Thing No. 1 Life insurance is generally for people with a
spouse and/or kids.
If you’re single and you just want to make
sure Fifi is provided for in the event of your untimely death, you
don’t need life insurance for that. You’ll probably be forced to buy
some if you have a mortgage (they’re not letting you off that easy) but
that’s a separate issue. If somebody suggests that it’s a way to
save money…that’s lame. There are better ways to do that.
The whole point here is that there are people that will need financial
assistance if they suddenly find themselves without your income because
you’re…well, dead.
Thing No. 2 Choose between a broker or DIY.
We prefer
the human touch. Life insurance is less about getting the best
deal and more about getting the right coverage for your specific
situation without overdoing it or underdoing it. You can use the
counsel. But, you can also do some preliminary research if you’re up to
it intelliquote.com or selectquote.com Choosing
one who is not restricted to representing certain companies is best but
many of them are and you can make due with them as long as they
represent a long list of companies. Check Find and Advisor @ naifa.org
Thing No. 3 You may have some coverage with our
employer.
If you work for a big company, you’ll likely have some
coverage (particularly if you happen to be fortunate enough to keel
over while in your cubicle) which you should acquaint yourself with as
a starting point.
Thing No. 4 Figure out what you want the post “six feet under”
scenario to be.
For example, you may want mortgage and college tuitions
fully paid and provide your family with an income for a certain period
of time before they’ve got to quit lying around all weepy-like, get
over it and get to work. Or, you may want to make sure they have
a steady income in perpetuity…your call. Obviously, the latter is
going to cost you more than the former. Grab yourself one of the many
worksheets available on the web and sort out what you’d like get paid
and for how long. smartmoney.com/insurance/life/
Thing No. 5 Buy it in chunks.
Term life insurance gives you
the most coverage for the least amount of money. We don’t like “whole
life” because these policies are based on investing some of your
premium. They basically give you a fixed interest rate on a portion of
your premium (which goes to the bottom line of your benefit) and/or a
non-guaranteed return based on their “projections” for the
investment. These “projections” are aggressive (not conservative)
since they want to lure you in with promises of high returns, which may
not turn out to be so high after all. You’re better off investing
that same money separately instead of wrapping it up with your life
insurance policy because these policies have extra penalties (which
come out of the payout) for early withdrawal and more restrictions than
if you’d simply invested that extra money…wherever. There are
also tax implications and Byzantine structures that make us scrunch up
our faces and furrow our brows in generalized disapproval.
Thing No. 6 Check the rating.
Make sure the insurance company has an A+ rating @ standardandpoors.com
Thing No. 7 You’ll have to “get physical.”
Ever see those
cheesy commercials telling the old folks that they are guaranteed
coverage and they don’t have to take an exam? The way they do this is
by charging a high premium for a death benefit that is low.
(That’s why they talk about the high costs of funerals in these ads
because that’s pretty much what they’re going to cover.) Most of
their customers pay more in premiums in just a few years than their
beneficiaries will receive, ever. Pretty sad considering they
could have just put that money in a savings account and been better
off. If you’re in decent health, don’t go for a “guaranteed
issue” policy and do submit yourself to the indignity of the physical
and the merciless judgment of your lifestyle that will ensue.
Thing No. 8 Clean up your act.
They’re going to
scrutinize you for nicotine, drugs, blood pressure and weight.
And, they’re going to hold it all against you in the form of your
premium. If you’re going to get life insurance tomorrow, there
isn’t much you can do about any of this but we thought you should know.
Especially, because anytime you can demonstrate that your health is
improving (like say over the first year) or even that you are a
“responsible patient,” (checking in with the doc regularly, taking your
meds like a good girl etc.) you can bring down your premiums.
Thing No. 9 Times change.
Check your policy at least every
three years or if there’s been some major change in
circumstances. New offspring, mortgage balance, anything that
would alter the amount that needs to be paid if (or should we say
“when”) you check out. Get a rider if you need to expand your
coverage so you don’t sacrifice any built up value in your policy.
Thing No. 10 Time’s a wastin’.
Costs only go up the older you
get. If you buy when you’re in good health, your term policy will
let you renew without being forced to pee in a cup again and, you can
also lock in your premium.
Thing No. 11 Check your credit.
Other than having to pay
your family because you went and died, the last thing the insurance
company wants is for your policy to lapse for missed payments.
When that happens, that big fat bonus/commission they paid to whomever
sold you the policy is gone and so is the premium they were collecting
from you. That upsets them deeply. equifax.com
Thing No. 12 Pay annually.
They’ll charge you more to
make monthly payments. If you have to make payments, have them
automatically deducted from your checking account so they won't charge
you quite as much more.
Now, off you go. Don’t walk under any ladders. Or, in front
of any cars. Rest assured though that if you do, your family
won’t be on the street and, if the Buddhists are right, before you know
it, you’ll be back in first grade again.