Buying Insurance

Lesson 4: Personal Life Insurance

This lesson deals with some of the misconceptions regarding life insurance and the mental obstacles to purchasing it. The lesson discusses the two basic types of life insurance and the differences between them. It reviews Group Life Insurance and its advantages and limitations. Finally, it discusses the situations in which each type of life insurance is likely to prove most useful.

Why Life Insurance?

Life insurance is unique in that it is solely for the protection of others. Those "others" are your spouse, your children, or at least other members of your family. Those who consider life insurance frequently speak in terms of "if" I die. They are using the wrong term. The word they want is "when" I die. While life insurance certainly protects others against your premature death, it also pays for all those outstanding bills, loans, legal costs, and burial expenses when you die. Unfortunately, dying is expensive. Unless you want those expenses to come out of retirement funds, savings, or from another mortagage on the house you just paid off, you will need some life insurance when you die. I am here excluding life insurance issued in a business situation or required as part of a contract or financial obligation. These matters are taken up in a companion to this course entitled "Savvy Insurance Buyer: Business Insurance". Some of the common obstacles to the purchase of life insurance are: we don't like to think about death; we know that the odds against premature death are in our favor; we don't like buying something we think we can't personally benefit from. If you share some, or all, of these views, you may wish to consider carefully what follows.

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