About why it is so important to insure your life, how to do it with maximum benefit for yourself and why you should not rely on insurance from your employer, vice president of the financial company Primerica (Florida).
Life insurance is love for your loved ones
People do not always understand why you need to insure your life. Especially those who came from the former Soviet Union. We have a lot of superstitions associated with death, talking about it. We are so superstitious that we are afraid, if suddenly we are ready, then we will jinx ourselves and immediately die. But thinking about life insurance is no more superstitious than thinking about a fire extinguisher. You do not think that if you have a fire extinguisher in your house, a fire will surely start. It simply means that if there is a fire, then you are prepared, you always have a chance to save yourself. The same with life insurance. If you have it, it does not mean that you will die. It simply means that if something really happens to you, your family is provided and prepared for this tragedy.To get life insurance in the United States, it is enough to have a legal status. The company does not ask for residency or citizenship, but you must legally reside in the United States and have a Social Security number.
Insurance is needed more young than older
What is life insurance? Most people think it is necessary for older people who are likely to die soon. Perhaps, insurance will be required in old age for a funeral, for the last expenses for a cemetery, for a wake. In fact, it is at this age that life insurance is not important. Because when a person dies in his old age, no one depends financially on him. And all that he has saved up for his life remains for his relatives, who can use these savings for funerals. But even if the elderly relative has nothing, the family, of course, will strain, pay for farewell, but for her all this will not be so critical.
It is much more important when someone depends on us financially. This usually happens while we are still young, healthy and working. We bring in the family income. Most often, life insurance is important for parents. If dad goes to work and mom is at home, then if the family breadwinner suddenly does not come home from work, mom will have nothing more to feed the family, pay bills, and so on. What should she do if the deceased father did not have insurance?
Therefore, life insurance is very important for replacing the income of the person who brings it into the house.
If you have two or three children who are 3-5 years old, then even if something happens unexpectedly to one of the parents, the children need to be kept for another 15-20 years. That is the same income that dad brought, must come to the house for another 15-20 years.
I often give an example to make people understand. Husband and wife or one of them generate income. For example, one of them, suppose father, was transferred to work from Florida to Texas. He went to Texas, and the family stayed in Florida. Does he send money to the family every month? Of course yes. His income goes to the family. And what if dad was transferred to heaven? The expenses of his family remained the same. If you have a family, it is your duty to provide for your family and friends after a sudden departure.
Non-working people also need life insurance.
My girlfriend died of an aneurysm suddenly. She left a loving husband and little son. Now her husband should be both a mom and dad to his son, but instead he has to work, go on business trips and find other people to carry his son to and from school. The cost of the sudden death, hospital, funeral is also huge. If my girlfriend had insurance, he would have the opportunity to replace his income for at least a few months, if not years, to take care of his son, mourn, hire the right people, and so on.
It is very important to have insurance even for a non-working person. Maybe not so big, for 200-250 thousand dollars. This is often very inexpensive, but will help to cope with such needs as paying bills. For example, for a non-working 35-year-old mother, a policy for 30 years for 250 thousand dollars costs from 20 to 35 dollars a month. This is not much, but what peace is in the family.
The less we pay for insurance, the better
Insurance companies in the United States assign ratings AMBest. It is advisable to work with companies that have a rating of A +. This is the highest rating. And he often does not affect the cost of insurance.
In the insurance industry there is a very big conflict of interest. The more the client pays for his insurance, the more the agent earns. There are so many policies created in such a way that they are profitable for the insurance company, but not for the client. Agents are encouraged to sell these policies to their customers. The client, because of some unnecessary options, instead of paying $ 50 for the same amount of insurance coverage, pays 300. And it turns out that even when the agent sells a policy that is not very beneficial for the client, he does not think that does some unethical business. Because the company trains its customers quite well. But we need to look at things realistically. The less we pay for insurance, the better. Because, most likely, we hope that for many years we will not need it and we will live happily ever after.
We need insurance for a certain time – until the children have grown up, while there is no savings.
Choose long-term insurance
In America, there are two main types of policies. The first covers long-term insurance for 10, 20, 30 years. If someone has children who are now 4-5 years old, after 30 years, they, respectively, will have 35. It is quite likely that by this time the children will have figured out how to support themselves financially.
If we are already 55-70 years old, the need for insurance has already passed. At this age, we no longer need insurance, but money for old age, savings. If we have been buying cheap insurance for 30 years and, at the same time, we are actively investing money in parallel, then when the insurance period ends, we have the very savings that the policy provided – about half a million dollars. And if we have these savings, insurance is no longer so important. Therefore, the cheapest way to get life insurance is temporary insurance.
I recommend insuring for the longest period in order to insure until old age, and at the same time invest funds for the future.
For smokers insurance is more expensive
For a family – a wife and a husband, who are 35 years old, a policy of 500 thousand dollars for 30 years will cost from 50 to 80 dollars a month depending on the state of health. Usually those who wish to receive a policy must undergo a medical examination, which is paid by the insurance company, they are awarded a rating, which determines the tariff. There is a standard rating, which the majority receives, sometimes a rating of smokers, it is usually 2-3 times more expensive than the standard one. And sometimes, depending on the insurance company, customers are awarded a rating, which gives a discount for good shape and excellent health.
In general, the cost of insurance depends on the amount, on the period for which the person is insured.
Avoid accumulative insurance policies.
The second type of insurance in the USA is different types of savings policies. They are much more expensive. In fact, the insurance industry has figured out how to make a boring and frightening product attractive. This is a savings policy. The company offers to keep her money, which after your death will pay your family.These policies are much more expensive than temporary insurance. For the same money for which a person could buy, say, 500 thousand dollars of long-term insurance, a savings policy will offer him 100 or 50 thousand, or even less. With this money, the family will not be able to hold out for 10-15 years, only she will have enough of her funeral.
The second drawback of such an offer is the savings within the policy. They pass into the possession of the insurance company, which is never explained to the client. This is called a savings account inside any insurance policy. Insurers always say: you can have access to your money, but they do not say – this money will be yours. But the bottom line is having access to your money means that you can borrow it at interest. In other words, you can take your money from the insurance, but then return it with interest. Therefore, keep your money and savings away from insurance companies, contact them only for insurance.
It is because of this type of insurance that many people get confused, think that insurance is expensive and they cannot afford it.
Cumulative policies such as Universal Life, Index Universal Life, Variable Universal life, Flexible Universal Life and others are three to four times more expensive than long-term policies, and such as Whole Life are sometimes 10-12 times more expensive.
Do not count on insurance from the employer
First, such insurance is often minimal in size. It starts from 10 thousand dollars, if it is a small company, and if the company is larger, then insurance covers the amount of annual income once. That is, if you get 70 thousand dollars a year, then the insurance payment will be exactly this amount. Once. But this money is not enough to replace the family income by more than one year.
Secondly, if you are counting on employer insurance, ask him for a certificate and read the terms of coverage. Most often, in order to get through an employer, you must die while actively working. This concept includes paid vacation and the time you spend on the way to work from home and back. But if we become ill with a serious illness, such as cancer, and begin treatment, we are no longer actively at work. In this case, we are reduced, because the employer needs to hire another employee for your place. In large companies, they can give you a disability, but even in this case you are no longer considered an active worker, therefore your life insurance is canceled. A personal insurance is no longer obtain, because for it you need to be healthy.
Therefore, consider life insurance from the employer as the base, and the main coverage should be through an individual policy, regardless of where you work or whether you work at all. In addition, insurance through the employer usually increases in value each year, rather than fixed for the long term.