My Finance Tales

A question that gets asked quite a lot is whether is it legal or not for a life insurance company to deny coverage because the patient has a certain illness. The quick answer is: yes, it is legal and most life insurance companies will either turn you down or charge plus for the coverage.

Life insurance is clearly a business, it is not a free government program. But as in any other business, the best you can do is go get some good advice. You shouldtake a look atthe major companies and talk to the agents.Maybe even having an independent agent take your personal information and do the life insurance shopping around for you! Can't get any easier than somebody else doing it for you!

In my case, I was denied insurance at many one company because I have a BP (bipolar disorder) diagnosis and had treatment and documented medication, but eventually found one companythat would take me in. My agent was worth every penny, and certainly was a smarter choice than fighting my way through the other companies, with ridiculous lawyer expenses and the like.

Independent insurance agents are widely available everywhere, and they surely know the market better than nobody. Just remember: life insurance is a very serious matter and should be a core element in every family financial plan. Think of it: a generous infusion of totally tax-free money right when your loved ones most need it.

If you are one of the lucky ones that get free life insurance from work, you alredy have a coverage of 2x your base pay. This is free except the cost of any insurance over $50,000 is taxable as "imputed income" according to an IRSrate. You can opt to buy extra coverage through your employer's group plan.

For most other people however, the best choice is to go for Term Life Insurance. Very few people have an actual need for Permanent Life Insurance. The vast majority of people will be better off just buying term. Many an agent and web siteswill try tohead you into permanent insurance. They will put up all kinds of convincing argumentslike “permanent is like owning, whileterm is like renting.” Ignore them!

As for how long, when you choose Term Insurance, you choose a number of years you would like to have the premium fixed. The longer the time, the higher the premium will be, because the higher cost of insurance in the later years has to be somehow averaged out to the earlier years. I personally recommend fifteen years, but that's just for you to choose!