Thursday, May 26, 2011

An ideal life insurance policy

Here are characteristics of an ideal life insurance policy

1) It does not build cash value.
2) You are able to exchange or convert it into another term policy
3) It includes terminal illness death benefit. If you are diagnosed to be terminally ill, you can use some of the face amount for whatever purpose and when you die, the remaining balance of face amount is paid to your beneficiary.
4) It does not contain "no war" clause in it. If you died by war or terrorist attack, the insurance company can deny paying death claim. I strongly believe this no war clause should be banned. It serves an injustice to all the men and women who are serving in the military.
5) Family banding coverage. Similar to where you can cover all your cars in one auto policy, you can cover your whole family, or at least you and your spouse, in one single life insurance policy. Every policy has annual fees included in your premium and it makes no sense to have multiple life insurance policies. You only need one life insurance policy.
6) Option of adding Disability Waiver of Premium rider to it. In case you do become disabled, the insurance company can pay your life insurance policy for the rest of your life.
7) Option of adding Child insurance rider to it. If you want to cover your kids, add this rider. You only want coverage that is just enough to cover funeral expense.
8) Option of increasing your coverage every year for 10 years or longer and that rates are based on issued age, not the age you increase your coverage.
9) It comes with a financial needs analysis that is able to tell you exactly how much coverage you really need and for how long.
10) The insurance company has a strong financial rating of A+ or better.
11) If its term, it must be guaranteed renewable. As you get older, your health is not as great as you were 25 years old. With guaranteed renewable, you can renew the term without having to go through medical testing or physical exam. If you renew, rates should go up every 5 years or longer. It should not go up every time you renew.
12) It guarantees coverage until you are 95 or 100 years old.

Of hundreds of life insurance companies in America, I find that only one company meets all twelve criteria. That is Primerica.