Insurance Issues From Johny White

If you have a home and family, you need not ask whether or not you need life insurance. Instead, fast forward directly to the question, “How much life insurance do we need?” Ray Williams, a long-time life insurance professional, suggests every young family ask and answer at least four critical questions:

· How can you secure your home?

You probably could not qualify for your mortgage without some form of “mortgage life insurance,” and you probably purchased a policy that will pay-off your outstanding debt in the event you die before you have retired the loan. The mortgage brokers probably did not tell you, however, securing your home requires more: Even with your mortgage retired, you need homeowner’s insurance, and you must provide for property taxes and utilities. As you make provisions for your spouse and children to keep the family’s home, you must make sure you allow for all the expenses associated with home ownership. An experienced life insurance professional can show you how.

· How can you guarantee a steady income for your family?

Nearly 90% of American families live just one paycheck from homelessness and bankruptcy. Often, because of their staggering debts, families have negative net worth-especially if the housing bubble’s burst has devalued their homes and left them upside-down in their mortgages. As you determine how much life insurance you must purchase, you must plan to retire those debts; but, more importantly, you must plan to secure steady income for your survivors, so that the absence of that one critical paycheck will not render them homeless and bereft of funds. Life insurance products can assure the income your survivors need, but you must select a product and plan that satisfies your family’s unique needs. Seek advice and counsel from a life insurance professional.

· If you die, who will settle your debts, and how will he or she do it?

No, of course you do not want to think about it, but you must: If you die, how will your survivors settle your medical expenses and other outstanding debts? If you suffer a serious accident, you almost inevitably will leave behind expenses from emergency medical treatment, which your health insurance or your employer’s liability insurance may not cover. How will your family handle them? If you succumb to a terminal disease or catastrophic illness, you almost inevitably will leave unpaid doctors’ and hospital bills. How will your family manage those debts? Similarly, you must consider how your family will manage your funeral and burial costs, which often exceed $10,000? If, like most American families, you have amassed between ten and twenty thousand dollars in credit card debts, you must plan for settling them. What will your survivors do to retire those obligations? Life insurance can cover all those situations, but you need to determine how much money your family will need. Seek a professional’s assistance.

· How will you secure your children’s future?

Naturally, you want the best for your children. You want them not only to have a secure foundation on which to base their dreams but also to enjoy opportunities for exceptional success. Therefore, you must consider how you will provide for their educations, travel, marriages, and purchases of their first homes. Life insurance products with rights of survivorship can provide for those essentials, but you must assess how much your children will need. Harvard does, after all, cost a great deal more than Farmville State U; how much will your children need? Ask a life insurance professional for help.

Term Life Insurance Benefits:

With term life insurance you pay cover for a predefined term, and are only covered for that term (usually the same term as your mortgage). At the end of that term, you simply walk away. Term life insurance only offers protection for the duration of the mortgage, and is normally of no value when your mortgage is paid off. Term insurance is also cheap, and can even become cheaper over time.

There are also a number of different types of term life insurance to choose from as follows:

• The first is level term insurance, and it is the most popular type of cover. This policy has it’s premium costs locked in for the full term of the policy, so you pay the same amount each month for the entire term of the policy.
• The next form of term life insurance is escalating term cover. This policy can be more expensive, as you pay an increasing amount each year. However, the lump sum payable at death also increases. These are normally low cost policies, and are best suited to younger people.
• Next, we have decreasing term insurance, and in this type of policy monthly payments stay the same, although the amount of cover reduces each year.
• The forth type of term life cover is increasing term insurance, where the pay out on death increases. However, to make up for this increase it will be necessary to increase the premiums from time to time, in line with changing circumstances.
• Finally, convertible term insurance is a type of term life cover that can be converted into an investment/insurance policy in the future. Normally, the value of such investments will be based on your health, at the time you bought the term insurance policy.

Whole of Life Policies:Whole of life insurance covers you right up until the time of your death, providing that you keep paying your premiums. It can give a considerable lump sum to your family when you die, and it normally accumulates in value over the years. Whole of life policies can be more expensive and more complicated than term life insurance. Also, the investment you make can earn some interest each year. Therefore, since your investment generally grows each year, your premiums can actually reduce over time. You may also reach a time where the interest gained covers all the future premiums, which means you may have no more premiums to pay.

Summary:

The decision of whether to buy a term life policy, or whole of life cover comes down to your own unique needs, and circumstances, and what you wish to achieve. The simplest form of life insurance is a level term policy with renewable option. This allows you to buy life cover for as long as you may require it. On the other hand, you might like to consider a policy that grows in value over time, giving you a very nice nest egg which you can benefit from, while you are still alive. Both types of policy have advantages and disadvantages, and that’s why it’s always a good idea to get advice from a competent insurance adviser.