I, also, realize that there are those who will differ with me on this point. Some people feel that it is more spiritual simply to "trust God to provide than to depend on the devices of man." But I find it curious that these same people are often willing to use other "devices of men" like door locks and seatbelts.
Let me share some quick thoughts on blessing others with the insurance decisions you make today:
1) Generally, I encourage people to carry 8-12 times their income in life insurance. Typically, this is enough to help a family get through the roughest times and get their feet back on the ground.
2) In most cases, I recommend term insurance over whole-life coverage. Frequently referred to as "pure insurance protection," term insurance doesn't include the cash value feature that distinguishes whole life. Accordingly, term is usually significantly less expensive than the same amount of whole life coverage. (If a 35-year old can purchase $250,000 of whole-life insurance for $3,000/year; he could probably buy a $250,000 term policy for $180-$300/year.)
3) Even with term, there are some things to consider: This form of insurance covers you for a specified period of time (often 10, 20 or 30 years), and then it expires. If you are still alive, you get no money.
4) I'm big on stability, so I prefer policies that have a guaranteed level premium for the term of the policy. Annual renewable term policies can raise the premium every year, until the policy is surrendered. If you are only going to keep the policy for a short while, annual renewable term may be cheaper, but experts warn that in the long run it will probably be more costly.
5) Also, I prefer term insurance that guarantees level term benefits. This means that if you buy a 20 year, $100,000 policy, your beneficiary will get the full $100,000 whether you die in year 2, 10, 18, or whenever. Decreasing term is another type of policy that will pay a lower benefit the closer it is to the end of the term. Sometimes sold by banks as mortgage protection, decreasing term benefit coverage is a big profit maker for the banks, but many experts don't believe it's very good for consumers.
6) Guaranteed renewable can help safeguard an uncertain future. Of course the goal is to get to the point where you don't need insurance coverage at some point. And, besides, if you still do need coverage at the end of your term-you can just buy some more insurance at that time, right? Not necessarily. It's possible that you may still need insurance at the end of your term, and it's also possible that health conditions could make it impossible to get decent coverage. What to do? I encourage people to consider buying their original policy with the guaranteed renewal option. This may make it possible to get more coverage at a later date. However, be aware that future rates can be prohibitive especially if you health declines. Get detailed future rate information before you buy. However, you need to know that future rates can be very high-check before you buy.
