Insider Suggestions for Buying Life Insurance

However much we research the options available when buying life insurance, and discuss them with friends and family, there are some things we might just never know.

Following are suggestions from insiders – those who are involved in life-insurance matters on a daily basis.

Include payment with your application. What would happen if you were to die after applying for a life-insurance policy, but before the application is processed? You wouldn’t have a policy, unless you take one important step: if you include a check for the first payment when you submit an application, your coverage will be retroactively binding to that day.

Don’t name a minor as a beneficiary. One reason we buy life insurance is to provide for our children. But minors can’t receive life-insurance proceeds, at least not directly. If you name a child as a beneficiary, he or she may have a hard time getting the money before turning eighteen. And, at that point, the child receives the money with no controls over how it’s used. A better option may be to create a life-insurance trust that receives the money and specifies its use. For example, the trust can disburse the funds over time on milestones you define, such as when your child turns twenty-one, thirty, etc.

Don’t use group life insurance to satisfy a divorce agreement. If a divorce agreement provides you with alimony or child support, it also likely requires your ex-spouse to have a life insurance policy naming you as a beneficiary. However, if your ex-spouse suggests using a work policy to satisfy this requirement, you may need to ask him or her to reconsider: if your ex-spouse changes jobs, the agreed-upon coverage may be lost.

Use an insurance professional. Purchasing insurance online is seldom a good idea, especially with life insurance. Ensure that you have the policy that’s right for you – and learn more from your own personal industry insider.