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S P I R I T O F W O M E N FA L L 2 015 w w w. s p i r i t o f w o m e n . c o m
facts
of life insurance
The
By Kelly Burgess
F I N A N C I A L F I T N E S S
SHUTTERSTOCK
and you no longer have dependents. Whole life
policies can also be expensive and can restrict your
available cash flow.
• Guaranteed universal life insurance is appropriate in
some cases where you may have a dependent beyond
the usual time frame, such as a special needs child who
might need lifetime support. These policies will not build
up any cash value, but the premiums are lower than
those for a whole life policy.
SHOP AROUND
An experienced agent or broker who represents a wide
variety of companies is your best bet for finding life
insurance, says Steuer, and can help you get the best
premium for your circumstances. Avoid contacting a
number of different agents because you could end up
with several applications at the same insurance companies,
which can raise red flags. This is particularly important to
avoid if you have a medical condition.
•
T
here's no universal answer to the question of
how much life insurance you need—or whether
you even need it at all.
Your age and your circumstances are the
defining factors, because in its purest form, life
insurance is an investment in the financial health of the
dependent members of your family, says Tony Steuer, an
insurance literacy advocate and founder of the Insurance
Quality Mark program.
"The current marketing push for life insurance seems to
be aimed at senior citizens, with the implication that they
should leave something for their children," says Steuer.
"That is not the point of life insurance, nor is it to pay for
your final expenses. Life insurance is only to care for those
who are dependent upon you and can't earn a living or
don't have access to other assets, like retirement funds."
LIFE INSURANCE BASICS
Let's take a look at the three main types of life insurance
and when they're most appropriate:
• Term life insurance is a must for anyone who has
dependents. This is particularly true if you have a non-
working spouse or partner and/or dependent children.
However, Steuer says the non-working partner should
have a policy as well, to cover expenses like childcare,
transportation, house cleaning—services that non-
working partners often perform that may be a burden
on the surviving, working partner.
• Whole life insurance is an investment, but it's one that
rarely pays off, says Steuer, because at some point your
need for life insurance diminishes as your estate grows
Life insurance resources
These organizations offer detailed information
about how to purchase life insurance:
• Consumer Federation of America
http://www.consumerfed.org
• Life Happens
http://www.lifehappens.org
• American Council of Life Insurers
https://www.acli.com/Consumers/Pages/Default.aspx