Basic Life Insurance

For example, let’s say that you contribute $50,000 in a year of income to your household. This means that in the case of sudden death, your household will feel the loss of finances in that year and in the next years to come. So to decide the right amount of coverage for this situation, you should decide how many years does your family need to recover from the financial impact of your loss.

Assuming that you feel that in 10 years, your household can already cope up with the loss of your income, so you need to multiply 10 by $50,000 to arrive at $500,000 which should be your adequate life insurance amount.

Once you established that you really need life insurance coverage, it is best to determine the amount of coverage as the next step. This is critically important because the higher your coverage, the higher your premium will be. If you want to get an adequate amount of coverage, you have to estimate the death benefit that your family needs based on a good guide.

Depending on whom you ask; the methods to determine the appropriate death benefit varies. Usually, experts recommend that 8-10 times of the yearly income should be required to replace the insured’s income in case of death.

If you fail to plan your life insurance policy carefully, your beneficiaries might end up in court or there might be problems and they will not benefit from the policy you have. There are basic questions that you need to answer, such as:
• Do you really need a life insurance?
• How much coverage do you need?
• How long do you need your coverage?
• What kind of life insurance policy do you need?
• Who should benefit from your policy?
• How will the benefit be distributed among your heirs?

How you answer these questions will determine the amount of premiums that you pay and how successful your life insurance plan will be in relation to your goal.

Before signing a certain contract, the company already discusses the possible consequences if you can’t pay your life insurance premium. It depends on the type of policy you have.If unexpected expenses come up and you can’t pay your life insurance premium, you should know the possible consequences. The effect depends on the type of policy and coverage you have and the policy terms and conditions. If you choose “term” from the time you stop paying your coverage lapses. While when you choose “permanent” you have 3 choices. The first one is the cash out policy where in you can stop paying the premium and collect all the available cash savings but no longer covered by life insurance. The other one is non-forfeiture which means you can completely stop paying premiums in return for a reduced death benefit and no cash saving. Last is policy will lapse. If this happened, see if policy can be reinstated.

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If you are age 60 or older and currently have a Life Insurance Policy in force, you may have questioned if you are truly getting the best policy for your money. Do you have the highest death benefit available? Are you paying the lowest cost in premiums available? Are there any available financing options you should be aware of? When you purchased the policy, were the proper array of carriers and products presented – tailored to you, and even if so, have your circumstances since then changed? A recent study concluded that up to 70% of the currently in-force permanent (Universal, Whole, or Term with conversion options) Life Insurance policies for people over 60 years of age are woefully insufficient, given changes in the health since the issuance of the policy. The bottom line is that health does change, circumstances do change, needs change, and in fact the available product lines and pricing changes as well over time. A comprehensive analysis can be an invaluable undertaking for those who wish to be fully protected and optimize their coverage, maximizing benefit and minimizing premiums. A review by licensed professionals from a reputable non-partisan firm can yield amazing results, and is generally thought of as well worth the minimal time invested.

Insurance fraud is real. There are criminals who will cheat you and take your money, after having made you believe that you are sufficiently covered in the event of disaster. Insurance frauds range from fake policies sold by unlicensed companies; premium fraud where the broker keeps the money paid by the policy holder instead of passing it on to the insurance company; unlicensed agents who will urge you to buy more coverage than you need, thus, adding to the cost of your premiums; lastly, there are the insurance scams perpetuated by criminals who stage accidents in order to weasel money out of unsuspecting policy holders. Always check an agent or company’s credentials before you do business with them. Be wary of any insurance scheme which you feel may be targeting you; a smart costumer is a safe costumer.

In buying life insurance, it pays to be inquisitive. Don’t be shy about asking questions, wanting to know as much as possible about your policy is a mark of a smart customer. Here are some questions you may need to ask your insurance agent or company:
• When would my first premium payment be?
• How would being a smoker affect my premiums?
• How would changes in health affect my policy?
• Do the premiums or benefits change annually?
• Will my policy change or be cancelled in the event of disability?
• What are the things I should know if I want to change policies?

Before your application for life insurance is approved, insurance companies will require you to undergo a medical exam, mainly to determine which health class you belong to and in turn, this will be an important factor on what your premiums will cost. Below are some tips on how to ace that medical exam:

* Sleep well before the exam.
* Refrain from caffeine intake for at least an hour before you undergo the medical exam.
* Avoid heavy exercise a full day before the exam.
* Lessen your consumption of cholesterol-loaded and salty foods 24 hours before you take the exam.
* If you can, do not eat anything for at least 8 hours for more accurate results.
* DO NOT drink alcoholic beverages and smoke for about 8hours before the medical exam.
* Reschedule the exam if you have even the slightest hint of illness, as this will adversely affect the results.

Here are other ways with which you can save when shopping around for the right life insurance policy for you:

* For those in good health, avoid guaranteed issue policies, which do not require a medical exam. If you are in a good state of health, policies which require you to take medical exams are the way to go, as they will usually give you lower premiums based on your health.
* Buy only the insurance you need. Don’t skimp on your premiums as they will ultimately leave you hanging; don’t overspend on your policy either; you will eventually end up paying more than you have to.
* Purchase life insurance when you’re younger, as the premiums generally increase relative to your age.
* Watch your payment schedules, as insurance companies tend to lower your premiums depending on how you schedule your payments.

Yes, that’s true; there are actually a number of ways to save money when you buy your life insurance. The trick is to know the market and to familiarize yourself with what you’re buying. Here are some tips for the cash-savvy customer:

* If your reason in purchasing life insurance is for short-term goals only, then you might look into buying term life insurance. This type gives you the good coverage for the least amount of premiums.
* Keep an eye out for no-load policies on variable life insurance. These policies typically have less additional fees, which means that most of your payments will be transferred directly to your premium.