not so much about savings or investments plans, but just pure protection coverage. Well, do you want the "best" type of insurance? Are you worried about estimating the amount of coverage? Or both? I am assuming you mean life insurance. The best approach to take would be good old fashioned term insurance. You can purchase a 30-Year Term policy that guarantees the premium and death benefit for 30 years, which is normally long enough to carry most insureds through they working years. As far as how much . . . that's gets very subjective. However, you could simply take you annual income (assume $50,000) and do a time value of money calculation to calculate how much your survivors would need to replace your income. You may want to tack on some "extra" coverage for your survivor's immediate needs such as funeral, final medical bills, pay off debts, etc. This is the basics. Another level is to buy some amount of cash value life insurance (e.g., enough to cover immediate needs) and add on a LOT of term insurance coverage as a rider. Do some serious looking around and compare all your needs and prices. Read the fine print before you sign anything. Very good question!!! Might I suggest reading some of Suze Orman's books... especially "The Road to Wealth," in which she presents a list of questions to ask from any insurance provider. What an eye opener that book was for insurance, home buying, trusts and wills, and all areas of finance. That question is hard to answer without knowing a few more details. Usually the magic number is your income times 3 for life insurance. As far as term or whole they both have there ups and downs. If your young go with a term policy (cheaper for more coverage) If your retired (then go with whole, rates never increase) and have no rental properties or anything that would need to be taken care of after you pass it is usually the cost of a funeral plus a few more for estate taxes and so on. Find an insurance agent, one that will sit down ask you a bunch of questions and asses your situation if you don't think they were thorough enough find another one. A good agent will ask you a bunch of questions before recomending anything. Hope that helps. First: compare several companies polices side
by side. Second: check their ratings with the A.M Best Company. Third: compare your total out of pocket expense in one given year before they pay at 100%. Always ask do they cover on or off the job injuries. Do they cover out of network. Never buy a plan that has a stop loss of 100,000. This means after the bill reaches 100,000 then they pay 100%. But only if you have bought the accelerated expense option. Believe it, there are companies out there that try and sell this plan. Hope this helps with your search. Always make sure you buy a major medical plan. THis way you are covered under the worse circumstances. You can compare plans of different companies, then decide, maybe that will help you take the right decision, try here, i always take their quotes/plans,
"http://www.jdoqocy.com/email-1961891-... Talk to a professional who can sit down and help you analyze your needs - if it were ME, I'd call an agent, tell them, hey, I'm NOT going to buy from you, but I WILL take you out to lunch, to get your unbiased opinion on what would suit me best.
Assuming from the terms above, you're talking about life insurance - pure protection coverage is called Term life insurance. If you buy it, you want to make sure it's renewable & convertible, and buy at the longest term offered - usually 20 years. For pure protection - Term life insurance is the answer. You pay only for the pure life insurance protection.
Level term life insurance is the most common type of term insurance purchased in the U.S.
Term life insurance is usually considered a short term solution (5-30 years) for one or more short term or fixed term needs. Such as, your mortgage, car loan or college funds for your children.
Term insurance makes a lot of sense when you are young with a growing family, because the rates are low and the benefits are high.
Term insurance is purchased for a specific number of years.
Premiums are lower than Whole life insurance, especially in the early years of the policy.
Premiums increase with age or at renewal of your policy depending on the type of term life insurance policy you choose.
Term insurance builds no cash value.
Based on a study at Penn State University in 1993, less than 1% of term life policies ever pay a death benefit. People usually outlive or discontinue their policy.
Most term life insurance policies cannot be renewed past the age of 75.
Why Do I Need Term Life Insurance?
Term life insurance offers you a way to provide cash for your family in the event you die. The money your beneficiaries receive from your life insurance policy can be used to pay for your burial costs and final expenses. It can pay off credit card debt, or a mortgage on your house. Or, it can pay the rent and living expenses for your family. Life insurance benefits can pay for college tuition, provide money for retirement, provide cash to pay your estate taxes, or provide a stream of income that can help your family maintain their lifestyle. Also, the death benefit paid from a life insurance policy is usually income tax-free.
How Much Life Insurance Do I Need?
There are many ways to determine how much life insurance you need. Here are a few:
The Rule of Thumb Method
Take 5 to 7 times your annual gross income and that would be the amount of life insurance coverage you should carry.
The Expense Calculation Method
Add up all your expected expenses should you die, including: expenses for your burial, an emergency cash fund, money to pay your current debts, mortgage, college tuition, and any replacement income needed for your family,. Now, add these all together to determine your total life insurance needs.
The Income Replacement Method
Decide how much of your current annual gross income your family would need for them to maintain their present lifestyle and standard of living. The average is 70% of your current annual income. What you want to do is purchase enough life insurance so that the proceeds, if invested at an after-tax rate of return of 8%, would generate enough income for your family.
Let鈥檚 use an example to show you how this works: If you earn $30,000, then your life insurance policy should provide $21,000 of annual income for your family. $30,000 times 70% equals $21,000 of annual income. Now, if your family invests the proceeds of your life insurance policy, they need to receive $21,000 annual income from that investment. $21,000 divided by 8% (rate of return) equals $262,500 of life insurance protection.
Term Life Insurance Calculator
You could use a term life insurance calculator at http://www.term-life-online.com/term-lif... to quickly determine the right amount of protection for your family. You just fill in a few numbers related to your current financial situation and needs, and the computer gives you an instant, accurate estimate of your life insurance needs.
What is Term Life Insurance?
Term life insurance provides your family with financial protection over a specific number of years. The policy pays a death benefit to your beneficiary only if you (the insured) dies during the time or period the policy is in effect. If the policy ends or expires and you are still alive, there is no payment made to your beneficiary. The term of period of the policy can vary from one policy to the next. The range of years for a policy can be from one year to 30 years for your coverage. Policy terms generally run for 1, 5, 10, 15, 20, or 30 years.
At the end of your policy term, your life insurance company may require you to provide proof that you are still insurable, if you want to purchase another term insurance policy. This means you may have to take a medical examination to qualify for a new policy. Annual renewable term insurance usually continues without having to qualify for coverage again. However, the premiums usually increase each year.
How is Permanent or Whole Life Insurance (Cash Value) Different from Term Life Insurance?
Permanent life insurance provides you with protection that lasts your entire life. As long as you pay your life insurance premiums, your life insurance death benefit will remain in effect. Also, most whole life insurance policies build cash value within the policy. This money can grow tax-deferred. It may be used to take a loan from your policy. This money goes to your beneficiary, in addition to the death benefit. Term life insurance does not build any cash value within the policy. Term insurance is 鈥減ure life insurance protection.鈥?
Whole life insurance policies are used to keep coverage in force for a long period of time. They are meant to insure you for your entire life. If you only need protection for a short period of time 鈥?5, 10, or 20 years, then term insurance may be the best solution for your needs. You get the maximum amount of protection at the most affordable rates.
Are There Different Kinds of Term Life Insurance Available?
There are several different types of term life insurance policies available. Term life insurance is generally used to provide the maximum amount of protection for a specific number of years at the lowest premium. Life insurance companies offer several types of term policies to meet your personal needs including:
Annual Renewable Term Life Insurance
Annual renewable term life insurance offers you a level death benefit, coverage amount remains the same throughout the policy term. The life insurance policy automatically renews each year without you having to take a medical exam or prove you are still insurable. But, the annual premiums you pay may increase each year as you get older.
Level Term Life Insurance
Level term life insurance offers you a death benefit that remains the same throughout the term of your policy. This type of policy is usually purchased for a period of 5, 10, 20, or 30 years. Usually, the annual premium remains the same throughout the entire period of your policy. Annual premiums for level term coverage will probably be higher at first than premiums for annual renewable term. However, the annual premium will stay the same for level term coverage for the entire period of the policy. But, annual renewable term insurance premiums will increase each year.
Decreasing Term Life Insurance
Decreasing term life insurance is usually used to help pay off the mortgage. The premium for this type of policy stays the same over the period of the policy, but the death benefit decreases each year until your life insurance policy expires.
An example of decreasing term insurance: Let鈥檚 say you buy a $150,000 鈥?30 year decreasing term life insurance policy so your family can use the death benefit to pay off the mortgage on your house or condominium if you should die. The life insurance death benefit will decrease each year along with the amount you still owe on your mortgage. After 30 years your life insurance coverage will end. In the event of your death during the policy term, the death benefit should be able to pay off the remaining amount on your mortgage.
Points to Consider in Choosing a Term Life Insurance Policy
Compare the Costs. Get multiple quotes to compare the lowest rates available.
Compare Similar Policies. Make sure the quotes are for the same type of policy, for example, level term life insurance where your rates are level each year for s specific number of years.
Guaranteed Periods 鈥?Make sure your rate is guaranteed to remain the same for as long as you need the coverage.
Insurance Carrier Rating 鈥?A.M. best provides financial ratings of insurance companies. Make sure you review the rating (your quotes usually will show the rating) for your life insurance company. This will give you an idea of their financial strength. Make sure you choose a company that is financially sound and can pay their life insurance claims.
How to Save Money on Your Term Life Insurance Policy
Compare Term Life Insurance Quotes online from several sources to find the best rates from quality life insurers.
Payment of Premiums 鈥?If you can afford it, choose to pay your premiums on an annual basis. This is usually less expensive than if you pay you monthly or quarterly.
Compare Higher Levels of Coverage 鈥?If you need $165,000 of coverage, compare quotes for $200,000 of coverage, too. Sometimes, the next higher level of coverage may not cost you much more in premium each year.
Policy Fees 鈥?Ask if there are any policy fees that are included in your term insurance policy. Some insurers may add an additional fee of $45 to $90 on the policies they issue.
Make sure you are comparing quotes on the Same Type of Term Life Insurance Policy 鈥?Level Term, Annual Renewable Term, or Decreasing Term.
What Are Conversion Privileges?
Many life insurance companies offer you a conversion privilege with your term life insurance policy. This means you can exchange or convert your term insurance policy for a whole life insurance policy with the same death benefit amount of your term insurance policy. Usually, you won鈥檛 have to take a medical examination or answer any medical questions to qualify for the new policy. However, the longer you wait to exchange or convert your term policy to a whole life policy, the higher your life insurance premiums will be on your new whole life policy. Each company may apply different restrictions on the conversion privilege they offer to you.
What are the Advantages of Term Life Insurance?
Very low cost compared to whole life insurance
Large amount of protection can be purchased at affordable rates.
Option to choose from many different terms or periods of coverage 鈥?1, 5, 10, 15, 20, or 30 years.
Best choice for temporary protection needs, such as your mortgage, college tuition, or a car loan.
What are the Disadvantages of Term Life Insurance?
Premiums increase each renewal as you get older.
Term insurance does not build cash value.
Coverage ends when your policy term expires, and premiums may be too expensive to purchase a new term policy when your current policy expires.
Keep This Point in Mind
Commissions paid to insurance agents on term insurance policies are much lower than commissions paid on whole life or permanent policies. So there is a definite incentive for insurance agents to sell you permanent life insurance, instead of term insurance. They make more money from you by selling you whole life insurance policies. Remember to keep this in mind. Don鈥檛 let a pushy life insurance agent sell you a policy you don鈥檛 need, or don鈥檛 want. Always choose a policy that fits your needs, and your budget.
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I hope that helps! Take care and best of luck to you! You should have a nice agent that will tell you/guide you into what insurance you need to protect your assets. If it is your income you're protecting (life insurance) than the guide at this site is great because it is NON-biased. Insurance agents have a natural conflict of interest because of how they are compensated. Give it a read, then move on... First thing I would do is ask agents lots of questions and see who will take the time to explain coverages and options. If they won't do that, move on to someone that will. I believe everyone should understand exactly what coverages they have and what's available. I am confused by your statement "just pure protection coverage"...I am assuming you mean liability protection, not life insurance. That being said I would talk with several different agents and compare the results and pick the policy that seems to be recommended the most. The reason I say this is because they are many good agents and many bad agents out there. If I did interpret your question correctly I would assume you are looking for a personal liability policy. You would want to find the policy with the broadest coverage and high limits. |
