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Home › Articles › Life Insurance › Buying Life Insurance

Buying Life Insurance

Where to Start and What to Look For

By Katherine Bontrager

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"Parents need to name not only primary beneficiaries but also contingent beneficiaries in case the primary beneficiary doesn't survive the insured," Graves says. "Minor children should not be named as beneficiaries. They're best protected by paying the proceeds into a trust or to a guardian for the benefit of the children."

Graves points out that new parents should know that it's very important to insure their own lives before they even consider insuring their children's. "The death of a child is traumatic but it doesn't threaten the finances of the survivors like the loss of income from an employed parent or the loss of services from a stay-at-home parent," he says. "Medical expenses are covered by medical insurance, and burial expenses for a child aren't prohibitive, and sometimes the costs are waived by providers or greatly discounted."

And one final important reminder: Don't rely just on the insurance offered at your place of work. Maintain a separate life insurance policy from those granted as part of your employment package so that if you quit your job, your company goes out of business or you get fired, your family stays protected.

Life Insurance Checklist

There's a lot of terminology involved in life insurance, and it can be confusing determining which type of coverage is right for you. Frank N. Darras is managing partner of Shernoff, Bidart & Darras, LLP, in Ontario, Calif., where he heads the firm's disability, long-term care and life insurance department and is singled out as one of America's leading plaintiffs' lawyers. Darras prepared these tips and suggestions to help sort out this complicated but integral investment.

Term Life Insurance: Term life insurance is generally sold in 1-, 5-, 10-, 20- and 30-year term periods. Term life insurance coverage is the cheapest, has no cash value buildup, is usually renewable and sometimes convertible to permanent life insurance. Remember, the healthier you are, the better the rate will be, so buy sooner, rather than later.

Here's what you need to know:

  • Know the terms of the contract.
  • When can your carrier raise premiums? When the guaranteed premium ends, what will your new premium be? Are there options to convert your term coverage to permanent life insurance?
  • Do you have any adverse medical conditions or is your family history poor (father or mother dying of cancer or heart disease prior to age 60), which will preclude you from obtaining the lowest rate? Insurance companies rate insureds from the highest risk of dying to the lowest risk of death by categories: uninsurable, substandard, standard and preferred.
  • Always shop for the largest death benefit with the greatest features, advantages and benefits at the lowest guaranteed price, for the longest renewable term from a trusted, competent agent.
  • Buy a policy that provides for a "money-back, 10-day free look," so if what you're sold is different than what you were promised, you get your money back.

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