Life insurance is a strange term…it sounds like it is insuring your life…like somehow it will make sure you have a long life. In reality, the way I look at life insurance is that it helps to sustain or preserve elements of the life you have created if you pass away. In any case, I want to share somethings I have come to understand around life insurance. This is not advice, but just my sharing of my experience with life insurance.
Why am I talking about this right now? Well, I recently applied for a term policy with a major life insurance provider. I have heard that term life insurance with a level premium is the way to go so I applied for a term policy to possibly replace my existing “whole life” policy and my annual renewable term policies which do not have a level premium. What I mean is the term policies have premiums that increase every year.
So, I bought my whole life policy over 20 years ago. A few years after I bought it, I started reading about life insurance and came to the belief that the best type of insurance was term insurance. I am not saying it is or isn’t though. This is what I hear from many people. Although I also here arguments on the other side as well.
As a policy holder though I felt that I was paying a lot for my whole life policy. My premiums were in excess of $6000 for a guaranteed 600K. I quickly could see that especially for my age at the time, that is a lot to pay for life insurance. In the meantime, I had a medical diagnosis that uncovered a condition I had that was not life threatening, but puts me in a higher risk class from an insurance risk profile perspective. SImply, this means, I probably would not get the best rates any longer.
However, my insurance agent explored and shopped around for reasonably term policies and was able to get me a reasonably priced level term policy. Of course, I was still relatively young as it was 16 years ago.
In addition, I took advantage of purchasing additional insurance through my employer as under my benefits additional insurance could be purchased after a major life event like the birth of a child so I was able to get a decent amount of insurance at group rates which are not too bad. I find though that when I was younger and if I had no health issues that raise red flags for underwriters, i probably could get better than the group rates…but the group rates are not too bad. The key for me here was the insurance increases I signed up for required no medical requirements.
…more to come….