How to Shop Life Insurance
Strength and Financial Security of the Insurer
The only serious risk posed by Life Insurance is if the insurance company backing the contract goes belly-up. In reality, most insurance companies hold solid, diversified portfolios that allow them to weather most economic storms. Occasionally though, an insurance compan- can become insolvent. Even in these cases policy holders are still covered by Minimum State Guarantees, but it's best to avoid this scenario altogether. How? Go with only the A-rated, brand name insurance providers you can trust and rely on.
Do you need Life Insurance? To determine your need for life insurance, answer the following questions:
- Are there people who depend on you financially?
- If you provide services such as child care, cooking, shopping, and cleaning for your family, who will provide these services if you die?
For most people, the need for life insurance is greatest after starting a family or buying a home. The need decreases as the children grow up and become independent and mortgages are paid.
Do I need life insurance for my children or my parents? There are three (3) common reasons to purchase life insurance. The first is to replace income or services provided should the insured person die. The second is to assist with burial expenses and the third is to pay off debts left behind by the insured. Children and people who are older or retired, or who have no dependents, may not need large amounts of life insurance. Insurance on children is sometimes purchased to assist with burial expenses, or to build cash value, which can be transferred when the child turns 21.
Should stay-at-home spouses have life insurance? If the stay-at-home spouse dies and provided services such as childcare, laundry, shopping, cooking, and cleaning, the survivor may have to pay someone for those services. Add up the expense of replacing these services to determine the financial impact when deciding if there is a need to insure a stay-at-home spouse.
Life Insurance Tips
- Verify before you buy!!!! Contact us to verify the license of the agent and the insurance company before you sign the application for a policy.
- Life Insurance Guides The guides are excellent tools if you are shopping for a specific type of insurance and would like to gain a better understanding of all the aspects of the product prior to making your purchase.
- Review your contract carefully!!!! As with any insurance product, always review the contract and be sure you understand the terms and conditions, since these will vary between policies. Ask the agent and/or company for an explanation of anything you do not understand. Do this before the free look period ends. The free look period gives you 10 days to look at the contract once it is received. During the free-look period, you can return the contract and request a full refund.
Should you have any questions or concerns about whether Life Insurance is right for you, please take a moment and contact us on the Home Page or under the More/Contact drop down menu.
Want more information? Visit the Life Insurance portion of the Insurance Library or call 1-877-MY-FL-CFO (1-877-693-5236)
The National Association of Insurance Commissioner (NAIC) ( http://www.naic.org/ ) recommends that you only shop with A rated (AM BEST) ( http://www.ambest.com/ ) companies that offer the best conversion options, rate and death benefit guarantees.
The State in which your application was purchased guarantees that the insurance company will pay upon your death. These guarantees are in place as death benefit funds are held in reserves.
For more information about the guarantees in the State of Florida, please go to: http://www.myfloridacfo.com/consumers/