Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
Click here to enter my free $205 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is October 31st, 2011.
The following is a guest post by Jessica Bosari. Enjoy!
Life insurance benefits those who are left behind when you pass away, so you want to make sure there is enough money to replace your income each year once you are gone. You want to ensure that your loved ones can maintain their current lifestyle if you pass away prematurely. You don’t want to place them in the lap of luxury (in other words, have too much life insurance) , except in the rare situation where that is indeed the current situation.
Purchasing Term Life Insurance
Permanent (sometimes called whole) life insurance has a cash value, and the premiums are much more expensive because a portion of it goes toward an investment portfolio that can include mutual funds. By passing up the permanent/whole life insurance policies, you can afford term life insurance rates that offer just life insurance without the investment portfolio.
The purpose of purchasing life insurance isn’t to invest money in the various financial markets (you have your retirement accounts for that, after all, and shooting for maxing those accounts out is a perfectly reasonable goal for most people); it is to leave behind enough money that will take care of your family when you aren’t there to provide for them yourself. You can do this for inexpensive rates with term life insurance, and in the process, you will keep the money you would have given to the insurance agent in commissions.
Insurance companies price life insurance by how healthy their clients are. If you are someone who has a weight problem, the insurance companies are going to see you as someone with a lower life expectancy, meaning large sums of money to your beneficiaries when you pass. Insurance companies want to avoid this, so if you are healthy and not susceptible to diseases, the insurance companies can charge you lower rates. If you are overweight, consider taking on a healthier lifestyle to reduce your life insurance costs. Because people who smoke also have lower life expectancies, they get charged more for life insurance. If you quit smoking, your chance of dying early from a heart attack goes down, as will your premium rates. The lower the risk is for your death, the lower the risk is for the agency who insures your and covers your cost of living.
Some professions are very dangerous, with employees who experience more injuries and deaths than most. If you were to leave your dangerous job and begin working in an office, then your insurance rates will decrease. It isn’t nearly as much fun sitting at a desk, but insurance companies like it better when you are safe inside rather than on high scaffolding that you can fall from.
The same activities that help you live a happier, more satisfying life help you to get affordable life insurance. Saving money on life insurance is great, but feeling good is even better.
How about you all? Do you currently have life insurance? If so, what type of policy do you have – term or whole life? Why did you go with the type you chose?
When you’ve applied for life insurance in the past, what types of details/questions about your life did they inquire about?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- @ Do you need life insurance?
- As we’ve discussed several times previously on this site, the first question in tackling the life insurance issue as a whole is to address whether or not you really need life insurance to begin with!
- Ultimately, if you don’t currently have any children or a spouse that depends on your income, then you’re probably better off waiting to get this form of coverage until such a time arises that it becomes needed.
- @ Deciding between whole and term life insurance policies –
- In my mind, deciding between whole and term life insurance is a no-brainer.
- In almost ALL cases, I would posit that people would be better off buying a competitive term life insurance policy rather than an expensive (often commission-filled) whole life insurance policy.
- What do you all think?
- @ How health factors affect your life insurance premiums and benefits –
- I definitely can imagine how life factors such as health, weight, and job safety could affect the level of premiums one would pay for life insurance.
- However, it’s interesting that in my experience, I’ve seen that if a person works for a fairly large company that has an established benefits package, you really aren’t asked any sort of health history or risk factor questions prior to signing up for the health insurance and life insurance benefits; they are simply bestowed upon you in a manner dictated by which policy you select.
- On the other hand, I could imagine that individual health and risk factors come much more significantly in to play if you were to pursue independent health or life insurance policies.
***Photo courtesy of http://www.flickr.com/photos/jakecaptive/5343993880/sizes/l/in/photostream/