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RMC Insurance Services
Life
Insurance > Questions
Why buy life insurance?
Topping the list of reasons to buy life insurance is
the financial protection life insurance offers. If
you're single and just starting out, you may not need
life insurance. But as you take on more
responsibilities and your family grows, your need for
life insurance increases. The proceeds from a life
insurance policy can replace the income lost to your
family upon your death. You might also want to buy life
insurance to pay off debts and expenses, leave money to
charity, and cover final and estate expenses.
Should I choose term or cash value?
There are two basic types of life insurance: term life
insurance, which provides life insurance coverage for a
specified period of time (the term), and cash value
(permanent) life insurance, which combines a death
benefit with a cash value component. Cash value
insurance offers lifetime protection, while term
insurance may be the most affordable option if you're
buying life insurance mainly for the financial
protection it offers, and your need for life insurance
is temporary (until your children leave the nest, for
instance). Some term policies (called "convertible")
will permit you to exchange the term life insurance
policy for a permanent one at some point.
How do I know how much coverage I need?
The amount of life insurance protection you should buy
depends on how much income your survivors will need,
how much you own and owe, and the amount of other life
insurance available to you. If you're married, both you
and your spouse should consider buying life insurance.
One of the easiest ways to estimate how much life
insurance protection you should buy is to use a life
insurance needs calculator.
How many years should my policy have?
Term life insurance is usually offered for periods
ranging from 1 to 30 years. Consider choosing a term
that matches your need for life insurance protection.
For instance, if your main reason for buying life
insurance is to protect your 7-year-old twins until
they're out of college, you'll want to buy a policy
with a term of at least 15 years.
How much will it cost?
How much you pay for life insurance will depend on a
number of risk factors, including your age, your
health, whether you use tobacco, your family health
history, and the type and amount of life insurance
you're buying. Keep in mind that the premium you're
quoted initially will increase later. For instance,
when you buy term life insurance, rates are guaranteed
only until the end of the term (annually for annual
renewable term or at the end of a specified number of
years for level term). While most life insurance
policies can be renewed at the end of the term, you'll
pay a higher premium for coverage.
How should I buy life insurance?
When comparing quotes for life insurance, make sure
that the insurance coverage you're comparing is
similar. And remember, any policy that you buy is only
as good as the company that issues it. Find out what
rating the company has received from major ratings
services, such as A. M. Best or Standard & Poor's.
These companies evaluate an insurer's financial
condition and claims-paying ability. The company giving
you a quote should provide you with this information.
You can also contact your state's department of
insurance to find out more about an insurer's record.
How do I purchase a policy?
Once you're ready to purchase a life insurance policy,
you'll fill out a life insurance application that
contains questions about your current and past health
history and lifestyle. You'll generally be required to
take a medical exam, arranged and paid for by the
insurance company. The answers you give on your
application, along with the results from the medical
exam and your past health history, will help the
insurance company determine whether to offer you a
policy, and if so, at what price.
What should I do with the contract?
Maybe a life insurance contract isn't as exciting as a
best-selling novel, but read it anyway. Policy
provisions, the amount of benefits, the premium, and
other charges you'll pay will be listed along with
other important information such as the beneficiaries
you've named and the premium guarantee period. Make
sure you understand everything in the policy. Under the
laws of your state, you may have a "free look" period
(typically at least 10 days) during which time you can
cancel the policy without penalty.
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RMC Insurance
Services
PO Box 218750
Houston, TX 77218
281.391.8787
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