Why Life Insurance
You may know the distinct pride you get in purchasing your own home or car. Ownership can give a certain comfort, a certain satisfaction that your financial stability is solid, secure, and even permanent. Wouldn’t you like to feel that way about your family’s financial future – even if you weren’t around to provide for them? When you purchase life insurance, you select a plan that provides the right kind of protection for your family.
How much insurance do you need?
Special circumstances, such as preexisting medical conditions or tax-efficient estate planning, can significantly complicate the question of how much life insurance you need. The insurance industry has many different formulas. Let’s narrow it down to what you would need to replace your income if you, or your spouse died suddenly.
Some experts suggest buying life insurance equal to five times your yearly income. This assumes there is group life insurance from work for an amount equal to one year’s salary, and that the person who will get the life insurance payment is eligible for Social Security survivor benefits. If both husband and wife work, you should buy insurance for each of you. You need more insurance on the person with the highest income.
Using this rule, buy life insurance
|on your life||(5 X $35,000) $175,000|
|on your spouse’s life||(5 X $60,000) $300,000|
Research the different types of policies available. There are many different types of products available to meet different needs. The two most common types of life insurance are Whole Life and Term Life.
Whole Life is permanent coverage designed for people who know their life insurance needs will not change or who want to build an investment for future funds. This type of plan offers level premiums that are based on the policyholder’s age when the policy is issued (issue age). Some policies offer a paid-up option after a specified period of time, such as 10, 15, or 20 years, which means premiums cease but coverage continues for life. Whole Life insurance also builds cash value.
Term Life insurance provides coverage for a specific period of time, such as one, five, or 10 years. After that period, coverage is terminated unless renewed for another term. Unlike Whole Life coverage, Term Life builds no cash value. However, Term Life insurance generally provides a larger amount of immediate coverage for lower initial premiums. Rate increases occur upon the term renewal. This type of insurance is ideal for those requiring temporary or supplemental coverage or need large amounts of coverage but have budget restrictions.
Do cost and company comparisons. Just as there are many different types of products available, many different companies are selling them for different prices. The cheapest policy is not always the best. Look for a financially sound company with top ratings from independent industry rating services. Also look at how premiums will change with age or on term renewal periods. A trusted Agent can do much of this legwork for you and provide you with personalized comparisons based on your needs and budget, as well as answer any questions you might have.
Per Wikipedia: ” Independent insurance agents, also known as insurance sales agents or “producers”, typically sell a variety of insurance and financial products, life insurance, health insurance, disability, and long term care insurance.
Independent insurance agents typically represent a number of insurance companies, or “carriers”, and sell the products that most appropriately meet the needs of their clients. Independent agents typically are very well trained and knowledgeable of the complexities of the insurance market and insurance law. Their expertise allows them to advise their clients about appropriate amounts of insurance and insurance coverages for their particular needs. Oftentimes, independent insurance agents will work with insurance intermediaries, which obtains quotes from multiple insurance providers and passes them off to the independent agent. Working with an insurance intermediary service allows the independent agent to review many quotes and offer their clients the best policy options available.”
Mystic Shore Insurance is staffed with Independent insurance agents, or producers, so we are able to consult several carriers rather than being obligated to just one.