Life Insurance > resources > Watch Out!

More than any other type of insurance, life insurance has, by far, the worst reputation. There is really one key reason for this: A Life Insurance premium is the most flexible of all insurance premiums. An agent has much more room to maneuver, especially within a whole life insurance policy to offer a "commission rich" product or a "consumer driven" product. The rule of thumb is to look at the cash value at the end of year one. If there is little or no cash value in the policy after year one, then, chances are, the agent sold you a "commission rich" product. If, on the other hand, the policy does have a reasonable amount of cash value at the end of year one, you probably got a better deal. There are always exceptions to every rule but, by and large, that is a good rule of thumb to use.

When purchasing life insurance, it is most important to remember to review your family's financial needs. Once you have determined what you need and what you can comfortably spend on a monthly basis, then go out and start shopping companies. Caution: In life insurance circles, instead of the word spend, agents will use the word save. As in, "determine what you can save on a monthly basis. From my experience, that is the wrong approach. I was an agent for 5 years and also have owned several policies, both term and whole life. The bottom line: It doesn't matter how great the agent makes it sound, you must be able to afford the insurance to keep the insurance. There are two industry statistics that I always kept in mind when I sold and bought insurance: First, Only one in 5 permanent life insurance policies are in force after 5 years. Second, only one percent of all term insurance policy death benefits are ever paid to the insured's family. My best guess on why only one in 5 permanent insurance policies are in force after 5 years is that most people get in above their heads and buy way more than they can afford. Secondly, because life insurance is not mandatory like auto insurance, it is the first "luxury" to go when times get tough. And the reason only 1% of all term insurance proceeds are ever collected; good news-people live long, bad news-people live long and the insurance gets to expensive.

In conclusion, we could devote many pages to what to look for and watch out for when purchasing life insurance. But the bottom line is it is probably the most important insurance you will ever own. Make sure you take the time to educate yourself on the process of buying life insurance and don't get intimidated. Thank you for your interest in Insurance4USA.com. Feel free to send us an e-mail with any ideas on how we can improve the site.

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