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Term insurance for families
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December 7, 2000: 10:45 a.m. ET
If you have a young family, term insurance is better than whole life
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NEW YORK (CNNfn) - It's often the best advice to stick with your current insurer and avoid the high fees that come with a new policy. However, if you are looking for something new, compare prices at an objective agency before taking the fee offered by commercial life insurance sites.
Also, when you have a young family, it's probably better to purchase term life insurance than whole life insurance.
If you have a question about insurance, here's your chance to find out the facts from a group of industry experts at the Consumer Federation of America (CFA).
Check back each week to read the latest Q&A on our Insurance page.
Send CNNfn your insurance questions to insurance@cnnfn.com. Don't forget to include your name and home town. And keep in mind, not all questions can be answered.
Today's answers come from James Hunt, CFA.
Question: I have a variable whole life insurance policy that I would like to roll over to a variable universal life insurance policy. Can it be done?
Answer: Yes, but each life insurer makes this determination for itself. If a rollover is to a different insurer, the amount rolled over will be subject to significant charges. Consider taking the reduced paid-up option in the current insurer and leaving the money there, then buying a new policy for the difference.
But the best advice is probably to stick with your current insurer and avoid high fees associated with a new policy. Also, the current policy could be quite valuable depending on pattern of implicit or explicit surrender charges. Better check out CFA's life insurance evaluation service at www.consumerfed.org before making a serious mistake.
Question: How do I shop for health insurance for my in-laws who are more than 65 years old and not eligible for Medicare? They have not worked in this country.
Answer: See above.
Question: First, why do all the life insurance marketplace sites that claim to have the best rates all quote the same companies? Second, is it true that some companies that sell directly to consumers sell the same products through their agents?
Answer: Probably because the sites purport to offer the best rates and insurers with best rates show up at each. Obviously, sites receive commissions and don't do business with non-commission paying insurers. Compare any Web site quote with www.term4sale.com, which lists generally all life insurers offering term life insurance. There are companies that sell direct and via agents, though not necessarily the same policies.
Question: Is it better to get term insurance or whole life insurance in my family's case? I am 33 and my wife is 29. We will soon be buying a house and we have two children, ages 8 and 3. Total annual income is about $85,000 gross. We have about $120,000 each in insurance through jobs. Please give me some good information regarding this. Also, if I do get more term insurance, how long should I keep it? Until my children are of age? Please let me know your thoughts.
Answer: Better stick to term life insurance, which at your ages can be very low in cost. We'd guess you wouldn't want to pay what whole life would cost in meaningful amounts. Consider funding any 401(k)s (or similar salary-reducing plans at work) or Roth IRAs before committing to the extra costs of a cash value policy, whose fees can be very high. Try www.term4sale.com to check term rates.
Based on your children's ages, a 20-year term is a good choice. We like Ameritas's ten-year term to keep costs low; After ten years, renew for another ten years if in good health or convert to a low-load cash value policy without evidence of insurability if your health has changed.
Question: Would you recommend that a Medigap policy that one purchases be a policy that is issued age or attained age one?
Answer: Sounds like an agent's question! But a good one. I have the impression that the worst companies sell low initial rate policies. 
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