Friday, August 14, 2009

Update August 14, 2009 All About Life Insurance and Financial Planning By Insurance Experts

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Step 1 Establish Goals
Step 2 Gather Data
Step 3 Analyze & Evaluate Your Financial Status
Step 4 Develop a Plan
Step 5 Implement the Plan
Step 6 Monitor the Plan & Make Necessary Adjustments

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Life Insurance Basics: Getting Started
By Megan Mahan Platinum Quality Author

Let’s be honest. The topic of life insurance isn’t exciting or glamorous, but it is important. In fact, many experts consider life insurance to be the cornerstone of good financial planning.

But how do you know if you need life insurance? How much is enough? What kind of life insurance policy is best for you?

Answering these basic questions about life insurance will help to simplify the shopping process and ultimately allow you to select the best policy to secure your family’s future for years to come.

Establishing Your Needs

To clear up any misconceptions, life insurance is designed to protect your loved ones from financial loss in the event of your death. Knowing this, it’s important to establish whether you need life insurance and how much you should purchase.

According to MetLife you generally need life insurance if:

  • You have a spouse
  • You have dependent children
  • Relatives or elderly parents depend on your income
  • Your retirement funds are not enough to provide for your spouse’s future
  • You own a business
  • You have a large estate

The beneficiaries of your life insurance policy can use the proceeds from your life insurance to:
  • Pay for last expenses and funeral costs
  • Cover estate taxes (if applicable)
  • Pay off existing debts (mortgage, car loan, credit card debt)
  • Pay for everyday expenses (food, clothing, childcare)
  • Put towards your spouse’s retirement fund
  • Donate to charity

If you don’t have dependents, you may still wish to purchase a life insurance policy to avoid becoming a financial burden to your loved ones in the untimely event of your death. Young singles also benefit from purchasing life insurance while they’re young and healthy, allowing them to secure a low premium for years to come.

Choosing a Dollar Amount

Figuring out how much life insurance your loved ones would need to maintain their quality of living can be tough. Generally speaking, experts recommend purchasing between 5 and 10 times your annual salary. But, as MetLife points out, your exact need for life insurance will depend on your personal and financial circumstances.

You can get a ballpark estimate of your life insurance needs by first totaling the funds your family would need for the abovementioned items (funeral costs, daily living, etc.). You can find helpful worksheets online that will help you organize and come up with this list of expenses.

After you’ve totaled your expenses, take stock of the funds you have in cash, savings, retirement accounts, bonds, property, pension and Social Security. Subtracting your financial resources from your expenses will give you a rough idea of how much life insurance you should purchase.

When it comes to choosing how much life insurance to purchase, it’s a good idea to get an idea of your needs before buying a policy—but your licensed life insurance professional will undoubtedly help you choose a dollar amount that accurately reflects the needs of your beneficiaries.

Selecting a Policy

Generally speaking, there are two types of life insurance: term life insurance and permanent life insurance. The type of policy you select will depend largely on your life insurance needs and what resources you have to pay life insurance premiums.

Term Life Insurance
Term life insurance, as the name suggests, will cover you for a specified amount of time, which means the insurer will only pay out a death benefit if you die during the term of your policy.

According to the Insurance Information Institute (I.I.I.), most people purchase a 20-year term policy, although smaller terms are available. Of course, you can renew your term life policy after it expires, although your premiums may increase as you age. But all in all, because of the “temporary” nature of term life insurance, policies are generally much cheaper and are therefore an attractive option for young people and families with a limited income.

Permanent Life Insurance
On the other hand, permanent life insurance, as you might have guessed, is permanent. A permanent life policy will pay out a death benefit whether you die tomorrow or in 60 years.

Permanent life insurance is also an appealing option for many because of the added benefit of the policy growing on a tax-deferred basis, which can grow to be fairly large over time. As a policyholder, you may be able to borrow against this cash value while alive, which has been of great help to some. Of course, most loans need to be paid back otherwise they will be subtracted from the death benefit, and your beneficiaries may have to liquidate assets to pay back the loan.

Nonetheless, permanent life insurance offers a wide variety of saving and investment options. Because of this, policies are generally more expensive than term policies, which may be hard for young adults to handle.

Your life insurance professional will help you decide which type of policy is best for your life insurance needs—and your budget. But researching these policy types beforehand can help you narrow down which policies appeal to you.

Knowledge is Power

No, learning about life insurance and planning for the unexpected isn’t glamorous, but it is important. So take advantage of consumer resources and talk to a life insurance professional about purchasing affordable life insurance. You’ll rest easier at night knowing your loved ones are taken care of for years to come!

About InsureMe

Megan L. Mahan is a copywriter and insurance information expert with InsureMe in Englewood, Colorado. InsureMe links agents nationwide with consumers shopping for insurance. Specializing in auto, home, health, long-term care and life insurance quotes, the InsureMe network provides thousands of agents with insurance leads every year. For more information, visit InsureMe.com.

Lowest Term Life Insurance
By Emily E

When you look for life insurance, what are you searching for? Do you decide because of price, quality, or a combination? In today's economy, many people want the lowest term insurance policy is available. Luckily, you won't need to sacrifice quality for the best price. With term life insurance, you get the best of both worlds.

With term life insurance, you get the same face amount as a whole insurance policy, but for a much lower price. The lower price is possible because the policy will expire in the future, and there won't be any cash value that can be taken advantage of.

Many smart shoppers will use the money they save by getting life term insurance as their bright future and put it in an IRA or securities. The money that accumulates in the accounts will often be greater than the cash value that would build up in a whole life term insurance account. The policy holder often has the choice of not renewing their policy at all.

Don't just take the lowest price for life term insurance policy. Do your homework. Look at customer reviews and ratings before you decide. This is a vital product for the future of your family. They need you to choose correctly, so take your time.

When you apply, answer every question honestly and completely. Don't get to the end and find you've been turned down by an underwriter. The time you invested in finding the lowest term life insurance will then have been wasted.

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