Life Insurance Information
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Paying for life insurance is not very rewarding, but you can't do without it if unless your dependents do not need your income for survival. The key is to buy life insurance only for losses, such as your income, that you or your family can not replace. Avoid narrowly defined policies that only cover specific loss of life, such as accidents, plane crashes or cancer. You're better off to cover any loss for a small increase in premium.
Don't skimp on coverage, but remember that people with no dependents may not need it at all. To estimate how much you need, figure your dependents living expenses if your income is no longer available. Most financial consultants estimate this to be five to ten times your annual income. Use our coverage calculator for a quick estimate, or consult with your financial advisor. If you are willing to spend a little more time at it, try out this calculator.
Term insurance covers you against death for a limited time, the term. For example, the term might be until your children are grown, or until college is paid for, or until retirement. You pay for the coverage period and at the end of the term the contract, or policy, expires. If no claims are made against the policy during the term, you don't receive any benefits after the policy expires, just like auto or homeowners insurance.
Whole life insurance is permanent and does not expire until you die (assuming you continue to pay the premiums). It provides coverage similar to term, but it also provides an investment vehicle. A portion of the premium goes toward insuring against death while the other goes toward an investment account. This investment account can be either an interest bearing account or a stocks and bonds investment account.
Which is better (our opinion)? Young families with large financial obligations are usually better off with term insurance. The substantially lower premiums enable them to purchase sufficient coverage to protect against loss of income. Any discretionary investment funds can be placed in other vehicles (mutual funds, money market accounts, etc.) that are likely to generate returns similar to or better than life insurance contracts. Whole life is sometimes purchased by people for tax and estate planning purposes. You should consult with your financial advisor.
Almost all companies sell their products through agents, rather than directly to the public. Some companies use captive agents, who can only represent that one company. Most of the competitive companies (such as those featured at this site) use independent agents, who are free to represent several companies. These agents can help you select from a variety of products and companies to tailor a plan.
The premium is set by the company, and it cannot be changed by the agent. The price you pay for a given product will be the same no matter where you buy it. Price shopping for an agent will not help you to find a lower price. On the other hand, shopping for a company, using an independent agent with access to our database, will help you find the best deal for which you qualify. We offer you the option to request an independent agent, who can help you choose the best life insurance company. You should take advantage of this opportunity.