too, which is to make money. The highest commissions are earned by salespersons selling whole life, but it is so expensive that the average breadwinner who needs at least $500,000 of life insurance cannot afford adequate coverage with a whole life policy. Forget the projections, the charts, the long columns of complex numbers and formulas! Ask for-no, demand-term insurance. Term life is like homeowner’s or auto insurance. You renew it each year, get the maximum amount you can afford with very few dollars-and the agent doesn’t like that idea!
With adequate long-term planning you will need a large life insurance policy for only the early years of your life. While the mortgage is being paid off, the children are at home, you’re still building a retirement portfolio, you can’t afford to put every dime into life insurance premiums. Get what you need while you need it but don’t overpay for it, and let it lapse when you no longer need it.
If you’re more comfortable having a “permanent” life insurance policy, search for a “low-load” policy such as the Veritas/Ameritas universal policies that are much more affordable for the average family but aren’t available in all states. If you’re fortunate enough to be in the military or related to someone in the military, you have access to one of the best insurance companies available. Call USAA Life in San Antonio, Texas, at 800-531-8000 and inquire about its life and disability policies.
Don’t waste your money on these policies. Use the dollars instead for your retirement savings, college tuition savings, or your emergency savings plan.
- Insurance on children. Unless your children provide income, use the $60 to $75 for this special add-on to your policy for an Education IRA rather than for life insurance.
- Dread disease insurance. Improve your overall medical coverage rather than waste money on special disease insurance. With all the exceptions and prohibitions, these policies don’t pay off until you exhaust your other medical coverage. Unless you have a crystal ball that forecasts a cancer diagnosis, don’t waste your money. Think positive and you’ll die in your sleep after your 92nd birthday party.
- Flight insurance. If you take 10 to 12 flights a year and buy this out of fear, a better use of money would be an additional term insurance policy. Flight insurance is overpriced coverage.
- Hospital indemnity insurance. The insurer promises to pay $100 a day while you’re in the hospital, but with today’s HMO coverage you probably won’t be hospitalized more than three to five days.
- Credit card insurance. This protects the bank’s interest, not yours. The overall cost of this is very expensive. Carry enough life insurance and let your family decide when and how they want to manage your remaining debts.
SHOPPING AROUND FOR LIFE INSURANCE
Before you begin calling agents and brokers to get coverage, spend some time doing a bit of homework and collecting some free information to learn how to get the most inexpensive coverage available. Several national insurance quote services are available and will charge you nothing