Clearly a potpourri of different types of Life Insurance are out there. How do you choose among them? Here are a few pointers.

• If you have a non-permanent need, buy Term. Examples of non-permanent needs include living expenses while the children are growing up, paying off a mortgage, or paying for the children's college education.


• If you have a permanent need, buy permanent Life Insurance, if you can afford it. If you can't afford it, buy cheap re-entry Term that's convertible to permanent regardless of your health. A permanent need is a need that, no matter how old you are today, will require cash for your survivors when you die—paying estate taxes, supporting an adult child with Down's Syndrome in a group home, continuing to support a favorite charity after your death, or providing supplemental lifetime income to a surviving spouse.


• Buy Term if your need is great and your budget is small—for example, if you're a parent with young children. However, make sure that you're clear on when the initial level Term period ends. If you still need Life Insurance at that time, you may need to convert what you have into a much higher-priced permanent policy. For that reason, I recommend that you buy Term Insurance for a period of at least five to 10 years longer than you think you need it. Also, because you want the company to be around when you convert, make sure that the quality of the Insurance company is high. I suggest an A.M. Best rating of A or better.


• Buy only guaranteed renewable and convertible Term products. You never know what the future may hold.


• Unless the price is significantly lower, always buy privately owned Term Life Insurance rather than group Insurance through employers, associations, or creditors and banks. Coverage from the latter sources can end (such as coverage from your employer ending when you leave your job).

> Visit the Insurance for Dummies website.

From Insurance for Dummies © 2001 by Wiley Publishing, Inc. © 2000 Text and Author Created Materials Copyright Jack Hungelmann. Used by arrangement with John Wiley & Sons, Inc.

<< Back