27 September 2013 0 Comments

Random Questions And Comments About Life Insurance

questions and answersOver the years I’ve been asked many questions and heard many comments from people just like you about life insurance.  Here are a few more of them and my answers:

Q.  What is Waiver of Premium and is it a good deal?

A.  Waiver of Premium is a rider that can be added to a life insurance policy that continues your coverage without the payment of premiums if you are totally disabled.  Most of these riders define “total disability” as one that has been caused by an illness or accident that prevents your working at any occupation.  Your disability must have commenced prior to age 60 and have continued for at least 6 months.  Is it worth it?  You must measure the premium charged against the odds of your ever qualifying for such a severe definition of disability.  What you should have is a disability policy that pays you an income if you are unable to work at any occupation for which you are reasonable fit by training, experience or education.  Pay money for a policy that essentially waives all costs of living after a shorter waiting period with a more liberal divination of disability.

QI’m 35 with a wife and two kids ages 3 and 6.  Should I buy 10, 20 or 30 year term?

A.  Before deciding on what type of policy to buy, determine how much insurance you need.  If you want to continue an income for your family and provide for a college education for your kids, you’ll want 10 X 15 times your annual income.  Actually, as the family ages the amount of insurance needed might decrease, so you could purchase some 20 year and some 30 year term.  Use 10 year term only if your budget won’t allow for the longer duration.  Those 10 years will pass very rapidly and you may have added more obligations along the way.  However, if all you can afford is 10 year term, then instead of reducing the amount of death benefit, reduce the duration to 10 years for the entire amount and then add longer duration term as time passes and your budget will allow it.

Q.  My dad says all I should buy is whole life.  Is he right?

A. “Father knows best” may be the title of an old TV series, but here it doesn’t hold up.  No one policy is always right or always wrong for every person.  Determine your need for insurance, your budget and then deal with a professional agent, not your dad, who can assist you with the correct program.

Next, I’ll be discussing how Social Security retirement planning and life insurance go together.

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