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whadu · Level 48: Brutality **Posts:** 35628 **Timestamp:** Wed Jul 23, 08 11:54 PM

Answers

You want insurance policy from a company with a good credit rating. As far as policy itself, well the life incurance policy is to protect your dependants in case something happens to you.
You don't want to overinsure yourself, since the chances are you will not be collecting on this policy. Now, I personaly think that it should be a term policy. Basically you pay a premium every year and if you stop paying, the policy stops. Don't go for all these "Whole life policy" or some other garbage like that. It's all a scam. Basically say instead of 300 per year for a term policy they tell you to pay 1200 per year, but after 10 years the policy will start paying for itself. What they do is invest money for you and hope that after 10 years there will be enough cash value accumulated, so the interest or dividents will cover the cost of life insurance policy. The reason I don't like this is you really can't tell how much they are charging you for the policy itself. This number is berried under a lot of mumbo jumbo projections.
You can do the same thing by paying for your own term insurance policy and investing some money into stock market or CD's or what have you, after 10 years, you will have accumulated enough money to use interest to pay for your own policy. But you will always maintain full control of your moeny.
In short, I think the "GOOD" policy is a term life insurance policy from a trusted company for about 3-5 annual salaries. Remember, that insurance procceeds are all tax free, so if you are making 100K and insure yourself for 500K, should something happen to you, your family will get net 500K, which is probably more like 6 years of your salary. If this money is deposited in a bank or CD's, with interest it may subsitute your income for your family for about 10 years.

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It should provide the necessary coverage to replace your income for your dependents and spouse to some degree. If you are in good shape with retirement saving, it would be nice to pay-off any mortgage and car loans and provide replacement of your income until your children are out of school.

If you are a stay are a stay at home parent you need to cover the costs of daycare, probably a cleaning service and some towards your children's college.

If you do not have dependent children you do not need life insurance unless you make a lot more than your spouse or you have a lot of debt and your spouse would struggle to pay it on their salary alone.

Once you have determined how much you need you should shop around for the cheapest term life policy you can find. Make sure you are picking the appropriate term for your policy and compare policies with the same term. If your children are young, you will probably need a 20 year term.

If you have a current life insurance is overpriced, get a new policy and THEN cancel your current one. If you have a policy besides term life you need to look at the fine print of how to get the most money by canceling it.

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Well since most life insurance is pretty much exactly the same.....if you have a policy with a well rated company (by AM Best) and you are sure it will pay out someday.....

Then the only real comparison is whether or not your premium is competitive with other similar policies sold by other insurers.

Start getting some quotes on comparable coverage.

If you are with an 'A' rated company and the rates are 20% higher than the same coverage from other 'A' rated companies, then it is NOT a good policy.

If the rate quotes are in line with what others are charging, then you're probably okay.

Either way....the fact that you are asking after the fact is a bit more bothersome.

You should have checked this out before you bought the policy.

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Compare, compare, compare. Let a competing agent look at it and make a recommendation. Make notes on what he/she says. Then let another competing agent look at your policy and the comparison that you received from the first competing agent. Make notes on what he/she says. Then talk to all of them again to get any of your remaining questions answered. Then make a decision and move on to something else in life. It will be very educational for sure.

Life-Insurance,

Policies

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