Published On: Mon, Apr 14th, 2014

Life Insurance: 5 Things You’re Dying to Know

casketI know, I know a terrible play on words but I just couldn’t resist.  As we age the realities of life become more evident.  Aches and pains no longer just go away; grey hairs appear in places you don’t want to know about and increasing your fiber intake moves to the top of your priority list.  Preparing for the hereafter can be a grime subject, but ready or not our day is coming.  Therefore, it’s time to start taking a more serious look at grown-up stuff.  This brings me to the subject at hand, life insurance.  In the past, I personally did not make having life insurance a priority because I was not married and didn’t have children.  Eventually like many of us I purchased whole life and term life policies without completely understanding either of them.  There is nothing like time to add wisdom and knowledge to your life, and “they say” knowledge is power.  Okay let’s get on with the knowledge, here are five things you should know about life insurance.

  1. Whole vs. Term, that is the question – Two primary types of life insurance are whole life and term life.  Whole life means the policy gives death coverage throughout your whole life and term life means the policy gives death coverage for a specific term like 20 years or 30 years (startling revelation, huh?).  If you out live the term you will need to renew or get a new policy.
  2. Cost vs. Coverage – In general, when it comes to cost it seems that term life is cheaper and provides a larger amount of coverage.  According to an article in Smart Money, a 35-year-old healthy, non-smoking male can purchase a $1 million, 30-year term life policy for about $700 a year.  One school of thought is to purchase a less expensive term policy with larger coverage.  This will cover your children and spouse during the earlier years when you are starting out and your death would be more devastating financially.
  3. Determine how much coverage is enough – How much will it take to cover the needs of your spouse, children, household, tuition cost and whatever you are responsible for within your family unit.  How much income will have to be replaced and what level of lifestyle do you desire to maintain.
  4. Seeking a long-term relationship – Know who you are buying your policy from and be confident with where they will be in 20 or 30 years when you need them.  Not all insurance companies are the same.  Make sure you are insured with a solid and reputable company; remember you are looking to be covered for the next 10, 20 or 30 years.
  5. Life insurance or investments, please pick one.  With many of the whole life options there will be an “opportunity” to use it as an investment vehicle that you can borrow from (I hope you can hear the sarcasm in “opportunity”).  The consensus is that you should not be attempting to make an investment out of your life insurance policy.  Check out the article in Smart Money for the full story.
Rhonda Williams

Rhonda Williams

Financial Management Counselor at Operation HOPE
Ms. Williams has been teaching and encouraging clients, peers and her family in the area of personal finance for more than 10 years.Ms. Williams is known affectionately as the “All Cash Queen” among her peers and family.As a certified financial counselor, Rhonda brings a wealth of knowledge, expertise and experience to her audience.
Rhonda Williams

About the Author

- Ms. Williams has been teaching and encouraging clients, peers and her family in the area of personal finance for more than 10 years. Ms. Williams is known affectionately as the “All Cash Queen” among her peers and family. As a certified financial counselor, Rhonda brings a wealth of knowledge, expertise and experience to her audience.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study