A: In most cases, term insurance provides the best coverage for the most reasonable price. While it does not accumulate cash value, it is far less costly on an annual basis than a cash value policy (Whole Life or Universal/Variable Life). Children and older people looking for a limited amount of coverage are often best served by Whole Life insurance.
Q: What about the rates after the guarantee term expires?
A: After that period, the rates become age-based, and can be quite expensive (but the policy can still be continued, should changing health conditions warrant it). Thats why it is so important to determine what your future financial needs may be, and buy enough insurance for a sufficient guarantee period to cover your familys needs, in the event of an untimely death.
Q: I have life insurance where I work. Why do I need more?
A: Generally, your employer-sponsored plans do not continue if you leave that job. Also, the amount they offer is generally insufficient to cover your survivors long-range financial needs.
Q: I just quit smoking. Can I get a better rate now?
A: Most companies only offer their best rates to people who are tobacco-free for three to five years. Some will consider applicants for preferred rates after one year. Some even consider pipe and cigar smokers for reasonable rates.
Q: I am a business owner. How should I set up my insurance?
A: It depends upon the reason youre buying the insurance. If it is for your familys income benefit, you should pay for it with your own after-tax dollars, so the proceeds go directly to them, tax-free. If your company provides it, some or all of the premium may already show up as income on your annual K-1 or W-2. If the reason is to fund a buy/sell arrangement with other owners, each owner should hold a self-paid policy on all of the other owners, to fund the buyout of a deceased owners share from their survivors or estate. Benefits from company-paid policies are likely to be taxable as income. Consult your accountant to see what is best for you.