Dear Insurance Adviser,
I'm in my late 20s. Because of my ignorance on the matter and despite the fact that I'm a single adult with no dependents, I selected term life insurance as one of the benefits of my job. I lost the job about less than a month ago because my position was eliminated. I would not like to continue to pay the premium on the policy, as I don't have any income, but I am presented with the option of converting that employer life insurance. Seems I don't truly need life insurance at this point.
What do you suggest I do? Should I waive the option to convert the coverage, or should I convert it and continue to pay a premium to avoid difficulties in obtaining life insurance in the future?
-- Jane
Dear Jane,
As a general rule, you shouldn't buy life insurance if no one is financially dependent upon you. So, I agree with your assessment that you don't really need life insurance now.
When you have life insurance through an employer, it usually comes with the right to convert the coverage to a permanent life insurance policy, which can build up cash value, when you leave the job. Who should convert? Those who have existing health problems that would keep them from getting life insurance on their own in the open market, now or later.
"But what about future insurability?" you ask. What if, later on, you have a family and a mortgage and you want to protect family members from the financial consequences of your premature death? Isn't that a reason to convert? No, but if you're worried about that, there is a better, cheaper way to accomplish the same thing. Buy term life insurance with premiums guaranteed to stay level for 30 years.
A woman in her late 20s in good health who's a nonsmoker can buy $250,000 to $300,000 in coverage today for about $15 to $20 a month, with the price locked in for 30 years. I wager that it would cost far less than converting your employer life insurance policy and would provide much more coverage. You're not, by any means, buying all the life insurance you will ever need. But you have hedged your bet.
I hope this helps.
Source: http://www.bankrate.com/finance/insurance/keep-employer-life-insurance-after-layoff.aspx
sacagawea new hope baptist church associated press foster friess new orleans hornets ghost rider spirit of vengeance hornets
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.