Focus : Health Care
Consider financial goals when buying life insurance
By GIL ELMALEH

In terms of personal pleasures, buying life insurance doesn’t usually fall in the same category as buying a new car or a spring wardrobe. However, despite its lack of glamour and prestige, the decision to buy life insurance can be infinitely more important to a family and its future financial security.

Before you begin your search for a life insurance policy, it is important to give some thoughtful consideration to your financial goals. For most of us, it’s hard to imagine how life would be without us in it. But this is the first step in determining what financial resources you need to leave your family so they can maintain the lifestyle you would want for them in case you die.

You might start by making a list that includes:

• Those who depend on your income and/or support;

• Your financial obligations;

• Your assets;

• Expenses that would arise that you may not have now. For example, if you are the primary caregiver for your children, what would it cost your family to provide that care without you?

Also, don’t overlook estate taxes. After adding up the value of their homes, cars, investments, pensions, 401(k)s, life insurance coverage and other belongings, many people are shocked to find their total assets could be subject to estate taxes at death.

Additionally, here are 10 things you can do to help you and your family make the most appropriate life insurance purchase:

• Do it now. Don’t put off a decision that can have such a profound impact on your family. Also, make sure you have a current will or trust.

• Shop for quality. Buy from a company that has the top ratings for insurance financial strength and claims paying ability from the four major rating agencies (Moody’s, Standard & Poor’s, Fitch and A.M. Best).

• Choose a representative you trust and like working with. This person should help you identify your personal and financial goals, recommend solutions to help you reach your and review your insurance plan every year to be sure it continues to meet your changing needs.

• Know what you’re buying. Make sure you are comfortable with and understand both the company and product(s) you are considering. If you’re only being shown a “best case” scenario, ask for something less optimistic to see how various nonguaranteed assumptions can impact your premiums, cash values or coverage.

• Be honest. Do not omit any part of your medical history on your life insurance application. If you do, the company may be able to refuse coverage, deny a claim or cancel the policy.

• Pay less often and pay less. Save money by paying premiums annually rather than semiannually, quarterly or monthly, if possible.

• Be prepared to wait. While most companies provide conditional coverage when you pay up front, you can expect delivery of the actual policy within approximately three months (it often takes time to get all the necessary medical records). If you don’t have it by then, contact the company.

• Read the fine print. When you get the policy, read it carefully and ask your representative to explain anything you don’t understand. Remember you have a “free-look” period (10 days in most states) that entitles you to cancel and return the policy for a full refund, without penalty.

• Tell those impacted. Inform your beneficiaries about the type, amount and location of any life insurance policies you own. Keep your policies in a safe place at home. Document the name and phone number of your representative and insurance company and all policy numbers in a safe deposit box.

• Get an annual checkup. Meet with your representative to review your life insurance coverage at least once a year to be sure it continues to meet your needs.

Be cautious if another representative suggests you cancel your current policy to buy a new one. Chances are you’ll be better off keeping your old policy ­ especially if it’s a “cash value” policy. Contact your original representative or company before making any decisions.

All things considered, when purchasing life insurance, shop carefully, ask questions and make sure you understand the answers. Keep in mind, as with most things in life, you get what you pay for.

Gil Elmaleh is a financial representative with the Northwestern Mutual Financial Network in White Plains. Reach him at Gil.Elmaleh@nmfn.com.

 

 

 

 

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