Insurance - Basics for Buying

Insurance is insurance! You can buy insurance from direct writers, independent agents, or captive agents. Most companies selling insurance use one or more of these. As a customer it does not matter but having the understanding helps.

Insurance Companies that offer you to directly inquire from the company are direct writers. Perhaps this suits best those who know what exactly what their insurance needs are and details such as what coverage they exactly need.

Independent agents are typically licensed agents to sell various types of insurance, actually underwritten by different insurance companies. An independent agent gets commission as a percentage out of premium paid. An independent agent would do the comparative study and other research for the consumer. The agent may provide advice. The premium may end up being higher, at times.

Captive agents work only for one insurance company. Captive agent would provide advice about the cost but because of dealing with an insurance  company, exclusively, would not have optional products. Captive agents can be less expensive than independent agent but more expensive than direct writers.

Depending upon your situation, knowledge and need for insurance you may choose the source of insurance arrangement.  There are obvious advantages of each but the most important is that if you need, you should get the insurance policy.

Life Insurance - why buy?

Insurance, in general, is more for the morbid thoughts. In Life Insurance, the estate of the deceased or the heirs or the nominated beneficiaries get the insurance money.  There are a number of variations such as Term Insurance and Whole Life Insurance which would be covered separately. Most of the times Life Insurance is bought to cover for the contingencies and to mitigate the impact that the loss may have on the survivors.  The frequent reasons why Life Insurance is bought:

• Wedding causes couples to think of the other spouse in case something was to happen.
• Arrival of a child makes the parent or parents to provide for the contingency as well as security of the child.
• Divorce makes the parent or parents buy Life Insurance to safeguard the future of children in the new setup or arrangement.
• Demise of near one causes some to have a wake up call making them buy Life Insurance.
• For some, it is part of home mortgage loan arrangement though some buy Life Insurance to arrange for repayment coverage of the mortgage loan to make it easier for the survivors to continue with the enjoyment of the home.
• Some buy it when they change employment and the new employer has lower or no Life Insurance.

When asking for Life Insurance, most valuable is to get a long term contract for a fixed annual rate, eg., fixed rate of premium for 40 years. When you are 25, the rate would be low but when you are 50, the rate would be high. To make the best deal, at 45 is to ask for 30 year fixed rate policy.

Tags: insurance, life insurance, term insurance