Life insurance is difficult to understand, but a must

Online, June 29, 2010 (Newswire.com) - Life insurance is critical to financial planning. It's an absolute necessity for anyone with dependents who would be affected financially after your death.

But life insurance is one of the most difficult things to understand, and is often sold by agents who are more concerned with their commissions than with your needs. But taking the time to understand life insurance can make all the difference.

All life insurance policies fall into one of two camps. There are term policies, or pure insurance coverage. There are many variants of whole life, which combine an investment product with pure term insurance and build cash value.

Agents sell the vast majority of life insurance policies written in the U.S. because the life insurance industry has a vested interest in pushing high commission and high profit whole life policies. Policies with an investment component cost many times more than term policies. As a result, many people who buy whole life often can't afford an adequate face value, leaving themselves under-insured.

But there are better places to invest, without the high commissions of whole life policies. Keep your investing and insurance strictly separate. Buy enough term coverage to fill your needs. Life insurance is no place to skimp, especially when rates are low.

Make sure to match the policy to your needs. You want the policy to last as long as your dependents need it to, or for your retirement income to begin. You'll also want to buy when you are healthy. Older people and those with health issues will pay higher rates for life insurance, so buy as early as you can, but only after you have dependents.

Make sure when you fill out your application to tell the truth, even if it means a slightly higher rate. If you file a large claim, the insurance company will investigate, and your claim will be denied if there is inaccurate or untrue information.

You can use the Internet to shop for your policy, getting tons of quotes, and avoid pushy salespeople.

In the meantime, if you run into an unexpected health expense, you can apply for an unsecured personal loan. Click here to learn more.