The Seven Don'ts of Buying Life Insurance
By: Steven Kolbrin - Life Insurance Broker 48 States
Believe it or not, buying life insurance can be a satisfying experience. Like anything else, you just need to know what you’re doing. A lot of it comes down to avoiding the pitfalls that give many people frustration and aggravation.
Over the course of my 25 years of experience, I have discovered seven don’ts of buying life insurance. By steering clear of these, I believe you can experience more satisfaction with your purchase.
1. Don’t kid yourself about the risks involved.
Yes, you may be healthy today and take the utmost caution in life. But the fact of the matter is, no one knows when his final day on earth will come. There are a multitude of threats beyond our control, such as undetected medical conditions, freak accidents, household fires, car crashes, and even terrorism.
While we can all improve our health to our best efforts, which can keep the cost of our life insurance down, don’t assume that a lower premium and higher level of health guarantees life longevity. If you are committed to securing the financial future of your loved ones, be it family or charity, then you have to admit that their future without you could very well start tomorrow. All the more reason to buy the life insurance today.
2. Don’t treat insurance like an investment – or a form of gambling.
People tend to lump all financial products together. Insurance, annuities, and investments may seem similar — especially when life insurance products build cash value and provide a benefit while the insured is still alive — but they aren’t.
Life insurance is not an investment. Investments are for you when you are alive. The longer you live, the more value that investment can attain. Life insurance is for your financial dependents when you die. The sooner you die, the more bang for your premium buck these beneficiaries receive.
It doesn’t make sense to say, “Well, I can take the same premium amount and invest it. With good returns I should be able to self-insure at some point in the near future.” That may benefit you, but it won’t help your beneficiaries should you die sooner than you hoped. Furthermore, what would happen if you fell ill, lost your job, or the market crashed? Your plan to self-insure may fall short and your dependents may end up without any security. This is called gambling with their financial future, not insuring it. Read more....
Why You MUST Change Your Life Insurance Beneficiary When Getting Divorced
By: Steven Kolbrin - Life Insurance Broker 48 States
Certified Divorce Financial Analyst™, Michelle Ash has a must-read article about financial issues after divorce in womensdivorce.com. Here’s an overview:
The divorce is finally over, the decisions have been made, and now life proceeds anew for the client. But it’s never really that easy, is it? For the newly-divorced client, the legal work may be done, but there’s often a long list of financial clean-up that lies ahead.
As a life insurance broker, I pay special attention when experts offer advice on how to avoid troubles with your policy. Michelle points to a big one regarding the need to change the beneficiary designation when the divorce is finalized:
According to estate planning attorney C. Randolph Coleman of The Coleman Law Firm, “There usually are a half dozen cases during a typical year where someone will call and ask whether there is anything they can do to avoid the ex-spouse of their recently deceased spouse, parent, child or sibling, from taking the life insurance or retirement plan that the ex-spouse was still the beneficiary designated on the decedent’s plans/policies. The short answer, there is nothing you can do. The beneficiary designation will trump the will or intestacy every time.”
Again from estate planning attorney, C. Randolph Coleman, “I probably see about 6 or 8 people a year who typically come in for estate planning 4 to 5 years after a divorce to ‘finally get around’ to updating their estate planning. Usually, during the course of our discussions I will suggest to them that they go back to their employer and check on the beneficiary designations for their life insurance and retirement plans. Invariably, about half of them will call back and tell me how much they appreciate the counsel to check because their ex-spouse remained their beneficiary.”
A big takeaway
One takeaway from the story is this: if you wait for a life event to prompt an update of your policy, you may end up doing too little too late. This problem can be avoided if you get into the practice of conducting regular audits of your policy. Policy audits can frequently head off trouble at the pass.
What about your policy?
What about your life insurance policy? Is the beneficiary designation is current?
Please feel free to comment, or to contact me directly with a specific question.
If you need a quote now, or a second opinion on a quote you have received, the best thing to do is to call me toll-free at (866) 633-1818. Or email me at firstname.lastname@example.org. I also encourage you to download my free Life Insurance Guide – see the above tab. Many people have found it to be extremely educational.
How Business Owners Use Life Insurance to Make Charitable Gifts
Using Life Insurance to Give Back
Life insurance is ideally suited for charitable giving. By taking out a policy on yourself for the benefit of the charity, you can turn a small amount of money into a substantial gift. Each dollar of the benefit only cost pennies in the original investment. This means that the gift does not have to be an excessive expense for the donor, but the investment adds up and the charity’s cash flow is considerably impacted.
Here are three quick tips for business owners for using life insurance to make charitable gifts READ more....