Tips on Buying Life Insurance
THE ONLY REASON you need life insurance is if anyone is dependent on your income. The point of life insurance is to replace income that would be lost if the policyholder dies. If you have this concerns, you may have considered buying life insurance on the income producing spouse. Buying life insurance on a child, or non-income producing spouse is pointless.
What kind of Insurance is best?
Whole life, universal life, and variable life are filled with gimmicks and extras that are not necessary, and are a waste of money. Most come with provides an investment component. Life insurance is not the proper way to invest. Do not let anyone talk you into one of these plans. Term life insurance is the only way to go.
How much insurance is necessary?
Most people don't spend enough time studying the life insurance that's best for them, as thinking about death makes them uncomfortable. They may rely solely on an agent's recommendations. Uninformed insurance buyers can end up paying thousands of dollars more than necessary.
A term policy provides your dependents with a death benefit if you die while the policy is in effect. Make sure the term you choose matches your needs. Buy a policy where the death benefit your beneficiaries would receive would be enough to support them without you for several years - even as many as twenty years. That means the payout could be invested in high-quality bonds earning 5 percent or so in annual interest. The interest income would then produce enough for them to live on. Also take into consideration assets such as life insurance through your employer, Social Security, savings, retirement funds, and the surviving spouse's income potential. Consider how long it will be until your spouse can find employment. Bear in mind Social Security provides nothing for a wife without children under age eighteen until she reaches age 60.
If you or your spouse is a stay-at-home parent, make sure you also have a policy on them, too. In the event of a premature death, the surviving partner would need extra income to help with child care costs. Calculate the death benefit to what your expected child care costs could be. This depends on how many years your kids would need that care. That is a biblical responsibility.
"...for the children ought not to lay up for the parents, but the parents for the children." (2 Corinthians 12:14b)
Even among life insurance professionals, you'll find a range of recommendations for your situation. But With the reasonable cost of term insurance, you can guarantee them a decent income without spending more than you can afford.
Who doesn't need life insurance?
You probably don't need life insurance if you are single with no dependents, or if you have enough savings or your spouse has enough income to live on and cover your final expenses, such as your funeral and the handling of your legal affairs.
A good agent has a broad knowledge of the industry and can guide you to the best choice for your needs. A good agent will be happy to give you a thorough description of the insurance policy you are considering, and will not hesitate to put the offer in writing for you to take home and study at your leisure. Beware of high pressure salemen, and make sure you understand every detail of what is being proposed.
You can save money by dealing with an insurance company directly. Some savings banks and commercial banks also sell term life insurance, usually through only one company. Don't buy a policy without getting quotes from several agents or companies as you could end up paying thousands of dollars more than you need to.
Make sure the insurance agent you are dealing with is licensed, by calling your state insurance department. To find this number, look in the state government section in the front of your white pages phone book, or call directory assistance. Ask the agent if she or he is certified as a Chartered Life Underwriter (CLU) or Chartered Financial Consultant (ChFC).
Regardless of what plan you choose, your choice to buy life insurance if your family would otherwise not be cared for is a scriptural decision. As a Christian, it's your responsibility to assure that those of your household are provided for under any and all circumstances.
But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel. (1 Timothy 5:8)
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