subject: Remembering The Point Of Life Insurance [print this page] You've seen those ads on TV, they appear on every channel, at every hour, marketing about life insurance policies, offering the best rates, for the best price, never increasing and always so important. They even usually target seniors, with special rates for those above 55 or 65 even. The way the actors in the ads talk, it's something everyone needs, and if you don't have life insurance, it's crucial that you call this number. While it's true that life insurance can be important, it's also important to see past the ads, and remember the point of life insurance.
The purpose of a life insurance policy is so that someone gets money when the person dies. It's a very simple purpose on the surface, but it can be more complex than that. First, should you take life insurance or not? One thing to realize before you can answer the question is how the insurance companies make their massive profits. Life insurance contracts always have similar clauses. You pay a monthly fee, and when you die, they give your family a certain amount of money. But there's also many other conditions. For example, in most cases, if you stop paying, then all the money you've paid so far disappears. That could be years of payments made for an eventual payday that will never come, pure profits for the companies.
A lot of new parents, for example, like to take a life insurance on themselves for their children. This can be a very useful thing to do, and if the worse happens, the kids will be taken care of thanks to it. But if these parents are 30 years old, and they live until 90, it's also important to realize that they will have to pay for 60 years in order for the policy to remain in place. Otherwise, the moment they stop, the insurance goes away. Worse, many of these contracts specify that while you do get a very large amount at first, as the years go by, that amount diminishes, and even if you keep paying, the amount your children end up getting at the end is much less than you may have expected. In these cases, it may actually be better to drop the policy the moment that the kids get out of college.
In the case of life insurance marketed directly to seniors, it's a bit different. You know that many of them will not live another 60 years. In many cases, it may be worth it. However, you also need to remember the point of life insurance is to help out family members once you're gone. Do your kids still need that money if they are 40 years old with jobs? Is it worth trading monthly payments for a 65 grandfather, to ensure their children or grand children will get money? Life insurance can be useful, and a great way to mitigate accidents, but these are questions you should be asking yourselves before you call the number at the bottom of a TV advertisement.
by: Casey Trillbar
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