The REALLY Adult Stuff
Life and disability insurance are strange things. The first is something you hope not to use for a long time. The second is something you hope never to use. Since this is the case, my advice for these forms of insurance is to buy only what you need to protect you against risks you can’t take.
If you have no dependents or other financial obligations that need to be addressed when you die, why do you need to spend money on life insurance? If you need such protection until your children finish high school or college, buy guaranteed renewable, fixed-price term life insurance for those years only.
If you can do your work or some other financially-rewarding alternative work, even if you suffer certain forms of disability, and you have adequate insurance for medical and self-care purposes, why spend a lot of money on disability insurance? These are matters of personal choice, of course, but you should bear them in mind in connection with the specific information that follows.
The first thing to say about life insurance is that if you do not have responsibilities for others, you do not need it. Insurance agents will tell you that life insurance is necessary to protect your estate. If you are not responsible for anyone else, you can take the risk of dying and do not need to protect your estate for anyone. If you do decide to buy life insurance, be sure you understand what kind of life insurance you are buying.
Terms Used in Life Insurance Policies
Beneficiary. The person who will receive money under a life insurance policy.
Benefit. The amount a life insurance policy will pay upon the insured’s death (some life insurance policies also pay a benefit if the insured loses an arm, leg, or eye).
Borrowing Capacity. The amount of money that may be borrowed under a whole life insurance policy at various times.
Cash Surrender Value. The amount of money an insured may receive for turning in a whole life insurance policy at various times.
Double Indemnity. Payment of twice the face value of a life insurance policy (some life insurance policies pay double indemnity for accidental death).
Guaranteed Renewable Term Insurance. A term life insurance policy that is guaranteed to be renewable for a certain number of years.
Insured Person. The person whose life is insured under a life insurance policy.
Owner. The person who owns a life insurance policy.