I personally like this one, “As befits a man,” by Langston Hughes. He covers pretty much everything I can think of, and it says something about how you live life even more than it does about how you die:

As Befits a Man

By Langston Hughes

I don’t mind dying—

But I’d hate to die all alone!

I want a dozen pretty women

To holler, cry, and moan.

I don’t mind dying

But I want my funeral to be fine:

A row of long tall mamas

Fainting, Fanning, and crying.

I want a fish-tail hearse

And sixteen fish-tail cars,

A big brass band

And a whole truck load of flowers.

When they let me down,

Down into the clay,

I want the women to holler:

Please don’t take him away!

Ow-ooo-oo-o!

Please don’t take daddy away!

Now, I don’t know about you, but that gets me, deep down. Of course, the author was one of the most famous poets of his age, and passed away in 1967 after complications from a surgery related to prostate cancer. His ashes are interred under a floor memorial in the Arthur Schomburg Center for Research in Black Culture in Harlem.

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However, even if you’re single and don’t have any kids, term life insurance can be a good investment. Here are several factors that may make it worth looking into a term life insurance policy:

• You have a roommate. Now, I’m not talking about just a random person who answered an ad in the paper. I’m thinking more along the lines of someone you’re friends with that you also live with. No, it’s not your responsibility to make sure that your friend is provided for if something happens to you, but it will certainly make their life easier.
• You have a small business. Just because you don’t have children doesn’t mean there aren’t people depending on you. Your employees in a small business can often be like family. Having a life insurance policy can help them make the transition into finding another job or into running the business for themselves.
• You hope to have a family one day. Right now is the best time to lock in a low term life insurance rate. Once you pass 30 and then 35, your rates will increase dramatically. If you enroll in a fixed-rate term life insurance plan at 22, you’re going to wind up paying less over time for the same kind of peace of mind that will help your family. True, you’ll need a longer term, but it will pay off in the end.

Term life insurance isn’t, and shouldn’t be, a priority for the single person with no children, at least not in the same way it is for someone with a family. However, if you can afford it, a policy can be worth looking into at just about any stage of your life.

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There are several ways you can reduce your life insurance premiums, too. You can get a multiple policy discount. You can make sure to choose term life insurance over whole life insurance policies. You can reduce your coverage if you need to, or you can choose a plan with a generally lower premium.

There is something you should never do when you’re trying to reduce your life insurance rate, however:

Lie.

You see, there isn’t a whole lot you need to do to get a life insurance policy. You need to fill out a relatively short questionnaire, and it will ask you some health questions. Among those, for example, it will ask about whether or not you’re a smoker.

Herein lies the problem. Smokers can often be charged life insurance rates that are two times the rate that a nonsmoker will be charged. It can be tempting to fib a little bit on your application if you’re a smoker, for example. One study even suggests that almost 15 percent of people lie to get a better rate on their insurance, including life insurance.

Unfortunately, if you lie about smoking or something else in your health history, you put yourself and your life insurance policy at risk.

How so? Well, let’s say that you state on your life insurance application that you’re not a smoker, but you actually smoke a pack a day. Five years later, you pass away from lung cancer.

Your family isn’t going to get a dime.

The insurance company investigates just about every payout it makes. If and when they discover that you died due to a smoking-related illness and that you were actually smoking when you made the application, they can deny the claim. Your beneficiaries can be left with nothing at all, and you will have wasted all of that money you spent on premiums.

Photo via Hoggheff aka Hank Ashby aka Mr. Freshtags

Why is the cost penalty so severe for smokers? Well, in short, life insurance companies prefer customers that have fewer health risks. If you have fewer health risks, your insurance policy is less likely to pay out and the company continues to make money on you. Insurance companies often have different tiers of classification based on your health. If you’re in good health and haven’t smoked in five years or more, you fall into the “preferred plus” category and your chances of dying soon are small and you’ll get the best premium rates. If you haven’t used tobacco in the past three years you’re in the “preferred” category and you’ll get lower premiums than smokers. A “standard” rate is one in which you haven’t smoked in a year. That one will cost a little bit more. At the top of the cost list, of course, is the smoker’s rate.

The smoker’s rate applies to people who have used tobacco products within a certain amount of time, typically one year. Those products include not only cigarettes but cigars and chewing tobacco as well. Even if you only enjoy an occasional cigar, you’re considered a smoker by the standards of the insurance company.

Depending on the type of insurance policy you choose, you may or may not need to take a medical examination in order to qualify for your life insurance policy. If you do, a urine test may be a part of that process, and your urine will be tested for traces of nicotine. If you claim to be a non-smoker and traces of nicotine are found in your urine, you could be denied coverage.

There is another scenario in which smoking could affect your life insurance. If you don’t smoke when you apply for the policy but start up later and wind up passing away, your insurance company may be able to deny your claim based on the fact that you were “dishonest” in your insurance application. This could arise from a clause in the policy, known as an “incontestable clause” that allows an insurance company to challenge a death claim, usually within a couple of years of the policy’s origination.

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I’m talking about life insurance.

One of the frustrating things about life insurance is all the specialized terms. Over the years, life insurance has changed as peoples’ needs have changed and as laws have changed. This has led to a veritable quagmire of products that the average person doesn’t have the knowledge or the desire to wade through.

One if the areas that differs between life insurance policies is how the premiums are paid. There are single premium policies, fixed premium policies and flexible premium policies.

Single Premium

A single premium policy is one that’s paid for by a single lump sum when the policy is first acquired. There are single premium whole life policies that will last through your whole life, and there are single premium term life insurance policies that you pay once and they cover you for a certain period of time. A single premium policy can be less expensive than the other types of policies.

At one time, single premium whole life policies were especially attractive from an investment perspective. Changes that were made to the tax code in 1988, however, pretty much put a halt to that popularity.

Fixed Premium

A fixed premium policy is one where you continue to make premium payments, but the price is fixed. As long as you make the payments, you have coverage. In some cases, a fixed premium policy may only require you to pay in for a given amount of time, after which the policy is in effect forever (in the case of a fixed premium whole life policy) or for the length of the term (in the case of a fixed premium term life insurance policy).

Flexible Premium

A flexible policy lets the person holding the policy pay variable premiums. The variations usually relate to the amount of cash value in the policy, and only whole life policies tend to be flexible. This means that a policy holder could, in effect, skip payments from time to time as needed, as long as the policy has cash value enough to cover it.

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The Old Way of Doing Things

By the time you hit 60, you need something different from insurance. You probably want enough insurance so as to not be a burden to your spouse when you pass away, but chances are pretty good that you passing isn’t going to affect your spouse’s monthly income greatly. You want coverage enough to take care of your final expenses.

A New Reality

Of course, 60 is the new 40, and that means this stereotypical situation is changing. Add to that the fact that grandparents may find themselves supporting or even raising their grandchildren on their own, and you create a mix in which the insurance needs of someone over 60 are very different than they used to be.

Identifying Your Needs

You’re an individual, and your insurance needs aren’t the same as someone else’s just because you’re the same age or gender. You need to identify what your insurance needs are, right now. If you have a small child living in the home, for example, you need more coverage than if you don’t have any children living in your home, no matter how old you are.

Finding the Right Coverage

Insurance companies have been a little bit slow to recognize this new reality in terms of life expectancy and changing social norms. While you regularly hear about someone in their 80s running a marathon, insurance companies still structure their products and their pricing as if the 60s were the final years of someone’s life.

Some companies are offering new types of coverage to meet these changing demands. There are term life insurance products, for example, specifically designed for people over the age of 60. Yes, you’re going to have to pay more in premiums than you did when you were 30. There’s no question about that. But, if you can find the right kind of product and if you’re in decent health, your premiums may be less than what you’d think.

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Sounds to me like someone’s watched way too many episodes of Law & Order. The fact of the matter is that life insurance fraud is a real and all-too-common problem, and the victims aren’t the insurance companies but average folks like you and me.

So, to avoid life insurance scams, here are some things you can do:

• Know the market. Know what kinds of products are offered. Understand the difference between whole life insurance and term life insurance. Know what kinds of things go into determining your premiums, such as your age and whether or not you smoke. Know what kinds of things are usually covered and what aren’t, and know what kinds of coverage are worth the money and which ones aren’t.
• Shop around. Prices for premiums vary greatly from one insurance company to the next. It’s worth taking some time to do a little comparison shopping. Make sure you are comparing like products, too, as one company’s term life insurance will always be cheaper than any other company’s whole life insurance, for example.
• Know your insurance agent. I’m not saying that you need to buy life insurance from that annoying guy in high school who used to date your sister, Mary Pat. But it pays to know who your agent is. If you know the agent, you can avoid being taken advantage of. If you don’t personally know the agent, make sure to do some vetting. Ask to see their proof of licensure, for example, and check for references and reviews.
• Read the policy. Once you do sign up, make sure to read the insurance policy. Know what declarations and endorsements are attached to it, and make sure it includes what you think it should include. If you don’t receive a physical copy of your policy, ask your agent to get you one.
• Watch your bill. Make sure your premium payments are what you think they should be and what was quoted to you. If they mysteriously go up without an explanation, call the insurance company to find out what’s going on.

Are You Being Billed for Services You Have Not Received? If you have received medical or dental treatment that is covered by an HMO or an insurance company, you will receive an “Explanation of Benefits” statement listing the services for which benefits have been paid. Review it carefully to ensure that your health care provider has not “bumped up” your claim (i.e., overstated services provided in order to receive a higher payment), or charged for services you did not receive. Contact your insurer immediately if you feel there are discrepancies. Fraudulent claims payments translate into higher insurance premiums for all of us.

What If You’re Involved in an Automobile Accident? Call the police to the scene and make sure that the details of the accident are documented and the identities of the occupants of the other vehicle are verified. Be suspicious if the driver of the other vehicle insists there is no need to call the police. That driver’s insurance card may be fraudulent and his car uninsured.

Auto Insurance Fraud is a multi-billion-dollar problem nationwide. Watch out for these common scams:

* The staged accident – A vehicle filled with people will stop suddenly in front of you, setting you up as the cause of a rear-end collision. The “victims” will then file costly multiple medical and damage claims using doctors and lawyers who are part of the scam.

* Steerers – These individuals will solicit the injured or allegedly injured parties and direct them, for a “referral fee,” to lawyers, doctors and/or medical facilities that are part of the scheme. Be on the lookout for steerers at accident scenes and don’t become their victim.

* Inflated claims – If you are in an automobile accident, be sure you know the extent of the damages to your own car and the other vehicle and carefully review claims. Vehicle owners and body shops frequently inflate estimates for damages and then either perform other repairs not related to the accident or simply keep the extra money.

BE ALERT! IT’S YOUR MONEY.

Think twice before replacing an existing life insurance policy with a new one. The new policy may have exclusions or waiting periods for pre-existing conditions that are covered by your current policy. And premiums are likely to be higher because you are older. The Insurance Department protects consumers by requiring agents to provide prospective purchasers with pertinent facts when that purchase will cause the buyer to surrender, lapse, or in any way change the status of an existing life insurance policy. Department Regulation 60 requires this full disclosure so that prospective life insurance purchasers can make decisions in their own best interest. To view the full text of Regulation 60, select this link.

Don’t allow high-pressure salesmanship to persuade you to sign up for a type of policy or certain coverages that you are not sure you need. Take time to decide what’s right for you.

Read your policy carefully before you sign. If you have questions, ask your agent or broker, or your insurer. An additional source of information and help is the Insurance Department’s Consumer Services Bureau. For additional consumer information, select this link.

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When life insurance makes sense

For an adult that’s the primary breadwinner in the family, life insurance makes total sense. That parent is the main source of financial security for their spouse and kids, and if they aren’t around then their spouse and kids are going to have a rough time of it.

Life insurance also makes sense for a stay-at-home spouse. If a father usually watches his small children all day and he passes away, the mom is going to have to start paying a sitter. There is, again, a financial impact to the person’s death.

However, in most cases, children don’t supply a financial component to a family. They aren’t a part of the income of the family, and if they pass away the family doesn’t make less money.

Proponents of children’s life insurance would make the argument that there are life insurance policies that accrue a cash value, and that these kinds of life insurance policies can make sense for a child because one day the child will be able to borrow against that cash value or even cash in the policy.

Life insurance isn’t an investment

The problem with this line of argument is that a whole life policy is usually not as good an investment as other options. You can make other investments in your child’s future without paying the whole life insurance premiums. In fact, whole life insurance rarely makes sense at all. Term life insurance is almost always a better choice, no matter what your age. There are other savings plans, such as 529 plans, that will let you set aside money for your child to use to go to college.

Most consumers recognize that children’s life insurance policies aren’t a good investment. Only about 15 percent of children under the age of 18 have insurance. For children that are covered, the amounts are usually pretty small.

There is one area in which it’s useful to have a small amount of children’s insurance, and that’s for burial expenses. In some cases, however, you can get your insurance company to add a small rider to your own insurance policy to cover just that kind of unfortunate expense.

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The same holds true for insurance. The friendly insurance agent, who you develop a long-term relationship with and who is someone you personally know and trust, is becoming something of a thing of the past. In many ways, this particular change may not be a good thing. There are many things that a good insurance agent does for you, including:

• Sales. Let’s face it, the first and primary job a life insurance agent has is to sell you things. Now, this isn’t bad in and of itself. In an ideal world, the insurance agent has a product you need or want and you’re willing to pay for it. The main thing here is to make sure your agent has your best interests in heart, as well as her own financial interests.
• Financial advising. Many insurance agents act as financial advisers, as well. Many insurance agents come from a background in finance. If your agent has some financial knowledge, it can help weed you through the vast options in the insurance world. Today, many insurance agents also offer other financial packages such as mutual funds or retirement plans.
• Customer service. In many ways, your insurance agent is a liaison. He’s an intermediary between you and the actual insurance company. When you have a life insurance claim, the insurance agent can help you communicate effectively with the insurance company, and help you know who to call and what procedures need to take place.
• Solutions provider. Many life insurance agents also offer other types of insurance. In this regard, your life insurance agent can become a one-stop shop. You may also find that you can get a decent discount on some of your premium prices by having more than one type of insurance through the same agent.

Ultimately, you need to be able to see your life insurance agent as someone who can work for you, and who will help you find the kinds of products you need.

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How it Works

The way this works is that the existing life insurance policy is sold from the current policy owner to a third party via the secondary institutional market. The seller then receives a onetime cash payment. This payment is less than the policy’s face value but more than the cash surrender value (CSV).

In addition to being relieved of all future premium payments, the seller often receives as much as 3 to 5 times the CSV.

The Life Settlement Process

Here are some points to ponder if you’re considering one of these:

• It takes four to six month to complete
• Policy type, age, gender, life expectancy, face amount, insurance carrier rating, projected annual premiums and state of residency are a few of the factors taken into account
• An application is completed by the seller
• Medical records are ordered
• A life expectancy report is prepared
• The policy is put out to bid to institutional investors
• Bid are received and presented to the seller
• Closing documents are prepared upon offer acceptance
• The escrow is opened and the funds are deposited
• The change of ownership information is submitted to the insurance carrier

In case you’re wondering about the impact of this on the insurance carriers consider this; 88% of universal life policies and 95% of term life policies never payout a death claim at all.

Photo via Phillie Casablanca