Feb 17, 2012

Life Insurance Guide 2012 Why Life Insurance at our age???

Life Insurance Tips 
When my mother was in her early eighties we talked with her financial planner about purchasing a life insurance policy. Believe it or not, even a widow at her age (82) needed some life insurance protection. Not because there was anyone left that would be dependent upon her for support after her death but because this was a very good way to protect her money from all those people that wanted to get their hands on it after she was gone. By protecting her money she also guarantee that any outstanding debts she had was paid off (think home mortgage or any credit card debt). So yesterday when I was contacted by an insurance company representative with information on insurance policies I sat up and paid attention. As a quick review, here are some choices available to you:
Life Insurance Guide 2012   
Life insurance is a critical component of any financial plan and ensuring that you have the right kind of coverage is important. Without having the right kind of life insurance, you cannot be sure that your family will be taken care of if you pass away unexpectedly. When engaging in financial planning, keep these life insurance tips in mind.

Decide if You Want Cash Value 
 
When you're in the market for a new life insurance policy, you have to determine whether you want your policy to have a cash value. Term life insurance only provides a death benefit for a specific number of years. By comparison, whole life insurance gives you a death benefit and a growing cash value.

Some people do not want a cash value and would rather save money on premiums. Instead of paying extra money to get a cash value, you could just as easily invest that money on your own and earn more money over time. However, if you are not disciplined enough to make yourself set aside money every month, using a whole life insurance policy can be a decent investment.

Get Enough Coverage 
 
When it comes to choosing a life insurance policy, you also have to make sure that you have enough coverage. Many people who buy life insurance policies are under-insured and do not have enough coverage to adequately protect their families. You need to at least have enough money to pay off all of your outstanding debts and provide your family with a little cash. For example, if you have a mortgage, student loans, credit cards and an auto loan, add up all of the debts that you have. Then add an amount on top of the debt so that your family will have enough money to pay your final expenses and have some left over. The face value of the policy is ultimately the amount that your beneficiary will receive when you pass away.

Company Quality
When choosing a life insurance policy, you should also look at the quality of the company that is offering it to you. Try to find a company that is reputable in the industry and has a good history of paying claims. If an insurance company goes out of business, it will not be able to honor your life insurance policy. Make sure that you choose one of the best insurance companies in the industry to work with.
Decide if You Want Cash Value   
When you're in the market for a new life insurance policy, you have to determine whether you want your policy to have a cash value. Term life insurance only provides a death benefit for a specific number of years. By comparison, whole life insurance gives you a death benefit and a growing cash value.  
Some people do not want a cash value and would rather save money on premiums. Instead of paying extra money to get a cash value, you could just as easily invest that money on your own and earn more money over time. However, if you are not disciplined enough to make yourself set aside money every month, using a whole life insurance policy can be a decent investment.  
Get Enough Coverage
When it comes to choosing a life insurance policy, you also have to make sure that you have enough coverage. Many people who buy life insurance policies are under-insured and do not have enough coverage to adequately protect their families. You need to at least have enough money to pay off all of your outstanding debts and provide your family with a little cash. For example, if you have a mortgage, student loans, credit cards and an auto loan, add up all of the debts that you have. Then add an amount on top of the debt so that your family will have enough money to pay your final expenses and have some left over. The face value of the policy is ultimately the amount that your beneficiary will receive when you pass away. 
Company Quality 
When choosing a life insurance policy, you should also look at the quality of the company that is offering it to you. Try to find a company that is reputable in the industry and has a good history of paying claims. If an insurance company goes out of business, it will not be able to honor your life insurance policy. Make sure that you choose one of the best insurance companies in the industry to work with.
The information was a reminder that taking care of business when it comes to our financial planning and life insurance is more important than ever.  Just remember, even though you are financially able to live the life style you are living now, your children could lose a great deal if your insurance does not cover the mortgage payment at your death.  We are all well aware that getting property sold can be a problem.  As for the credit card company I don't even want to go there.

FYI

b

3 comments:

  1. Interesting topic which we were just discussing a week ago. We decided to keep our renewable term life insurance policies in force as the payout would replenish funds spent on long term care or end of life care as we don't have long term care insurance. However, I don't believe your heirs are responsible for debts such as credit cards unless they are listed on the account. You might want to check into that if it is a reason for you to buy insurance.

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  2. Cheap is certainly not a bargain when it comes to insurance. Sometimes it is worth spending a little bit more to ensure you get the best protection rather than which is the cheapest.

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