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The www.FedPrimeRate.com Personal Finance Blog and Magazine

Wednesday, April 20, 2016

Life Insurance Benefits Often Denied

Here's a highly recommended (and brief) segment detailing examples of life insurance companies deny benefits, produced by the folks at CBS News:

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Wednesday, March 23, 2016

Life Insurance's Dirty Secret

From CBS News, a very interesting segment on how certain life-insurance companies have dealt with veteran-related survivor benefits:

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Friday, April 16, 2010

Life Insurance: Do You Really Know What You Need? Term vs. Whole

Life Insurance: Do You Really Know What You Need? Term vs. WholeSome people are plain grumpy. Teaching a night course on Personal Finance at a local college painted my memory full of stupidity from one specific student. My other students were great and as a class we learned a great deal. Even Ms. Grumpy would eventually come around.

It just so happened I was much younger than Ms. Grumpy and this was my first adult teaching experience. I kept my cool and told the class from day one, "We all have something to learn, and if you can save yourself money from this, I have done my job." The big break came in about week 5, when we were on the topic of life insurance. I started class off with a short little introductory lecture on Term Life Insurance vs. Whole Life Insurance.

Each time in your life requires different life insurance strategies; and knowing these strategies will save you money on the policy you purchase.

  1. Term and Whole Life Insurance both cover expenses in case of death.

  2. Whole Life Insurance costs more because it is also a way for you to invest your money.

  3. Term Life Insurance is for a set period of years and with the lower premiums, you can invest your money your way.

Whole life insurance makes insurance companies money, that is why many insurance salesman push Whole Life Insurance. Term life insurance is cheaper and does provide for your dependents in the case of your death.

There were a lot of glossed over faces looking at me, when Ms. Grumpy said,"I have a lot of money, I am divorced, my kids are out of the house, I have Whole Life Insurance, and I know how to invest myself." "So I should get Term Life Insurance." I replied, "If you weigh the price and length of the polices and if you have enough discipline to invest the remaining money, then, yes."

I could tell she was mad, but luckily this time it wasn't at me, but her Insurance company who had been selling here Whole Life Insurance for the last 4 years, when she could have the same protection under a Term Life Insurance Policy. It was a great moment, Ms. Grumpy in her own way had learned something from the new teacher.

Saving money in our budgets adds up in many different ways. Depending on you life situation, re-evaluating your Life Insurance needs could be one way to free up some extra cash for investing or paying down debt, while still giving you the protection for yourself or your family.

I wish the story of Ms. Grumpy would have a happy financial ending, but when we got to the investing unit, finding out she had all her eggs in Corporate Bonds because they paid a 8% interest rate, would not let that happen. She said here is where all my money is and it is safe. That will be for our next story. Life Insurance is a necessary evil. Finding the right coverage can save you money and allow you to invest the way you see fit. Keep in mind, Insurance Companies make a lot of money, but as a consumer you decide how much of yours they will get.

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Saturday, January 02, 2010

Expect the Unexpected: How Life Insurance Can Actually Save Your Life

Many individuals who need to secure life insurance policies for themselves and their families neglect to do so because of the dreaded health screening. Not wanting to be gouged for higher premiums based on pre-existing health conditions that may or may not justify the price difference, many roll the dice on the financial security of their families and go without. However, very few people consider that the health screening required by most life insurance companies could actually be a blessing in disguise. Sure, the results of the testing may cause you to pay more than you wanted for life insurance, but what if the same health exam that you have been avoiding could play a role in actually improving your health, or even saving your life?

I know first hand that such a thing is possible – my husband might be dead today if we had not applied for life insurance two years ago.

When I became pregnant with our second and third children (twins) I began to press my husband to get the life insurance that he knew we both needed. We had been married for four years and had one child already, so life insurance should have been a priority long before then. However, my husband, like many others, hated the invasiveness of the required health screening, assuring himself that he was as healthy as a horse and did not need anyone trying to prove that he wasn’t. The reality was that we needed to be taken care of in case of his untimely demise, and knowing that eventually pierced his heart - we soon called a life insurance agent about policies for him and me. The application process went very smoothly; our agent was kind, helpful, and prompt. We even scheduled an in-home health screening for our convenience. Everything about this insurance company and their representatives was impressive – that is, until the nurse came to our home for the health screening.

Our first impression was positive - the nurse was friendly, professional, and surprisingly not preoccupied with trying to discover hidden illnesses or ailments that we had not disclosed. She asked some basic health questions, drew my husband’s blood, and took his blood pressure reading. The reading, however, seemed to confuse her, as if she had not been nursing for very long. Eventually she became convinced that her gauge was broken, and left to get another. Upon her return visit, she still could not figure out what was going on with the blood pressure reading and had to consult with one of the insurance company’s doctors. As a former athlete and someone who knew that he had elevated blood pressure levels in the past, my husband was surprised that this nurse could have botched such a standard procedure; no one else he had ever encountered found such a simple task to be so frustrating. Later that day we got a call from the insurance company. Their doctor advised my husband to be seen by a medical professional immediately. The nurse was no novice – she had just never seen a reading that high before and assumed there must have been a problem with the meter. My husband’s blood work proved that what she had seen was no mistake, but a crisis for an unsuspecting family.

After getting a second opinion from a local clinic, my husband rushed to the hospital for emergency care. Although he felt fine, my husband’s blood pressure was so high that the emergency room doctors were astounded; they had never seen anyone with such high numbers who was not having a stroke. One of the doctors actually asked him, “Did you walk in here?” The reason that they were so shocked was because his blood pressure had been measured consistently at approximately 290/185 – according to the American Heart Association, a normal reading for a healthy adult is a less than 120/80. My husband was immediately hospitalized and placed in the intensive care unit (ICU). Having no experience at all with hospitalization, he asked me why he was constantly being monitored by nurses and visited by different doctors. I explained to him that the ICU is where hospitals treat people who are facing extreme health deterioration and may not have much longer to live. That week he spent in the hospital was a very sobering time; it made us appreciate not only life, but the need to be prepared for the unexpected in life.

Now, after two years of consistent treatment and monitoring, we are ready to search for a life insurance provider again. My husband’s health has improved, but not so drastically that it will not negatively affect our insurance premiums. However, we are extremely thankful that the entire ordeal took place – had it not been for the life insurance company’s health exam, my husband might have lost his life. He recalls how by the time he arrived in the emergency room he had begun feeling a little light headed. Had we not applied for life insurance, that day I might have just advised him to lie down and get some rest, not knowing that he was in grievous, mortal danger.

Now I have a much more meaningful understanding of the old adage, “Expect the unexpected.” Our family can expect this: 2010 will be the year that we find a life insurance provider to suit our insurance needs, even if we have to shop around and pay slightly higher premiums than most.

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