My wife and I were recently home in Atlanta for the holidays. So, I immediately called one of my old college classmates to see if he wanted to get together for a bite to each, but he told me that he couldn’t because he already had a lunch meeting with an insurance agent. My friend was upset that his wife had scheduled the appointment with the insurance agent because he felt like he already had enough life insurance. Below are three things that I told him to keep in mind and remember during his upcoming meeting.
You May Already Have Enough Insurance Coverage
You may already have enough life insurance coverage thanks to group policies that you have through your work. While everyone’s needs and circumstances in life are very different, many financial planners recommend using the rule of thumb to purchase enough insurance that is equal to ten times your annual income. While my friend did not have ten times his wife and his annual income in life insurance coverage, he also does not have much in the way of insurable needs thanks to no children and a paid for home.
Whole Life Is The Insurance Agent’s Bread And Butter
I am a big fan of term life insurance. There are not many instances when a person, especially a young person, should invest in whole life insurance. But, since whole life insurance policies pay the highest commissions for insurance agents, these policies are pushed hard on the unsuspecting and uninformed. Term life insurance can be purchased for a small fraction of the cost of whole life insurance. A consumer can do a lot better by saving the difference and investing it. For example, if whole life insurance costs a person approximately $100 per month and term costs only $25 for thirty years for the same amount of coverage, an insurance buyer can invest that $75 per month for the next thirty years and have over $110,000 to show for his or her savvy financial planning.
Don’t Forget The Coverage For Your Spouse
Many young couples forget to adequately insure the wife. When the husband continues to be the primary breadwinner of a family, the family can become blinded by insuring only him, neglecting the wife. Not adequately insuring your spouse especially when there are kids involved can be devastating should the unthinkable loss of a wife and mother happen. Who will care for the children? How will the widower pay for daycare if the children are young? How much income will the family lose with the loss of a spouse? These are often forgotten things that should be considered when discussing the amount and type of adequate life insurance with your insurance agent.
No matter how many free meals your insurance agent gives you, you cannot forget that he or she is there to sell you a financial product. The problem is that you might be walking into a sales pitch for a type and amount of insurance that you do not need. Potential insurance purchases must be careful when considering how much and what type of insurance the buy. The best thing that a consumer can do is head to your meeting with your insurance agent as informed as possible.
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