Life insurance should be a part of your overall financial planning. While some life insurance policies can be used to help you achieve your financial goals, others just provide protection. But whichever type you choose, it is important you understand your needs and the options available so you get the best value for your life insurance coverage.
How Much Life Insurance?
First, determine how much coverage you’ll need and how much you can afford. Now these 2 items may not match. However, if you have a young family, you need to get the most coverage for the lowest price. That means term life insurance which indeed, meets the needs of most everyone.
What Type Of Life Insurance Do I Need?
Next choose a term or permanent life insurance policy. Term life insurance provides protection for a specific period of time, normally 10, 20 or to age 100 in Canada.
Permanent life insurance policies are whole life and universal life. These policies offer death benefits and a savings account (cash surrender value) so that you can get money back either by cashing in the policy or by borrowing against it. However it is my firm belief that you should only buy whole life insurance if the premium is about the same as the term life insurance. And that will only happen in your sixties or beyond. Otherwise you are paying a higher premium for the same coverage And then, if you want to borrow your own money out of the policy, the insurance company charges you interest! And if you don’t pay it back, the coverage is reduced by the amount of the borrowing. And you still continue to pay the far higher premiums, though now for less life insurance coverage. Why would you do this?
Is Universal Life Insurance Same As Whole Life Insurance?
No. In whole life insurance the savings, so called, are in the premium itself. In universal life, the investment is added on if you so choose. But if you do not add any investment to a universal life insurance plan all you have is an expensive term to 100 life insurance policy.
Lesson: Be aware of what life insurance you buy.
Check the financial strength of the companies who will have to stand behind the policies you’re considering.
Ivon T. Hughes
http://www.articlesbase.com/finance-articles/life-insurance-is-for-your-life-135571.html
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Do life insurance companies check your medical records after you die?
Let's say that you get life insurance and claim to be a non-smoker. Then let's say that you start smoking or resume smoking. Assuming that your medical records show that you smoked, will most life insurance companies check your records, see that you smoked, and then cancel your benefit?
I am unsure if answering this question in the negative would contribute to fraud.
Perhaps you have a method of assuring that the proposed insured be around to assist or supervise the investigation.
In general, death claims are only investigated if there is suspicion of fraud. If the insurance is within the incontestable period, benefits may be limited to premiums paid, plus interest.
Generally, life insurance contracts are incontestable after having been in for two years.
References :
if you died from a smoking related illness then no they wouldn't pay out the benefit. They will ask to see your death certificate and that will state what you died of, if they are suspicious they will investigate further. There isn't any point paying the monthly premiums on a policy you have lied on because they rarely will pay out.
References :
after you die, yes. And it's called "voiding the policy", and it's YOUR lie that voids the policy, the insurance company just finds out about it.
References :
agent, 21+ years
Your application must be truthful at the time you apply. If you aren't a smoker when you apply, but pick up the habit down the road, there's no fraud and the insurance company will pay. You never signed anything stating you will NEVER smoke.
Proving that a dead person committed fraud is extremely difficult! Once they agree to insure you, they're are obligated to do so unless somehow, someway, they prove fraud, which again is extremely difficult!
References :
There is a cost to acquiring medical records, so they wouldn't do this just for fun. If you die during the contestability period, you better believe they want to make sure you didn't make a factual misrepresentation on the application. If they successfully contest the policy, this may void your coverage. Don't lie.
References :
If you die of something caused by smoking…
they will likely check your records a bit
BUT they'll still pay the claim – minus the amount you "should've paid" for premiums as a smoker
References :
State Farm Agent