Clark has talked about how to buy life insurance and annuities before on the show, but apparently he hasn’t done a very good job because the questions keep coming up. First of all, you want the company you buy from to be financially healthy. If an insurance company goes under, your policy is practically worthless. The state insurance guarantee systems are ineffective and they expose people to massive losses and delays. There is no equivalent to the insurance you receive when putting your money in a bank – known as FDIC. So, it’s up to you to protect yourself. There are several insurance rating services, and the one Clark likes to suggest you use is A.M. Best -
ambest.com. The company rates insurance providers on grades from “A” to “F”. And, you only want an “A+” or “A++” company. An “A-rated” company is okay, and with a “B” or less is no good. If you have no one who depends on you for income, then you probably don’t need life insurance. But if you do, then you need a substantial amount. And, Clark likes term life insurance best. Most agents don’t like to sell you this because they’re low commission sales. But they offer you great coverage. If you’ve got a lot of working years left, you want to consider a 30-year policy. If you’re a little older, a 20-year term would work. And, so on. Agents will probably push “variable universal life,” but there is almost no one who can benefit from this type of insurance. If you make more than $350,000 a year, you may benefit. Otherwise, stick with term life insurance. As a general rule, you want to take out an amount that is 10 times your annual income. If you make $50,000 a year, buying a $500,000 life insurance policy is a good idea. And when someone approaches you about buying an annuity, you want to run away as fast as you can.
