|
Life Insurance: Where To Begin?
|
When it comes to life insurance, most people have minimum knowledge or none at all. Arnold T. Respicio, an agent from Farmers Insurance Group in Stockton, California, answered some of the basic questions everyone is wondering.
Q. When should you begin shopping around for life insurance?
A. It depends on your needs. But you should start shopping for life insurance when you get married. When someone depends on you financially, like children or a spouse, and you have a mortgage or want to protect significant financial assets, you should have life insurance. People also buy when they are young and single for future insurability because you don't know what your health will be tomorrow.
Q. How much life insurance do I need?
A. Conventional wisdom states five to ten times your annual salary. I try to get them coverage that at least covers their debts. Some people may not be able to afford the premium, and in that case, I try to get them to buy what is affordable for them. Some coverage is better than no coverage at all.
Q. Is life insurance needed if I don't have a family and am still in my 20s?
A. Not really, but if you want to protect future insurability, you may want to consider it. Not only that, but the cost of insurance is less when you are young and healthy.
Q. What are the common mistakes people make when purchasing a life insurance plan?
A. Understanding the policy. Know what type of plan it is and the amount of coverage.
Q. What's the difference between term and permanent life insurance?
A. Term is for a term period of time, one year, five years, 10-, 20- or 30-year term policies. When the term is over, you have no more coverage. It's the pure cost of insurance. There is no cash value. Most term policies can be converted to a permanent plan. The premium is less when you're young and healthy, but costly when you're older and not in good health. Permanent life insurance is designed to last your whole life. It has cash value you can withdraw or borrow against, but the premium is more because part of the premium goes into savings or investments.
Q. Who is a term life insurance plan best for?
A. Term insurance is best for someone young and healthy with a lot of debt and limited amount of money to spend or someone who only wants coverage for a fixed amount of years.
Q. Who is a permanent life insurance plan best for?
A. Permanent insurance is best suited for someone who wants coverage for their whole life and wants to leave their children or grandchildren something when they die. Or if someone has significant financial assets they want to protect and want to be able to pay for estate tax, so they don't have to sell the assets to pay for estate tax.
Q. What should I look for in a life insurance plan?
A. You should look for what's best for your situation, what your needs are. A lot of policies have different features and benefits. You need a trusted advisor who can help you and guide you. They can help you with choices that may end up being one of the most important financial decisions you'll ever make.
Q. What is your advice for someone who is in the market for insurance, but doesn't have much information on the insurance market?
A. You need to talk to a full-time insurance professional. You would not want to go to a part-time doctor who has a full-time job doing something else. You should call your agent who takes care of your auto and home insurance first because you already have a relationship with him or her.
Q. What should first-time insurance buyers be warned about when looking for the right plan?
A. You should buy from someone you know and trust. They will be able to guide you in deciding the "right plan" for your situation.
When it comes to life insurance, most people have minimum knowledge or none at all. Arnold T. Respicio, an agent from Farmers Insurance Group in Stockton, California, answered some of the basic questions everyone is wondering.
Q. When should you begin shopping around for life insurance?
A. It depends on your needs. But you should start shopping for life insurance when you get married. When someone depends on you financially, like children or a spouse, and you have a mortgage or want to protect significant financial assets, you should have life insurance. People also buy when they are young and single for future insurability because you don't know what your health will be tomorrow.
Q. How much life insurance do I need?
A. Conventional wisdom states five to ten times your annual salary. I try to get them coverage that at least covers their debts. Some people may not be able to afford the premium, and in that case, I try to get them to buy what is affordable for them. Some coverage is better than no coverage at all.
Q. Is life insurance needed if I don't have a family and am still in my 20s?
A. Not really, but if you want to protect future insurability, you may want to consider it. Not only that, but the cost of insurance is less when you are young and healthy.
Q. What are the common mistakes people make when purchasing a life insurance plan?
A. Understanding the policy. Know what type of plan it is and the amount of coverage.
Q. What's the difference between term and permanent life insurance?
A. Term is for a term period of time, one year, five years, 10-, 20- or 30-year term policies. When the term is over, you have no more coverage. It's the pure cost of insurance. There is no cash value. Most term policies can be converted to a permanent plan. The premium is less when you're young and healthy, but costly when you're older and not in good health. Permanent life insurance is designed to last your whole life. It has cash value you can withdraw or borrow against, but the premium is more because part of the premium goes into savings or investments.
Q. Who is a term life insurance plan best for?
A. Term insurance is best for someone young and healthy with a lot of debt and limited amount of money to spend or someone who only wants coverage for a fixed amount of years.
Q. Who is a permanent life insurance plan best for?
A. Permanent insurance is best suited for someone who wants coverage for their whole life and wants to leave their children or grandchildren something when they die. Or if someone has significant financial assets they want to protect and want to be able to pay for estate tax, so they don't have to sell the assets to pay for estate tax.
Q. What should I look for in a life insurance plan?
A. You should look for what's best for your situation, what your needs are. A lot of policies have different features and benefits. You need a trusted advisor who can help you and guide you. They can help you with choices that may end up being one of the most important financial decisions you'll ever make.
Q. What is your advice for someone who is in the market for insurance, but doesn't have much information on the insurance market?
A. You need to talk to a full-time insurance professional. You would not want to go to a part-time doctor who has a full-time job doing something else. You should call your agent who takes care of your auto and home insurance first because you already have a relationship with him or her.
Q. What should first-time insurance buyers be warned about when looking for the right plan?
A. You should buy from someone you know and trust. They will be able to guide you in deciding the "right plan" for your situation. |
|
|
|
|
