Reader’s Question:
I live in Bloomington, Indiana and a close friend of mine died just a few days ago. It appears that he spent so much for his insurance even though he doesn’t have any dependents. Is it ever possible to be OVERINSURED? Can you site some consideration in investing for life insurance?
Carmen
Bloomington, IN
The term “over insured” is very much possible. This leads to wasting large amount of money especially in the event of a premature death and there is no beneficiaries who would benefit from the proceeds. This can greatly affect the financial status of the policy holder. The good thing when one is overinsured is when he or she ahs dpeendents. This could mean that the beneficiaries of the policy holder can move on easily with peace of mind since the finances were taken care of.
On the other side of the picture, there is also what we call a state of being “underinsured”. The negative thing with this is that your direct beneficiary is going to suffer during and even after your death. The beneficiary is going to face the financial dilemma, good thing if the beneficiary is financially stable. How can they handle the financial dilemma after your death? From where are they going to get their schooling funds?
Determining your insurance needs is not a normal math problem with specific formulas and steps. You need to consider a lot of things, but the general rule is to get a coverage 10 times your annual salary. The idea is for you to allocate a small portion of your annual income and benefit greatly from your policy.
Surely life is a cycle; we’re all going to die. Since that’s the case, we should at least leave something for our family so as not to get them into so much trouble, especially during a premature death.
Since you are from Bloomington, IN, it is best if you try to get some free insurance quotes in your area by simply typing in your zip code on the form available found in this site. You will get to compare rates without any obligation.
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