Protect the ones you love with life insurance

Rockford Register Star

There is one absolute guarantee in life: We are all going to die.

We don’t like to think about that, but life insurance can cushion the financial blow for those left behind.

“If you love someone or owe money, you need insurance,” says Kate Ordway, 64, of Ordway Insurance Agency Inc. in Rockford.

She emphasizes two points particularly important to women.

1. Women live longer than men, so rates are generally lower.

2. A woman’s income in a two-income family is as important as a man’s — even more if she is the breadwinner.

“Life insurance is especially important for young families today,” says Sandy Praeger, 62, president-elect of the National Association of Insurance Commissioners, which supports state insurance regulatory officials. “If the wife passes away, can the husband handle the loss of income (if she worked) and the child-care expenses?”

There are two basic types of life insurance.

- Term insurance

Coverage is for a specific number of years, aka the term. A death benefit is paid only if the individual dies within that period. Generally the policy can be renewed for additional terms or converted into a different policy.

Premiums are generally lower than for cash-value insurance. For example, a 10-year $100,000 term policy for a 64-year-old nonsmoker might be about $43 a month, or a 30-year $100,000 policy for a 30-year-old nonsmoker might be about $15 a month. Smokers generally will pay at least twice as much.

- Cash value insurance

Permanent, or cash-value insurance, generally covers you as long as you pay your premiums, and it can accumulate dividends.

Whole life is the safest but most expensive option. Death benefits and premiums are fixed.

Universal life is more flexible. Benefits and premiums can be adjusted based on your preferences.

Variable life fluctuates cash values according to the investment portfolio’s performance, but death benefits stay intact.

Be aware of how each type of policy works; in some cases, benefits and cash value may end.

Variations on life insurance are plentiful and can include depending on needs coverage related to specific health conditions, such as cancer or stroke.

Get a policy that best fits your needs, Praeger and Ordway emphasize. Both carry life and long-term care insurance.

When considering life insurance, know what you are getting. Work with a trusted agent or adviser, and make sure that the insurance company will be there when it is time to pay up.

If there are too many bells and whistles and the price is always low, question whether it is a good product.

Check independent ratings given to insurance companies. For example, the best companies according to their underwriting start with A++, a superior rating, and go down. A size rating from 1 to 15 indicates how many billions of dollars are in the reserve funds. A++15 rating would be top of the line.

Tailor your insurance based on what you can afford and what you need it for: death benefit, retirement supplement, estate planning, etc.

The younger you get insurance, the better. You may ensure your ability to get coverage later in life, and your premiums can go up as you age.

Remember that you may have to have a physical.

When calculating your death benefit, consider whether it’s more important to consider immediate payout or investing the payout to replace needed income.