Life Insurance Part 1 – Everything You Never Wanted to Know about Life Insurance

The fundamental reason to buy life insurance is that someone else is depending upon you for a living.  Plain and simple.  It is risk transfer:  in exchange for premium dollars, the insurance company will make a big payout at your demise.

The life insurance industry is one that responds to market demands.  In Part I of this series I’m going to give you a little history.  What kind of policy should you buy – term?  whole life?  In subsequent entries, I’ll discuss the other jobs life insurance can do for you, and talk a little about underwriting.

Yearly Renewable Term Insurance

Original insurance contracts were for one year only – term policies, in other words, which renewed each year.  As the insured ages, year-by-year the premiums would rise, reasonably enough, as one’s mortality age comes closer.  So fundamentally we have a bet here between two parties:  you make a bet that you’ll die during the...

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