It’s true that insurance can be complicated and very tricky. Lots of factors to consider, many different options from which to choose and, of course, all of this comes with a certain outlay of money. It’s no wonder that many people can’t decide what to do or how to make the correct decision.
And it’s clearly an important decision because the old adage “it’s too late” can ring true in many situations in which there may be an incident and then the unfortunate discovery that there isn’t enough insurance or any insurance at all.
While insurance is a “huge” topic I thought that I would address some of the fundamentals to help start the conversation and clarify a bit of the confusion that you might have.
What is a Whole Life Insurance Policy?
This is a life insurance contract with level premiums that has both insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.
As the most basic form of cash-value life insurance, whole life insurance is a way to accumulate wealth as regular premiums pay insurance costs and contribute to equity growth in a savings account where dividends or interest is allowed to build-up tax-deferred.
(Source: Investopedia.com)
What is Term Life Insurance or Term Assurance? 
Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.
(Source: Wikipedia)
As in most insurance and investment decisions, you should consult with a qualified expert to help you identify the right choice for your needs and circumstances.
Should I Have Life Insurance?
Clearly everyone’s circumstances are different and that is exactly why the decision about whether to buy life insurance or not, as well as what kind of insurance to buy, deserves significant research and consideration.
At its core life insurance is protection and your need or desire to have it will be based upon your unique circumstances.
Some reasons are:
- Protect your family
- Pay off debts
- Pay for funeral expenses
- Pay off estate taxes
Once again this is a very personal issue and is contingent upon a whole host of considerations best discussed with an insurance professional so that you may arrive at the best decision.
Why You Should Evaluate What You Currently Have?
Let’s face it, many people buy life insurance and they promptly put their policy in a file drawer and never look at it again. The policies lapse or circumstances change and the policyholders are none the wiser.
Now I tend to agree that reviewing your insurance regularly might not be something that you wish to do but make no mistake about it, this review is critical for many reasons. You should ask yourself the following:
- Do I have enough insurance for my current situation?
- Are there equivalent policies in the marketplace that cost less?
- Based on my current situation and goals, should I change the type of coverage that I have?
The price of insurance fluctuates and it is important to make certain that you are getting the coverage that you need and at the best price. Once again there are many insurance companies and policies from which to choose and the guidance and wisdom of an insurance professional, one that deals with these issues on a daily basis, should be sought.
W
hile clearly this is not meant to answer ALL of your questions I hope that I’ve been able to outline some of the basics. For more information please contact me at (516) 605-0437 and I’d be happy to speak with you about your unique circumstances.
