the next 20+ years.

It is wise for most people to have a portion of both term and permanent life. A good example is a family with young children may want enough life insurance to provide income for the surviving spouse to stay home raise the kids, provide for a college education, etc. Let's say this is $1 million. I would suggest 900K term for 20 or 25 years and then a smaller permanent life policy of 100K.

I routinely run across people from age 50 to 70 that are buying permanent life insurance.

Let's say someone has term insurance and comes down with a terminal illness at the end of the term. Even with health insurance a terminal illness can cause great financial harm to the faineances of the family. Then you are left without life insurance to offset the cost of the illness and the final expenses.

I suggest you look for a local broker that can help you sort through the different companies available. You can use yellowpages.com to search for life insurance brokers in your area. A Broker represents multiple carriers and can help you sort through all the different insurance companies and plan options in your state.

You can call your auto and home agent they specialize in property and causality insurance and usually have a good knowledge of life insurance. But you would be better served with someone that specializes in life insurance.

Answer 2

an agent should help you answer all those questions and more. What is the purpose of the insurance? Is it protection or to also build a cash value for retirement. Will your needs stay constant or will they decrease over the next 10, 20, or 30 years. How old do you think you will live? Many policies today can be based on living to 100 or 121 years. First, find a company that is rated highly by AM Best. They rate all insurance companies. Some companies are even Not For Profit so they actually can have lower fees and return larger dividend to their policyholders and the community.

Answer 3

Do not worry about the company.

Worry about the agent.

There are designations we have in the insurance industry.  One is the CLU (Chartered Life Underwriter).  It takes a lot of study to achieve this award.  Most agents do not even attempt to earn the CLU.

Another designation is the ChFC (Chartered Financial Consultant).  This is also difficult to receive.

If you save your old telephone books in the garage, go get the oldest one you can find.  Open it to Insurance.  Look for the listing of all the CLUs and / or ChFCs.  Find one with your last name - or the next one in alphabetical order.  (This keeps one guy named Adams from receiving all the calls.)

Call the number.  If it is disconnected, he has left the business (or moved).  If the number is still good, then you have a very experienced  - and credentialed! - agent who will guide you through the selection process.

A person with the ChFC is prohibited from giving you poor advice.  He can lose his designation.

Call an experienced and credentialed agent.  He will not, not, not steer you wrong.