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Insurance Options

No one really likes to pay for insurance, but insurance coverage is a necessity if you wish to protect the assets you've worked so hard to accumulate.

Why buy life insurance?
No one likes to contemplate their own mortality, but if you die tomorrow, those close to you will be dealing with an emotional nightmare. You can't control that, but you do have the power to help them avoid a concurrent financial disaster.

Do you need life insurance? If someone is dependent upon you, obtaining proper insurance coverage is a responsible and unselfish act. Your children, spouse, partner, grandchildren, parents, and even your business partners might suffer financially from your death.

If you are single with no dependents and few debts, you may not need life insurance unless you wish to protect your insurability while in good health.

In addition to providing income to dependents, life insurance can provide money to pay the following expenses:

  • Funeral and other final expenses
  • Probate costs
  • Estate taxes
  • Debts and loans
  • Your child's college education

What type of coverage should you buy?
This is a very difficult question to answer. It is best to meet with a licensed financial advisor or insurance agent to help determine the best option for you and your family. Some of your choices include:

  • Term Insurance: Term is the cheapest and most common type of coverage. Unlike the other types that build cash values, term only pays off if you die. Premiums increase as you get older, becoming very expensive in your retirement years.
  • Whole Life: Most expensive, but guarantees that you won't outlive your coverage.
  • Universal Life: Flexible policy. You can adjust your premium and coverage over time. Interest rate paid by company changes annually.
  • Variable Universal Life: Like Universal Life, but values are invested in the stock market.

Other life insurance questions
There are many considerations to make prior to buying life insurance. Here are some other questions to think about, but be sure to consult a qualified financial advisor or insurance agent if you need help:

  • How much do I need? Some financial advisors recommend three to five times your annual income, but it is ultimately up to you to determine what amount makes sense.
  • Who should be my beneficiary? It could be your spouse, your children, or another family member. Be sure to think this through before naming anyone.
  • Who should own the policy? If you're insuring your own life, then you would typically be the owner. But
  • How stable is the insurance company? You should only buy insurance from a reputable, highly rated company. There are several rating services - BEST, Standard and Poor's, Moody's, Duff and Phelps and Weiss - that rank a company's stability.
  • Should I deal with an agent or buy over the Internet? This is a personal question. If you feel you are knowledgeable enough to answer all the above questions with certainty, then you may be ready to buy it on your own. If not, then consider meeting with an agent to get more information before making any decisions.

Auto and home insurance These are types of insurance that you should own if you own or drive a car, own or rent a home.

  • Auto Insurance. For legal and moral reasons, you shouldn't drive a vehicle unless you have auto coverage. In addition to protecting you against lawsuits resulting from accidents, it can pay for repairs to your vehicle, medical bills and damage by uninsured motorists.
  • Home Owner's and Renter's Insurance. Homeowner's insurance provides property coverage for your home's structure and its contents. It also provides liability coverage for accidents on your property. Renter's coverage is needed to protect your possessions and provide liability coverage.



 

 

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