Monday, January 29, 2007

Evaluating Insurance

One of the major features of the financial landscape right now for me is insurance. While I am lucky enough to have a job that includes some insurance based on salary, I am still concerned that I might not have enough insurance.

The immediate issues are that there is for me is the idea of life insurance, and then after that, disability insurance. Interestingly, I was researching these options this weekend and I went to one of the insurance websites, Metlife.com to see if there was anything that I could use to figure out how much I might need to pay for a 30 year term policy.

Term Policies Best?

Many people like to figure out whether or not Term makes sense and to me, I think that it does. Since I get a certain amount of insurance from my job already, it makes sense for me to look at getting a term policy for between 20-30 years.

I don't view insurance as an investment for my particular situation. I am investing in my retirement accounts and paying off my debts and building assets. My goal is for my retirement accounts to be strong enough so that when I get to the middle to the end of the term, that I will open a new policy for about 25-50% of what the first policy is for.

The Worst Possibility

Unfortunately, many people think about life insurance, but what might happen is actually far worse than just dying. Becoming disabled, permanently losing income or possibility to make the kind of money that you make is probably the worst thing that could happen. The money that is lost is a huge burden, and it is coupled, usually, by expensive medical bills. It is therefore no surprise that many bankruptcies are related to medical problems.

Age Assists Insurance

Understanding that there is some risk that is mitigated as I grow older by the fact that there is more money in savings and retirement makes me more and more comfortable with the idea of slowly decreasing the amount of insurance that is held. The other major factor is that over the short term, most of the bills will be paid off except the mortgage. This means that there will be less needed to cover expenses in the event of disability.

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