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Life Insurance Companies
All About Life Insurance Companies
While not strictly necessary, life insurance is a good idea for anyone who can afford it. It's not for you -- it's for the people you leave behind. At the very least, it's something that will ease the cost of your funeral and subsequent burial or cremation. If judiciously chosen, it can also provide for your loved ones for years, when you can no longer provide for them directly.
At its most basic, any life insurance (in fact, any insurance at all) is a legalized form of gambling. Buying a policy is a bit of a crapshoot. The life insurance companies are betting that you'll live long enough that your insurance premiums will add up to more than what it'll cost when your heirs finally collect. They don't do this idly: all life insurance companies compile vast amounts of data, called actuarial tables, to tell them how long a person of your height, weight, age, gender, race, and habits is likely to live. They don't always win their bets, but they do win many more than they lose. For every person who dies young, several will live into their golden years, paying premiums the whole way. This is why thinner non-smokers without existing health conditions pay lower premiums than most of the rest of us.
Ready for your exam?
In order to get a substantial amount of life insurance -- that is, more than the basic burial amount -- you'll usually have to undergo a thorough medical examination first. The idea is to make sure that you don't have serious life-threatening illnesses that might risk the life insurance company's investment. Sometimes, life insurance companies don't require the exam, but that's usually only for policies with small payouts for relatively high premiums, or similar policies that are provided and paid for by your employer.
One thing that most life insurance companies won't tell you is that your insurance is going to be the same no matter which agent quotes it to you -- it's all based on your age and health. While different life insurance companies may have slightly different prices per category, they all have access to the same data, and those prices won't change much from one company to another. Within the same company, it won't matter if Agent X quotes you a price of $500 a year while Agent Y quotes you $450 for the same policy. Unless he's taking money out of his own pocket, Agent Y is duping you, plain and simple.
Captive or Independent?Life insurance agents come in two major flavors: captive, those who work exclusive for one company, and independent, those who work for a variety of life insurance companies, often up to 10 or 20. Your best bet is to deal with an independent agent. They can search through all the companies they work with until they find the best policy and price that meet your needs. A captive agent is, as the name suggests, captive to one company, so the best they can do is offer you their one company's one rate for your age and health.
One final piece of advice. Your employer may offer you the option to purchase extra life insurance at what seems to be a decent rate. However, it's usually far more expensive than what you can get by working with a good independent agent. You're better off taking your free life insurance, if your company offers it as a perk, and then finding any extra coverage you need on your own.