4 Questions Everyone Must Ask About Life Insurance

by Efin Advisor | October 31, 2007

Certifiied Financial Planner Michael Rubin reaffirms that there are four simple questions everyone must ask about life insurance.

“I know that talking about death isn’t fun,” Rubin states. “But failing to put life insurance in place is among the riskiest things you could do to your child. You’d never leave your son alone on a bridge. You’d never look the other way while with your daughter on a boat. Life insurance is much more that just the safety railing or the life raft. Life insurance is you looking after them, just in case, some day, you’re not.”

Here are the four most frequently asked questions about life insurance that, left unanswered, can prevent a parent or spouse from taking the right steps.

Question # 1: Do you need life insurance?

Not everyone will answer this question exactly the same way. You need to consider who will be harmed financially by your untimely demise. If it’s only your hair stylist, you don’t need life insurance. But if you’ve got children, or have a significant other or parent who depends on your income, life insurance is critical.

“It is not only those making an income who need to be insured,” says Rubin. “Even if you work full-time in the home and receive no salary, there is a tremendous financial cost to the survivors resulting from your early death. How would your surviving husbandor wife be able to keep his job and perform all your responsibilities if you were gone? Quite likely, it would be impossible. It is life insurance on the homemaker spouse which would enable the surviving spouse to keep the job he has and afford to hire others to help with the tasks you formerly performed.”

Question # 2: How much life insurance do you need?

Your main goal with life insurance is to satisfy your family’s needs for a specific period of time after you are gone. As a parent, you are protecting your husband or wife from having to work for the rest of the time your children were expected to live in the home. Another consideration is for your children’s expected college expenses. Take advantage of the tools available such as the Efinancial Life Insurance Calculators to get a firm grip on the amount of insurance that’s right for you.

Question # 3: What kind of life insurance should you buy?

While there are circumstances where whole life insurance policies make sense, most young families with limited budgets need to maximize their protection per dollar spent and choose term insurance. You pay premiums for the specific length of time (the term) the policy covers. If you pay your premiums and you die during the term of the policy, your beneficiary receives the life insurance proceeds. If you do not die during the term of the policy, you get nothing. It’s that simple.

Generally speaking , you’ll see you can afford much more protection for the same dollar amount buying a term policy compared to a whole life policy.

Question # 4: Where do I buy life insurance?

“Even if your employer offers you a life insurance benefit at work, you owe it to yourself to get a quote for a private policy. Especially if you are young, healthy, and a non-smoker, you’ll likely find that a privately purchased policy will be less expensive than the one offered to you at work,” states Rubin.

Keep in mind that life insurance you purchase privately does not depend on your continued employment at your current job. When you go to work for another company or take some time out of the workforce, you can keep your privately purchased life insurance. This is called “portability.” Life insurance purchased through your employer is typically not portable, since it is usually not available to you should you leave your job. In most cases, this is true regardless of the reason you leave: quit, layoff, or disability.

Important questions, one and all. Let a fast life insurance quote from Efinancial help you find the answers!

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