“Life” Insurance versus “Death” Insurance
Every person faces two basic contingencies concerning life: he may die too soon, or he may live too long. This does not mean that he may live too long to suit himself; it means that he may outlive his financial usefulness or his ability to provide for his needs. The first category is physical death. The second is economic death. A man who is forced to retire at 65 from his job, unless he has the substitute income, is financially dead. Economic death also may occur at early ages if the person becomes too disabled or ill to work.
Life insurance protects against premature death. When an insured person dies, the proceeds of the policy are paid to the beneficiary designated in the policy. Annuities protect against economic death upon reaching retirement age. They pay retirement income as long as the annuitant lives. The problem of selecting the best life insurance policy and the right annuity is somewhat more difficult than that of selecting other insurance contracts. A man buying insurance to protect himself against losing his house by fire, for example, is faced with few choices as how to arrange for that protection. The basic policy will be the standard fire policy. To be sure, we will be able to have certain endorsements, attached to the policy to fit it better to his specific needs; but, essentially, he has little choice.
The man deciding to buy insurance protection against premature death, however, does not find the situation so simple. He finds himself facing a host of different types of life insurance policies. Do you choose to go with a “big” name corporation? Or do you choose to insure yourself under an affordable life insurance plan? There are so many options out there, and it is crucial to understand not only the numerous options and words in small print, but also life insurance basics.
A careful inspection of various policies will show that they are by no means identical or even similar. The selection of the right life insurance form is just as important as that of fitting the standard fire policy to the insured’s particular needs.
In a popular motion picture, a southern grandmother is quizzing her nephew, who is trying to sell her a life insurance policy:
“Will this policy insure my living a day longer than the good lord intends me to live?” she asks.
The nephew has to reply that it does not.
“Then,” she says, “you should be ashamed of yourself. You’re not selling life insurance; you’re selling death insurance.”
This criticism is well taken, even though one cannot condone the woman’s condemnation of her nephew for a nomenclature in whose making he had no part. What is called “life insurance” certainly could be more realistically called “death insurance.” True, life insurance is really provided by annuities. Be that as it may, usage has established firmly the designation “life insurance” for those contracts which protect against premature death. But why fret over usage of terms, and so on. The most important factor here is the individual, and their specific needs. Choosing the best life insurance for yourself is a choice that is never easily made. It’s extremely advantageous to consider all aspects of each plan wisely, and thoroughly. After all, this is your life we are talking about! You only get one; live it well and wisely.
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