Term Life
Insurance Is A Great Buy
With
the introduction of new term life insurance products, deciding where
to find the
cheapest rates is only part of the solution to finding the best deal on
life insurance.
Lets
begin with need. How much insurance should you buy? Consultants generally
advise between five and seven times your gross salary. But that's
only a guideline. The best way is to estimate your survivors expenses
if you die.
You'll want to make sure that there's enough money to pay any debts and
burial expenses.
Don't
over insure. Many younger people without children need very little insurance.
Older couples may need just enough coverage
to pay for final expenses and provide their surviving spouse with enough
money so that they can avoid major financial decisions for the rest of
their lives.
Cost of Long Term Care Insurance
A
real quick way to determine the amount of coverage you need is to total up
the expenses that your family will have after you're gone. First, the one
time expenses at death and then the ongoing ones. Take the ongoing expenses
and divide by .07. What that says is that you'll want a lump sum of money
earning about 7% each year to pay those annual expenses. Add to that lump
sum the amount you'll need to cover the one time expenses. The total should
approximate the amount of life insurance you need.
A
simpler method is to add your mortgage debt, all other debts so that
everything is free and clear. To that add a lump sum which, if invested
at say 5%, will produce sufficient income to keep you spouse and family
going.
Single
Term Insurance
Many
people favor term insurance. After all
it is cheaper. But as you get older you'll probably want to
consider
'permanent insurance'. With this type of insurance, as long as you continue
to pay the premiums you'll have coverage no matter what your health condition.
Other
Types of Life Insurance
Permanent
insurance goes by a variety of names. Basically, they're all variations on
the same policy. One of the most common is called 'whole life'. Here you'll
pay a consistent premium for the rest of your life. The premium is split
into two parts. One part actually pays for the life insurance for that year.
The other part is invested in the early years and can be used to pay your
premium in later years.
In
some policies you'll be given a choice of where to invest the money.
Youll sometimes
be able to choose either a fixed rate investment
or a stock mutual fund.
You'll
find no lack of variety available. The choices are almost endless. One popular
option allows you to 'borrow' the accumulated investment from the policy.
This can come in handy for college tuition or other major known expenses
where it's nice to begin saving a little bit on a regular basis.
Selecting
an insurance company can also be challenging. According to industry sources
there are over 2,000 companies that sell life insurance in the United States
and Canada. Prices vary significantly. I ran a comparison of a 10 year renewable
term for myself and found rates from $535 to $3,814 for a yearly premium!
But
there's more than price to consider. Make sure you select a company with
a high rating. But see
what term life insurance will cost.
When
you get right down to it there's only three good things to say about shopping
for life insurance. First, it's available to cover our needs. Second, we
can select a plan that meets our needs. And finally, it's not something that
you have to buy each year!
Back
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Ivon T. Hughes, The Hughes Trustco Group Ltd.
Online Insurance Broker - Get a FREE Quote TODAY!
Tel: (514) 842-9001 Email: info@trustco.ca Web: http://www.trustco.ca
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