Insurance is something that we all need, but really don't want. Yes
we all want the protection, but who really wants to pay for it?
Keeping that in mind, when you do spend money to buy insurance, it
is important to spend your money to protect against the greatest risks.
The greatest risk that most people face is that the breadwinner in the
family will unexpectedly pass away.
Think about it. You, your spouse, or life partrner, suddenly passes
away. What will your partner and family do to pay the bills? How will
your partner that is not the breadwinner find income to maintain their
life style?
While social security does pay survivor benefits to qualified spouses,
these payments are not nearly enough to support a middle aged person
with 2 children, a mortgage, and a car payment.
Hint 1 - Keep it simple. Stay away from policies that
combine different types of insurance in one ploicy.
When you are buying one kind of insurance e.g., life insurance, it is
much easier to compare policies just for liability life insurance (also
known as term life insurance), than it is to compare whole
life insurance policies (which are a combination of term life policies
and a savings account).
Hint 2 - Term life insurance is all you really need. Term life
insurance is a policy that does nothing but insures your family against
your early death. There are no savings components in it, as you are
just paying for protection against early death.
It is also very easy to buy. You decide how much money you want your
family to be paid upon your demise, and you go shopping for a trem policy
that pays that amount.
About the only choice you have to make is the amount of time you want
level premium payments
Should you cancel your whole life policy? Most of the fees for
taking out a whole life policy are paid in the early years. If your
whole life policy has a very low cash value, you should probably cancel
it and just buy term life insurance. You will save much more more money
by paying lower premiums, then you would ever earn form the savings
portion of the policy.
Hint 3 - Paying as little as possible for insurance is not a good
thing. As in most things, with insurance you get what you pay for.
Companies that are struggling, or that have poor business practices
may lower their premiums to attract new customers.
You definately do not want to do business with an insurance copy that
is having financial deficulties. Which brings us to Hint 4.
Hint 4 - Insurance is only worth the paper it is written on.
Insurance is a wonderful thing until the company that is providing your
insurance goes out of business. Poorly managed insurance companies can
go out of business and leave you high and dry clutching your now worthless
insurance policy. Even if a struggling company does not go out of business,
they may not be able to pay you when your insurable event occurrs.
