How to save on travel insurance

As life expectancy increases, so has the age at which 'life begins' – with many people supporting the idea that 'life begins at 50'. Unfortunately, travel insurance companies disagree. Or at least that is how it seems, considering how rapidly premiums rocket for those who are 50 or over. And as for those who are over 70, many "are shocked to find travel insurers unwilling to provide cover at prices they can afford", says Kara Gammell in The Daily Telegraph. So how do you find affordable travel insurance that won't leave you high and dry if you fall ill on holiday?

Consumers need to think of travel insurance as something they should tailor to their own needs, rather than an off-the-shelf product, says The Daily Telegraph. So one of the simplest ways of reducing the premium is to look carefully at the level of cover you are being offered and then decide whether you actually need it all within the policy. For example, if you are travelling to Europe, opt for European cover rather than worldwide cover, as the latter includes America, where litigation and medical costs can push up the cost of cover. Also, consider covering personal possessions under your home insurance – and, as always, shop around for the best deal.

Eat your greens. Food inflation is forcing the weekly shopping bill to new heights, but broccoli is proving the exception, says The Guardian. It is one of the few vegetables that is falling in price, due to plentiful current supplies. The average price is now £1.38 per kilo – down 27% from this time last year. So stock up on broccoli. But forget the cheese sauce. Cheddar prices rose 10% last week alone, according to The Grocer.

Choose your pets carefully. A Great Dane will cost its owner an average of £669.64 in damages over a lifetime, says eSure, and small dogs aren't much better. Chihuahuas cause an average carnage bill of £638.41 during their lives. Add in medical bills and food, and dogs are expensive members of the family. But there are ways to cut the costs.

Save on vet's bills. If you haven't bought a dog yet, then opt for a mongrel. "They tend to be less prone to disease and cheaper to insure," says Ali Taylor from Battersea Dogs & Cats Home in The Independent on Sunday. What if you already have a pet? You could consider pet insurance to cover emergency vet bills, but do shop around and check the small print carefully: pet insurance is notorious for exclusions based on age and other factors. A better route is prevention – take your dog for regular walks and cut back on the treats. A healthy, fit canine is far less likely to get ill than a fat one.

Save money on clothes. You can currently get 30% off at Gap. Just go to moneysavingexpert.com, fill in the form and you can print off a voucher giving you 30% off in Gap until Sunday 28 September.

By Staff Writer Ruth Jackson Sep 19, 2008


The Hunt For A Missing Life Insurance Policy

Uh-oh! You're the beneficiary of a relative who just died, but their policy is nowhere to be found! What do you do? Well, don't panic, because if you find it in the near future, you may still be able to claim the death benefit. Here's what to do if a life insurance policy is missing:

  1. Look through canceled checks or go to the relative's bank and request copies of any old checks. When reviewing the checks, see if there are any made out to life insurance companies.
  2. Ask your relative's lawyer, insurance agent or accountant and see what information they can give you on your relative's finances.
  3. Call their old employers and see if they bought into the company's group life insurance.
  4. Call the Medical Information Bureau (MIB)-an organization that maintains a database showing if insurers requested your relative's medical information. If your relative applied for a life insurance policy within the past seven years, the MIB will more than likely have some kind of paper trail to help you find it.

Naming a beneficiary
If you are making someone your beneficiary, here are a couple of things you will want to do:

  1. Be sure to provide your beneficiary with your life insurance policy details, such as policy number, insurance agent's name, company phone number and email address.
  2. Keep your records together. To make it easier on your beneficiary, be sure to keep all of your records (financial and medical) together in one place. This will help alleviate any panic or stress if your beneficiary needs to find something after you have passed.

Different kinds of policies

  • Term policy—If your relative had a term life insurance policy, and they died during the term and paid their premiums, the named beneficiary will receive their death benefits. If they died outside of the term or failed to pay their premiums, you won't receive anything.
  • Permanent policy—If the policy was in force at the time of death, the named beneficiary will receive the death benefits. If the relative died a while ago, the beneficiary is entitled to the death benefits plus the interest accrued from the date of death.
  • Lapsed policy—If your relative had a permanent life insurance policy and they stopped making payments and the policy lapsed, the insurance company could switch its status to one of the non-forfeiture options selected at purchase or specified in the policy. These options include extended term, reduced paid-up, cash surrender value, and loan value. In most cases, laws specify that there are certain amounts that must be returned to a policyholder or beneficiary even if premiums were not fully paid.

Lapsed Policy Non-forfeiture Options

  • Extended term uses any built up cash value to buy a term life insurance policy in the amount of the current policy. If the insured dies before the term ends, the beneficiary collects the benefit. Otherwise, the beneficiary gets nothing.
  • Reduced paid-up means that the life insurance company uses the cash value of the policy to buy as much insurance as possible. This reduces the death benefits, but keeps the policy in force.
  • Cash surrender value refers to the amount of cash value a policy has. This amount is returned to the policyholder or beneficiary and the policy is canceled.
  • Loan value is the amount of the policy's cash value available as a loan. This amount will be returned to the policyholder or beneficiary and the policy will be cancelled.

If the policy lapses due to the death of the insured, the beneficiary will collect the full death benefit. Also, there is no time limit on when the beneficiary can collect the death benefit. The only requirement is that the death certificate is presented to the life insurance company to verify the insured's death. If the beneficiary never comes forward, then no one receives the money.

Unreported death
If the policyholder dies and the insurance company isn't informed, the policy will lapse. In this case, the life insurance company will send letters informing the insured that payment was not received and their policy may lapse if this continues. If there is still no response, the insurance company may initiate a search, but if no answer is found, the policy will automatically lapse due to delinquency of payment.

Unclaimed death benefits: are they gone forever?
If a beneficiary doesn't collect death benefits, and the life insurance company can't find the beneficiary after a few years, the money is transferred back to the state where the life insurance policy was originally purchased. The full amount must be turned over to the state comptroller department within three to five years of the insured death. There, it is put into a bank account and considered "unclaimed property."

A database with the names and addresses of lost beneficiaries is located at the state comptroller's office, and many times, they try to find the beneficiaries to distribute the death benefits to. Depending on your state, you may be able to go online, look in the paper for any unclaimed death benefits, or call the state comptroller or treasurer for information.

It should be noted that if the life insurance company doesn't know the insured has died, they are not required to turn the money over to the state. If the state doesn't have a death benefits law in place, then the money will remain at the insurance company and they can continue to search for the beneficiary. Also, it is very rare for money to be turned over to the state, because most insurance companies have their own search techniques to find beneficiaries.


10+ Tips to Help You Save on Car Insurance

Most people complain about the cost of their auto insurance--hardly surprising, given that a typical policy costs at least several hundred dollars a year. Depending on your age, driving record, and other factors, your annual premium can be significantly more than that. So how can you lower your premium and save yourself money?

If you own a car and drive it, going without insurance is generally not an option. In most states, you are required by law to purchase a minimum amount of liability coverage. And you should probably have more than just the bare minimum if you want to provide yourself with adequate protection. There are steps you can take, however, to reduce your auto insurance costs without having to cancel your policy. Some or all of these steps may be appropriate for you, depending on your circumstances.

Specific ways to save money on auto insurance:

1. Shop around.
One of your first steps should be to shop around. A particularly good time to investigate your alternatives is when your current policy is about to be up for renewal, especially if you find that your premium has gone up. You may be surprised to learn that auto insurance premiums for the exact same coverage on the same car can vary widely (by hundreds of dollars) between different insurers, even in states that regulate auto insurance rates.

2. Increase your deductible.
For many people, raising the deductible on their auto insurance is a good way to cut the cost of the policy. Sometimes you can reduce your annual premium by 10 percent or more if you increase your deductible from, say, $250 to $500. If you do this, however, make sure you have the financial resources to handle the larger deductible when the time comes.

3. Keep an eye on your credit report.
Your credit history is an important factor for most auto insurance companies. Many studies have shown a correlation between your credit history and the risk to an insurance company. Paying your bills on time and maintaining a good credit history will allow you to enjoy lower auto insurance rates.

4. Drive less.
If you drive less than a certain number of miles in a year (e.g., 7,500), you may qualify for a low-mileage discount. If your insurer offers this discount, try to limit your driving as much as possible. If you commute to work, use public transportation instead of driving. When you go away on vacation, fly or take the train.

5. Don't use your car for business purposes.
Since work-related driving generally subjects you to higher premiums than pleasure driving, it may be in your best interest to stop using your car for business purposes.

6. Drive more safely.
You may be eligible for a price break on your policy if you maintain a clean driving record for a specified period (usually three years). A clean driving record generally means no accidents, moving violations, drunk driving convictions, etc., during that period. The best way to qualify for the applicable discount is to drive carefully and defensively at all times.

7. Buy a low-profile car.
Cars are rated on a risk scale for auto insurance purposes. In general, sports cars and other high-performance, flashy vehicles are classified as higher risks because they are common targets for thieves and vandals, and because statistically, the people who own them tend to drive more recklessly. If you own such a vehicle, you will likely pay a higher premium than if you owned a station wagon, sedan, or other low-risk vehicle.

8. Move.
If you live in a rural community with little crime and traffic congestion, your premium will generally be lower than if you live in an urban area where your car is more likely to be stolen, vandalized, or involved in an accident. Granted, you shouldn't move just to cut your auto insurance costs. However, this may be one of many factors in your decision if you're thinking about relocating from the country to the city.

9. Keep your car in a garage.
Cars parked in garages are less likely to be stolen, vandalized, or struck by other vehicles. Using a garage to store your car may entitle you to a slight premium reduction.

10. Have safety/anti-theft devices installed.
You may receive discounts on your insurance if your car is equipped with one or more of the following options: anti-lock brakes, automatic seat belts, and airbags. Similarly, anti-theft devices such as car alarms and tracking systems (e.g., Lojack) may also get you a discount because they reduce the chances of your car being stolen or vandalized.

11. Inquire about multifamily/multipolicy discounts.
You may receive a discount from your insurance company if you buy more than one type of insurance through that same company (e.g., auto and homeowner's). A discount may also apply to your auto insurance if you insure multiple cars under the same policy or with the same company.

12. Other discounts
Other discounts may be available if you meet certain criteria. Examples may include discounts for taking a defensive driving course, being a AAA member or staying with the same auto insurance company for a number of years. These discounts vary by company.

Your Auto Insurer Knows Plenty about You

Your auto insurance company probably has a lot of your personal information, and that`s not necessarily a bad thing. For instance, auto insurers get a hold of your driving record, credit history, and other info to use in making decisions such as whether to cover your vehicles and how much to charge you for coverage.

Many insurers use credit information to determine your insurance risk score. You`ll likely pay less for car insurance if you have a good credit score, a history of paying bills on time and no bad debt. Insurers see a direct relationship between your insurance risk score and the chances of you filing a claim. Conversely, an insurance applicant who has a history of being late on bill payments and who often opens and closes savings or credit accounts wouldn`t be as good an insurance risk.

You won`t be able to obtain your insurance risk score, but you can assume that it`s comparable to your credit score.

Providing insights on credit scoring/rating are insurance industry experts Carolyn Gorman, Dick Luedke, Nichole Mahrt and Dave Snyder. Your credit rating may affect what you pay for auto insurance, so keep tabs on it, recommends Gorman, vice president of the New York-based Insurance Information Institute. Gorman believes that credit makes auto insurance rates more accurate, fair and objective. The use of insurance scoring varies from state to state and company to company, says Gorman, but the insurance industry believes that drivers with long, stable credit records have fewer accidents than drivers who don't.

Gorman says that there are various Internet services that permit consumers to check their credit rating and offer suggestions on how to improve their scores.

"Motor vehicle records are invaluable to a company in the assessment of auto insurance risk, and to the extent they are not accurate, we are unable to assess that risk as well as we might otherwise be able to," says State Farm spokesperson Dick Luedke.

Credit scoring is another tool that enables insurers to estimate risk, according to Nicole Mahrt, western regional public affairs director for the American Insurance Association. "It helps them accurately price the product for you so that you pay a premium that reflects your individual risk characteristics."

Mahrt`s AIA colleague, Dave Snyder traveled a different road on the topic. "Because driving experience is so important as a predictor of insurance risk, insurers try to gather as much pertinent information as they can about the drivers, and that would include state motor vehicle records and related data from other sources."

Word of warning from insurance trade group executive Daniel Kummer. "You could end up with legal difficulties or get in trouble with your auto insurer by leaving citations or convictions off an insurance application. Doing that could make you vulnerable to fraud charges. And misrepresenting your driving record on your insurance application by leaving out reference to citations for DUI or other moving violations could give the insurance company grounds to cancel your policy," warns Kummer, director of auto insurance for the Property Casualty Insurers Association of America in Des Plaines, Ill. "And if you make such an omission in your application, you might get caught by the insurer, and it`s likely your rates will go up as a result."


Home Insurance Tips

Getting quality insurance is a good first step towards protecting your home. But ultimately, the best protection is prevention. There are steps that you can take to help you avoid ever having to make a home insurance claim - the following home insurance tips can get you started.

1. Safeguard your home

Take action to make your home theft-resistant. "Case" your home as if you were a burglar.

Burglars look for easy targets - make sure your home isn't one of them.
  • Install exterior lights that are out of reach and triggered by motion.
  • Trim trees and shrubs near doors and windows.
  • Don't hide house keys outside - burglars know where to look.
  • Consider investing in a security system. Not only does this make your home safer, it can lower your home insurance premiums.
When you're on vacation:
  • Have mail and newspapers picked up.
  • Leave blinds in normal positions.
  • Arrange to have your lawn mowed or your driveway shoveled.
  • Tell police and neighbors that you will be away and ask them to watch your home.

2. Be a responsible dog owner

The numbers speak for themselves: According to the Center for Disease Control and Prevention, 40% of Americans homes have a dog. There are 4 million dog bites per year, and dog bites create 33% of all homeowners liability claims - resulting in more than $1 billion in claims per year. Consider these tips to avoid having a claim brought against you:

  • Pick a dog breed that's covered by your home insurance. Ask your insurance agent for details.
  • Have your dog spayed or neutered.
  • Train your dog.
  • Keep your dog on a leash when walking.

3. Protect your home business

Home businesses are generally not covered under your home insurance policy. You may have only limited property coverage and no liability coverage for your business under your homeowners policy. Research the coverage that you have for property and equipment damage or theft, loss of income, and general liability for customer and supplier injuries.

4. Cover your domestic help

Check with your state Department of Insurance regarding whether you need a workers' compensation policy for your housekeeper, gardener, nanny, cook, or other domestic employees. In addition, if someone else occasionally runs errands for you and drives your car, have that driver listed on your auto insurance. Confirm that you have adequate liability and medical coverage on your home insurance policy. Consider purchasing a personal umbrella policy.

5. Review your coverage annually

Your home insurance should reflect your home's current value, condition and improvements. Check your policy each year and review your specific coverages so that you will be able to make the necessary adjustments to fully protect your home.

Auto Insurance Buying Tips

Consolidate Insurance Policies

Insuring two or more vehicles with the same insurance company can save you between 10 - 15% on your premiums. Covering your home through the same company that you have auto insurance with can reduce your premiums by another 10-15%.

Increase Your Deductible

One rule of thumb is to carry the highest deductible you can afford. By increasing your deductible from $100 to $1,000, you could save up to 25%. Keep in mind, though, that your lender might not agree to a higher deductible.

Install Anti-Theft And Safety Devices

Installing a vehicle recovery system such as Lo-Jack or Teletracer could save you up to 7-10% per year. There are other relatively inexpensive anti-theft devices such as "The Club", which locks the steering wheel in place, as well as having your Vehicle Identification Number (VIN) etched on each window.

Safety features such as air bags, traction control and anti-lock braking systems (ABS) are viewed positively by insurance companies which, in turn, is reflected in your premiums. Although these systems may not reduce injury during an accident, they will reduce your premiums.

Clean Driving Record And Safety Courses

While traffic tickets and auto accidents will increase your premiums, most insurance companies offer discounts to drivers with clean records. Also, some insurance companies will offer a discount if you attend a Driver Training School Program, and your employer might even pay the cost if you use a company vehicle for your job. Training school discounts may vary between 7-10%.

Reduce Coverage On Older Vehicles

If you have an older car worth between $1,000 - $2,000, you might be better off dropping the collision coverage. Check to see if your collision premium is more than the value of the car.

Non-Smoker Or Early Retiree Discounts

Yes, some companies provide discounts for Non-smokers and Early Retirees. Insurers consider smoking a dangerous driving activity.

Park In A Garage

Sometimes the difference between getting auto insurance and going uninsured is where you keep your vehicle at night. Most thefts do not involve a garaged car and this is reflected in premium discounts. If you have a winter home with no garage, try putting the vehicle in storage. Let your insurance company know that your car is in storage, and you could receive a partial premium reduction.

Carpool With A Co-Worker

Most insurers surcharge premiums if the commute to work exceeds 3 miles. Carpooling with a co-worker may result in a discount for low-mileage use.

Drive A Conservative Car

Before buying a car you might want to find out how much your insurance will cost annually. Insurance companies consider certain cars easily damaged and expensive to repair, and other cars the target of thieves. You could end up paying a premium surcharge between 10 - 20%. The National Highway Traffic Safety Administration (NHTSA) has established the Auto Safety Hotline at 1-800-424-9393 to report safety defects or to obtain information on cars, trucks, child seats, highway or traffic safety. The Insurance Institute for Highway Safety provides information on death rates by car make and model as well as the standard safety equipment available. The Institute can be reached at 703-247-1500.

Teenage And College Bound Drivers

You may want to consider letting your teenager drive the family car instead of buying his/her own vehicle. This will very likely lower your cost to cover them. Students in school and living away from home can reduce their premiums by 30 - 50%, depending on the insurer.


After reviewing all of the savings tips, you may have determined that if you added up all your credits you could receive a 70 - 90% reduction in your premium. Well, unfortunately it doesn't work like that. Certain measures that you take may qualify you for being placed with the "preferred" company of a particular insurance group. This "preferred" company will be able to give you additional premium credits.

Changing Auto Insurance Companies May be Easier Than you Think!

There are many reasons why you may choose to change your auto insurance coverage to another company. Perhaps you’ve found another company that offers you the same amount of coverage for considerably less money. You might have changed jobs and are eligible for a group discount through another insurer, or maybe you’re unhappy with the service that your present company provides. With the growth of the internet and quote comparison sites, investigating your options has never been easier!

Why change to a new Auto insurance carrier?

You need to regularly review your auto insurance coverage to make sure that you are receiving the best insurance value for your money. You will discover that it pays to shop around. In some states, premiums for identical policies vary widely among different auto insurance companies. The reasons for this price variation can be very complicated, but they boil down to a company's claims experience with policyholders in a coverage group (e.g. people of similar age, number of accidents, type of vehicle). For example, if a large number of people in a coverage group files claims during a given year, their rates will likely rise. When this happens, better discounts and lower overall premiums may be available at other insurance companies. When you decide to switch your auto insurance to another company, you’ll find that it's fairly easy to do so.

How to cancel your old Auto Insurance policy

Generally, all you need to do to cancel your auto insurance policy is to inform your insurance company in writing, specifying the date you want the policy canceled. In some states, the new agent must notify the previous agent of the policy change. Some auto insurance companies ask the policyholder send back the actual printed policy. The insurance company will send a cancellation request form that will need to be signed and returned. Examine the form carefully to make sure that all information regarding the policy is correct. If the form is not received within two weeks of sending the letter, call the agent or company immediately to check on the status of the cancellation. Don't just walk away from the old policy without formally canceling it. Each state requires that auto Insurance policies be cancelled with notice, thus the insurance company might assume one wished to continue the coverage, and it might eventually terminate the policy for failure to pay premiums and report the lack of coverage to the state Department of Motor Vehicles. This can hurt your credit rating and ability to get a new policy.

Be sure to get a new Auto Insurance policy first

Always have a new policy in place before canceling the old auto insurance coverage. Otherwise you might have a gap in protection for a day or more! Most states require all drivers to carry a minimum level of auto insurance and most insurance companies require policyholders to present proof of new coverage before they will cancel an active policy. The new company will be able to time the beginning of the new policy to coincide with the cancellation of the prior coverage.

When to Change Auto Insurance policies

At Renewal

Renewal is a convenient time to change auto insurance policies, as you don’t have to wait for a refund from your current carrier. A renewal notice will be sent to you approximately 30 days before a new policy begins, depending on the regulations in your state. Should you decide to switch companies, you’ll need to have a new policy by the time the current policy renews. Though a company might say there is 10-30 days to get your payment in before a policy terminates, you do not have coverage until the carrier receives the payment. If you have an accident during this time period you most likely will have no coverage since the premium wasn’t paid!


All Auto insurance policies contain a provision allowing you to cancel your policy with proper notice at any time. In a few states auto insurance companies “short rate” the policy that means one pays a penalty for canceling before the policy renews. Most insurance companies pro-rate their policies so there is no penalty. The advantage of switching before the renewal date can save you a lot of money. For example if you have a policy that runs from Jan 15th to Aug 15th and you have an accident or ticket that will be over 36 months on March 15th. By switching Auto insurance companies on March 16th, you get a discount for having a clean driving record. Your current carrier won’t apply this discount until the policy renews on August 15th! This can save you Hundreds of dollars immediately!

How long does it take to change Auto insurance?

When you change auto insurance companies, the new agent or insurer can generally change carriers while you wait! Generally they’ll just need a copy of your current declaration page, driver’s license and down payment to get the policy issued.

So why not get started today and Get Free Auto Insurance Quotes from Top Companies

8 Ways To Keep Your Home Insurance Costs Low

All homeowners are looking for ways to reduce our home insurance costs. Costs continue to rise and budgets get tighter and tighter with each passing year. Here are 8 tips to reduce your home insurance costs.

1. Increased Home Security

Most homes are fitted with some sort of security device. To make the most of your Home Security Discount make sure that you home is fitted with: dead bolt locks, smoke detectors, fire extinguishers and a burglar and fire alarm that are monitored. You do not have to have all of these to receive a discount on your home insurance so even if you only have one or two make sure that you ask for the savings.

2. Keep your credit score as high as possible.

While it would seem that a good credit score would have nothing to do with insurance rates, it is a fact that they do. Home Insurance companies are using your credit score as an indicator of responsibility. The theory is the more responsible the individual the less claims they will have. So, insurance companies are giving lower rates to those individuals with a better credit score.

3. Consolidate your policies.

Most, if not all companies that sell home insurance, offer discounts for insuring your autos with them. These discounts can sometimes save you up to 30% off of your total insurance bill. Plus, you get the added convenience of having one agent for both your home and auto insurances.

4. Protect your home with updates.

Discuss with your agent about the possibilities of receiving home insurance discounts for keeping your home in good repair. Some home insurance companies will offer savings for a anew roof, electrical, HVAC, plumbing updates. The discounts are generally not enough to warrant the replacement but if you needed it anyway, be sure to get the discounts if applicable.

5. Make sure you are not over insured.

Your home insurance coverage should not necessarily be what you paid for them home. Land values are calculated into the final sales price and should be considered when insuring the structure. In others words you cannot hurt the dirt. A good idea is to call local builders and ask them what new home construction cost per square foot is going for. Take that number, multiply that times your square footage and that is the amount that your home should be insured for. Companies will not pay more than what it is going to cost to rebuild the home anyway, so make sure you are insured correctly.

6. Stay away from low deductibles.

The deductible is your portion of the claim that must be paid before the insurance company pays for the claim. The lower your deductible, the higher your premium will be. Deductibles can range anywhere from $100-$5000 or more. The majority of homeowners will carry a $500 deductible, but the savings one can receive by raising your deductible to $1000 can be significant, up to 20%. It doesn’t take too many claim free years to make up the difference between the two deductibles, but remember you should never raise your deductible to a level that you could not afford to pay.

7. Ask your home insurance agent.

Most of the time, an agent will make sure that you are receiving 100% of the home insurance discounts that you qualify for, but it doesn’t hurt to ask. Some insurance companies have discounts that others do not. Some offer discounts that most would never dream as being a discount such as 55 and retired, non smoking, military service, law enforcement, single parent discounts, etc.

8. Don’t be afraid to shop around.

Home insurance shopping is easy. Insurance shopping online is even easier. Companies like ours at HometownQuotes.com (yes, I am biased) have given you the ability to get multiple home insurance quotes by filling out a form that takes about five minutes to complete. Also be aware that not all insurance companies are created equal. There are some bad ones out there but most, at worst, are pretty good. Getting the best price is great, but check up on the company offering you that price at reputable insurance rating sites like Moodys.com or AMBest.com.


Health Insurance Options for Small Businesses

Health Insurance

Employees working in a company that employs fewer than 50 people are twice as likely to have no health insurance as employees working in a company with more than 50 people. Many small business owners feel that they don’t have the time or can’t afford the expense of health insurance. However, offering such benefits to your employees decreases turnover and increases job satisfaction, so it’s definitely worth some consideration.

Small businesses are eligible for what is known as ‘small group insurance’. Generally this refers to a group of between two and 50 employees. In most states small business owners have as many options for health insurance as do owners of much larger companies. In fact, in some states, such as Arizona, the law requires that insurance providers offer small businesses the same range of options for health insurance as they offer to large businesses.

Most major American health insurance providers offer a variety of options for small businesses, so that you can choose the type of health insurance that works for your business and for your employees. You have a great deal of flexibility in choosing a healthcare plan for your business, and in selecting optional extras such as disability, prescription plans, dental and vision coverall.

HMOs and PPOs

Most employers tend to choose either HMO or PPO plans. These are the most affordable types of health insurance for small business owners. The main drawback of these types of plans is that they are inflexible, and place certain restrictions on what types of healthcare providers policy owners can visit.

HMOs are the most restrictive of the two types of plan, as well as the cheapest. Under this type of plan, a policy owner must choose a primary care doctor who coordinates their healthcare, and the policy owner is covered only when they visit healthcare providers in the HMO network. PPO plans are a little more flexible, but are also more expensive. Under a PPO plan, users need not choose a primary care doctor. They may also visit non-network providers, but must pay some of the costs of doing so. In both cases, the insurance covers the full costs of all network visits.

POS and FFS Plans

Point of Service and Fee for Service plans are both more flexible plans that offer policy owners a high degree of choice in selecting healthcare providers. However, these plans are much more expensive, and typically involve high premiums, co-payments for doctor visits, or large deductibles. These are generally unpopular choices for small business owners.

HSAs and SDHPs

Health Savings Accounts are similar to Investment Retirement Accounts, in that the account is owned by the user, who can administer the account and even choose how to invest the funds it holds. These are increasingly popular with small and large businesses alike, as they allow account holders a high degree of flexibility and coverage for their healthcare. HSAs must be used in conjunction with a High-Deductible Health Plan.

A similar type of plan called a Self-Directed Health Plan is another increasingly popular way of managing healthcare. Users can choose to visit network providers for lower out-of-pocket costs, but have the option to select non-network providers if they wish. These plans are unique in that they focus on providing preventative care, and provide special benefits in the form of lower costs for preventative checkups and procedures such as vaccinations.


Early Cash Out on Life Insurance

There was a time when almost no one would have considered cashing out a portion or all of their life insurance policies early. Although you can opt to cash out portions or even a life insurance policy in its entirety minus penalty fees, should you? It is not without risk and you should weigh that carefully before making such a decision.

You have to think carefully about your financial holdings before making such a choice. The reason most people buy life insurance is so that they and not their loved ones, can pay for funeral and burial costs when they die. For this reason you would want to make sure to leave enough money in your life insurance policy to cover those expenses. Funeral and burial costs combined can cost anywhere from $8000-$10,000 as of today. With time, inflation will increase these costs, and you need to do some calculating of what costs could be in the future in determining how much to leave in your policy. The coverage amount that will be paid out in life insurance varies from policy to policy and so do the restrictions on those policies and the amounts they will pay. If you only have a $30,000 life insurance policy, don’t touch it unless you have other money that could be used to cover death expenses that you aren’t planning to leave family.

But you can safely cash out portions of life insurances with pay out amounts higher than $100,000., and use some of that money to travel and buy things in retirement that you want now. Your life insurance policy likely has a penalty fee for withdrawing portions or whole amounts of your policy, but these fees may be worth it to you. Especially if it would mean that you could afford to travel to destinations around the world that you have always wanted to see, but didn’t have the money to visit them before. Or you may wish to gift family and friends with money and other things while you are still living so that you can see their enjoyment.

There are people too who choose to cash out life insurance policies because they have been diagnosed with a terminal illness and need expensive care, and those that suddenly need long term care they had not planned for and cannot afford. Faced with such hurdles, it is not hard to understand why someone might choose to cash out portions of a life insurance policy to pay for expensive and long term care.

Before you send a letter off to your life insurance carrier requesting a partial or whole payout of your policy, speak to someone with experience with life insurance policies to determine if this is the right move for you.

The internet is an information warehouse on many subjects including the various types of life insurance policies, the rules regulating them, benefits versus risks of early policy cash outs, and much more. You may even decide that you need a term life insurance instead of the traditional life insurance. It is recommended that you immerse yourself in learning as much as possible about life insurance so that you know what life insurance is and isn’t .This is learning that will benefit you greatly by demystifying the subject of life insurance that can be confusing to many. The more knowledge that you have the better position you put yourself in for making the decisions that are right for you and your financial situation. . It just may be that cashing out early on your life insurance policy and using that money for a more colorful retirement or for extended or hospice care is the right decision for you based on your needs.

Term Life Insurance VS. Whole Life Insurance

With the availability of so many kinds of insurance, it can be confusing trying to select the kind of insurance that is most appropriate for your personal and financial circumstances. Life insurance is valuable to have for the protection of your financial assets now and to ensure that the costs of your final expenses are taken care of. Life insurance is also worth considering for the unexpected turns that life often takes. Treating many of the diseases that strike older adults is becoming increasingly more expensive and has put a real strain on the retirement funds of many people. You can offset the unexpected and very expensive costs of prolonged medical treatments including extended care nursing, with partial or total withdrawals from your life insurance.

But how do you choose what kind of life insurance is the best fit for your personal circumstances? Should you invest in more than one kind of life insurance? There are many factors that you must consider that will help you in answering these questions. Does your employer offer a life insurance plan? How old are you? Are you nearing or in retirement? What is the state of your present health? What is your family history for major diseases? How much money could you afford to spend monthly, annually, or in one large payment for life insurance? Is your retirement fund big enough to cover retirement living, the expenses of an unexpected and lengthy illness, and also cover the costs of memorial and burial services when you die without having life insurance? These are questions to consider and to consult with a professional insurance agent about as well.

Term life and whole life insurance are the two kinds of life insurances that many of us hear about the most. But what do their names mean and what are the differences between the two? Is one kind of life insurance better overall than the other? The following information is intended to help you better understand term life insurance VS whole life insurance.

Term life insurance is so named because it signifies a kind of life insurance that stays in effect for a specified amount of time. Typically this means time terms of 10, 15, 20, or 30 years. Term life insurance often costs much less than whole life insurance because of these shorter amounts of time that a policy is in effect. That makes it appealing for those that cannot afford whole life insurance, for younger people not ready for whole life insurance yet, or for those not needing longer term life insurance. Your home and other financial assets are fully protected throughout the time term of your policy. This also offers financial security for your loved ones in the event you unexpectedly suffer dismemberment or are killed.

Whole life insurance is so named because this traditional kind of life insurance remains in effect for the life of the policy owner. Whole life premiums cost more than those paid for term life insurance, but whole life insurance carries a guaranteed death benefit and cash value amount. The cash value of whole life insurance grows much more than term life insurance due to the longer term and higher amounts paid in premiums with this kind of life insurance. Dividends are earned and can be used for unexpected costs such as treating a major disease. Whole life insurance offers the same financial protection for your family in the event you experience an accidental or expected death.

Owning both kinds of life insurance is not a bad idea if you can afford to. That way you can tap into whichever life insurance is most liquid and with the fewest penalties for funds for use in times of emergency.


Insuring a Used Car

A standard auto insurance policy is a package of different kinds of coverage. There is generally some flexibility in terms of both the types and amounts of coverage you select.

However, practically every state has enacted insurance laws that require drivers to carry at least some auto insurance. Many states even require that you present proof of insurance before you register a car. So the short answer to the question is that you will probably need to
insure your car, regardless of its value.

Every state requires that drivers carry liability insurance.
The liability coverage section of an auto insurance policy provides financial protection from liability claims against you when you (or certain other people) cause an accident that results in bodily injuries to other people and/or damage to their property. Every state has mandatory minimum levels of coverage in this area. The rationale behind such laws is that at-fault drivers should be able to compensate victims who suffer accident-related losses. But the required minimums in most states don't even come close to covering the costs of a serious accident. Consequently, if you wish to be adequately protected from liability claims, your liability coverage should probably exceed your state's requirements.

Other coverages are required in some states and optional in others.
Medical payments coverage and uninsured/underinsured motorist coverage are two such coverages. Medical payments coverage covers medical expenses incurred by you, your family members, and your non-family passengers. Uninsured/underinsured motorist coverage covers losses you and others suffer as a result of an accident caused by a driver who either has no insurance or insufficient insurance. If buying these coverages is optional in your state, base your decision on your needs, circumstances, and other factors. Consult your insurance agent for more information.

Collision and comprehensive insurance is optional in virtually every state.
The collision and comprehensive section of your policy covers physical damage to your own vehicle resulting from collisions and a variety of other causes (e.g., fire, falling objects). It may also cover losses associated with theft. However, your car's value plays a big part in assessing your need for this type of coverage. It may not be cost-effective if your vehicle is worth less than $1,000 because you'll have to satisfy a deductible, and the most you'll receive (even if your car is totaled) will be its actual value (i.e., after depreciation). That's not much, especially taking into account the premiums you would have been paying for coverage.


Life Insurance & Estate Planning - What Wealthy Families Want to Know

Newport Beach, Calif. (August 12, 2008) – An estimated $41 trillion in US assets will change hands by 2052.1 Families, especially wealthy families, have specialized estate planning needs but can be confused by complex estate planning strategies full of legalese so Pacific Life Insurance Company and Pacific Life & Annuity Company now offer a kit of “plain English” materials to show how life insurance can stabilize and strengthen estate planning techniques.

Alyce Peterson, vice president of marketing services for Pacific Life, explained that using life insurance in a client’s estate plan provides a death benefit that can be used to help pay for estate taxes owed.

A life insurance policy combined with an estate planning technique can also help:

* Avoid the forced liquidation of assets
* Replenish wealth as it passes from generation to generation
* Instill positive behaviors in heirs
* Equalize inheritances between family members
* Leave a charitable legacy
* Identify which assets to retain, sell or donate.

“Many clients become overwhelmed and even wary when faced with complex planning strategies and the legal language involved,” Peterson commented. “The plain English format of our new resource guide plus the fact finders addresses this problem.”

Financial professionals can get the “What the Wealthiest Families Know” Kit by contacting their Pacific Life Insurance Company or Pacific Life & Annuity Company representative or by calling 866-722-9555.

1 “Wealth Transfer: A Digest of Opinion and Advice” The Journal of Gift Planning Vol. 10, No 2, 2nd Quarter 2006

Pacific Life Insurance Company
Founded in 1868, Pacific Life Insurance Company provides life insurance products, annuities, and mutual funds, and offers a variety of investment products and services to individuals, businesses, and pension plans.2 Pacific Life counts more than half of the 100 largest U.S. companies as clients3 and is a member of the Insurance Marketplace Standards Association (IMSA), whose membership promotes high ethical standards for the sale of individual life insurance and annuities. For additional information about Pacific Life, including its current financial strength ratings from A.M. Best, Fitch Ratings, Standard & Poor’s, and Moody’s, visit the About Pacific Life section.

2 Product features and availability vary by state.
3 Data compiled by Pacific Life using the FORTUNE 500® list as of April 2008.

Pacific Life & Annuity Company
Pacific Life & Annuity Company offers a wide range of products, including life insurance, annuities, structured settlement annuities, and other investment products and services for individuals and businesses.4 Pacific Life & Annuity is a member of the Insurance Marketplace Standards Association (IMSA), whose membership promotes high ethical standards for the sale of individual life insurance and annuities. For additional information about Pacific Life & Annuity, including its current financial strength ratings from A.M. Best, Fitch Ratings, Standard & Poor’s, and Moody’s, visit the company Web site at www.PacificLifeandAnnuity.com.


Love, Marriage, and Insurance

Marriage can be one of the most significant events and times in a person's life, and just as important as it is to love and cherish your spouse, it's equally important to be sure you have enough insurance coverage so that you are both taken care of. That is why it's important to review your life, homeowners and car insurance coverage and see if any adjustments can be made to help you out financially in your new married life.

Life Insurance
Life insurance should be the first thing you consider or review when you become married. Life insurance helps your spouse financially in the event of your death by covering debts you may have incurred, and is equally important to have if you are considering having children or even buying a new home.

Health Insurance
Combining health insurances is another thing that you may want to take a peek at once you are married. If you have a good employer-sponsored health insurance plan, it may be more cost effective to move your spouse over to your plan. Then of course, your spouse may have a better plan than you, and you may need to switch to theirs. It's most important to review the features and benefits of both health insurance plans and compare them to see which will work best for you and your spouse.

Additional Coverage
When it comes to married couples' valuables, it is very important to be sure you have adequate coverage in the event something happens to your engagement or wedding rings. It's important to note that homeowners insurance and renter's insurance, though they do protect the physical structure of your home and its possessions, they don't always cover jewelry. Your homeowners insurance agent or insurance company, will be able to determine what kind of insurance coverage is best for your valuables, and may determine if a rider is needed on your homeowners policy to cover your valuables, such as jewelry.

Another factor you should discuss with your homeowners insurance agent when applying for your rider policy is whether the extension provides "actual cash value" or "replacement cost coverage". Though replacement cost coverage is more expensive than actual cash value, it is better to have it because actual cash value factors in time depreciation for the item. Which means you will only be paid back what the item was worth at the time it was stolen or damaged, not the price you initially paid for it.

Car Insurance
It's important to inform your auto insurance company or agent that you are married, because many auto insurance companies offer discounted rates for couples who have "tied the knot". Also, check to see if they offer any other discounts, such as multi-car or multi-policy-who knows, you may be able to save more than you thought!

If you are interested in getting a life insurance, homeowners insurance or car insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life, homeowners and car insurance coverage for you and your spouse.

Ways To Save When Buying Life Insurance

When it comes to shopping, savvy shoppers get the most for their money. This stays true not only when shopping for groceries or food, but for life insurance as well. So to help you get the most bang for your buck, Insurance.com has compiled a list of ways you can save the most when you're in the market to buy a life insurance policy.

  1. Is term life insurance for you? If most of your goals are short-term and you're not as interested in saving for the long run, term life insurance is for you. Term life insurance typically offers you the most coverage for the least amount of money, and is set up based around spans of time. For example, you may get a term life insurance plan that is set to pay out after five, ten or 20 years.

  2. If your main goal is to save money, and you don't mind paying a higher premium, it would be wise to look into a whole life insurance policy. Whole life policies offer a "cash value" feature that helps you save money each time you make a payment on your premium. However, though you can withdraw funds from the cash value, your death benefit will decrease. If you take out a loan and it exceeds the amount you have already paid for on the premium of your whole life insurance policy, you will receive a tax bill. Also, it's good to note that as time moves on, the cost of insuring you will go up, and your cash value will begin to decrease.

  3. No-load policies. To find lower premiums for variable life insurance, be sure to keep an eye out for "no-load" or "low-load" life insurance policies. These policies have fewer added fees, such as agent commission or fees for marketing, which makes a higher percentage of your premium go to your cash value. To find theses policies, check with a financial advisor who doesn't collect commission from life insurance companies, or inquire around. Some insurance agencies even sell these directly to the customer!
  4. If you're healthy, stay away from guaranteed issue policies. Guaranteed issue policies, also know as "simplified" or "quick" policies, may sound too good to be true, because they really are. They do not require a medical exam, making them seemingly ideal, but ultimately much riskier for the insurer. If you are healthy, you will get much better rates by buying a life insurance policy that requires a medical test.

  5. However, the problem for those who buy into guaranteed issue policies is that many may end up paying more in premiums than their beneficiaries receive from their death benefits. The National Association of Insurance Commissioner (NAIC) is trying to find a solution or way to put an end to this. Regulation of rates is not something they plan on doing, but a disclosure statement warning consumers is in the works.

  6. Check online. When shopping around for any kind of insurance, looking online is a great way to compare prices and see what different companies have to offer. The more information you give, the more accurate your insurance quote will be.
  7. Make a change for the better. If you are overweight, are a smoker, have heart disease, high blood pressure or diabetes, finding affordable life insurance may be difficult. This is because the better your health is, the easier and more affordable it will be for you to buy life insurance. Insurance companies will issue lower premiums if the policyholder is in good health standing. The less things that may give you a risk of dying sooner, the more affordable your life insurance policy will be. Also, if you do have an outstanding medical condition, you are a smoker or overweight, and you are trying to better your health, be sure to document it. By showing the insurance company your medical files and that you have been trying to improve your health, you may save yourself some money in the long run.

  8. Many life insurance companies have different categories for medical conditions or combinations of medical conditions, when it comes to issuing you a policy. They also have different tests and medical exams you may need to go through before they will issue you a policy. This may have a major impact if you're a smoker. Even if you quit the day you apply, you will still be considered a smoker, because to be completely "nicotine free," you would have had to quit smoking for two to five years prior. Smokers do generally pay at least three times more than nonsmokers for a life insurance policy, so by quitting, you're not just saving money from not buying tobacco, but also by bettering your standing.

    Being overweight is another reason you may have a higher life insurance premium. Though you may not be obese, once your weigh reaches a certain level, you become more of a death-risk. So by taking the steps to lose weight and get healthier, you are not only helping yourself live longer and feel better, but also helping to get more affordable life insurance rates.

  9. Buy what you need. It's not a good idea to under-buy insurance, nor is it beneficial to over-buy, so when you're in the market for insurance, be sure to evaluate what your exact needs are and go from there. A good way of doing that is in the form of an equation: Short-term needs + long-term needs - resources = how much life insurance you will need.
  10. Rider policies are helpful. A rider policy is an extension to an insurance policy that helps you extend you coverage. If your needs change, it may be more cost-effective to purchase a rider policy for additional life insurance-it also doesn't affect your cash value. Be sure to shop around though, you may save more by actually buying a second policy.
  11. Buy early. Instead of waiting until there is a real problem with your health, buy life insurance early in life. As you age, the price of your life insurance will increase, so the younger you start, the more you will save. To keep your premium low, you may want to inquire about a "level premium" policy. Which keeps your premium rates the same for a set amount of time.
  12. Run your credit report. If there are problems with your credit, you may be denied for an insurance policy or your premiums will sky-rocket because you are considered high-risk. If your credit score is low, the insurance company's main concern is that you will let your policy lapse due to non-payment of premiums. So by rebuilding your credit, you are not only helping that financial aspect of your life, but also the one concerning your insurance.
  13. Fractional premiums. Some insurance agencies charge less depending on how you schedule your payments. By paying fractional payments-those are fewer payments over the year-you may pay less over all. For some life insurance companies the same also goes for electronic funds transfer (EFT), which is when they take out the amount of the premium directly from your checking account.
  14. Being responsible saves you money. This goes along with making a change for the better. If you are in an expensive rate class due to high cholesterol (for example), but make a point of going to your doctor regularly and establish a history of lowering your cholesterol, your life insurance company may be willing to lower your premium.

If you are interested in finding out more about life insurance, or getting a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life insurance coverage that benefits you, as well as your beneficiaries, while still being within your budget.

Tips for First Time Insurance Buyers

When you buy insurance, you're really buying something that you hope you'll never have to use. But if you ever do need to file an insurance claim, you'll understand why having the right amount and right types of coverage is important.

Decide how much insurance you need
You can't stop bad things from happening. But you can protect yourself financially by purchasing insurance. How much insurance you need depends on a lot of factors including how much you owe and own, how much your assets are worth, whether you have dependents, and how much out-of-pocket cost you could afford to bear. You can estimate your coverage needs using calculators or worksheets available on-line, but it's a good idea to sit down with an insurance agent or broker who can thoroughly evaluate your needs.

Comparison shop
No matter what type of insurance you're buying, the process is essentially the same. Once you've decided what type of insurance and how much coverage you need, you can begin contacting insurance companies online, directly by phone, or through an insurance agent or broker to obtain quotes. Get quotes from several different insurers because premium cost can vary widely.

But compare the coverage offered, too. A policy might cost less because it offers fewer, or different, features and benefits. And make sure the company you've settled on is reputable, with good customer service and claims-paying ability. All insurance companies are rated by major rating agencies (e.g. Standard & Poor's, Moody's, A.M. Best) on their ability to pay claims. You can access these ratings online, through public libraries, or through car insurance company literature.

Understand what you're buying
An insurance policy is a legal contract that may be loaded with technical terms that are hard to understand. But read it anyway before you sign on the dotted line to find out about the coverage you're buying. For instance, the policy will tell you:

  • Who or what is covered
  • What coverage exclusions and limitations apply
  • When coverage begins and ends
  • How much coverage is provided
  • How much you'll pay for coverage (the premium)
  • How you report a loss or file a claim

It's always a good idea to ask an insurance professional to explain any terms, conditions, or benefits that you don't understand.

Evaluate your insurance needs periodically
As your life changes, your insurance needs change, too. So every once in a while (annually, some experts suggest), review your insurance to see if you need more (or less) coverage or an additional type of coverage. Here are some times in your life when you'll definitely want to re-evaluate your insurance needs:

  • You're getting married or divorced
  • You're starting a family
  • You're renting an apartment
  • You're buying a house or a car, or making a major purchase
  • Your child is going off to college
  • You're starting a new job or becoming self-employed
  • You're buying or selling a business
  • Your income increases or decreases substantially
  • You're taking care of an aging parent
  • You're retiring

Make your insurance policies work for you by taking the time to periodically review your needs and coverages.


Top 10 Things to Know About Life Insurance

We all recognize the importance of life insurance. After all, we want to make sure that our loved ones are taken care of when we die. But before you run out and purchase a policy, do some research ahead of time. That way, you'll be sure to get the best possible coverage at the right price. Here are some helpful tips to get you started:

1. Shop around
2. Never buy more coverage than you need
3. The healthier you are, the better the rates
4. Buy sooner rather than later
5. Realize the importance of periodically reviewing your coverage
6. You don't necessarily have to pay a commission
7. You may be paying more for monthly premium payments
8. Don't rely solely on the life insurance offered by your employer
9. Tell the whole truth and nothing but the truth
10. Buying more is sometimes cheaper

Shop around
When it comes to life insurance, it pays to shop around because premiums can vary widely. And thanks to the Internet, it's now easier than ever. Try out one of the many insurance websites that can provide you with instant quotes. Make sure the website you shop from takes into consideration the factors in your medical history that can affect the premiums.

Never buy more coverage than you need
The key to purchasing the right amount of life insurance is to have just enough coverage to meet your needs. If you have more life insurance than you need, you'll be paying unnecessarily for higher premiums. On the other hand, it's important not to have too little coverage, resulting in you being underinsured.

The healthier you are, the better the rates
It's true – healthy people get better rates on life insurance. You will be asked to pay a higher rate for anything that shortens your life expectancy (e.g., if you smoke, take medications regularly, are overweight, have a bad driving record).

Buy sooner rather than later
If you've been putting off purchasing life insurance because you don't want to pay the premiums, you may be doing yourself a disservice in the long run. The younger you are when you purchase life insurance, the lower your premiums will be.

Realize the importance of periodically reviewing your coverage
Any life change signals the need for a review of your overall financial plan. When it comes to life insurance coverage, you'll want to make sure that this major life event (e.g., birth of a child, children are grown) won't leave you underinsured or overinsured.

You don't necessarily have to pay a commission
One of the reasons for higher premiums is that most life insurance policies pay commissions to the agent/broker. However, you may be able to purchase a no-load policy through an insurer that sells no-load policies directly to consumers.

You may be paying more for monthly premium payments
You may not realize it, but you may be paying more for your life insurance if you pay your premium in monthly installments. Many insurance companies charge extra fees if you make monthly premium payments instead of paying the annual premium.

Don't rely solely on the life insurance offered by your employer
Many employers offer their employees some sort of group life insurance. But this amount of coverage is usually not enough to adequately meet your life insurance needs. In addition, group life insurance policies are not portable, meaning that if you leave your job, you can't take your life insurance coverage with you.

Tell the whole truth and nothing but the truth
If you're thinking about lying on your insurance application, think again. If your insurance company finds out that you lied about a health-related condition or your lifestyle (e.g., smoking habit), they may be able to terminate your coverage.

Buying more is sometimes cheaper
Life insurance usually costs less per thousand dollars once you get into higher coverage amounts (e.g., $250,000). If the numbers work out, you may be able to pay a lower premium while increasing your coverage.

How Much Life Insurance Do You Need?

You might be asking yourself this question: "How much life insurance do I need?"

Some financial advisors will tell you to multiply your annual income by seven. Others will tell you to buy only enough life insurance to replace the income you are expected to make between now and retirement. Some might recommend you buy only enough life insurance to cover your present debts.

While you probably can do all of those calculations in a minute, they won't give you the right answer. Simply put, calculating your life insurance needs takes homework. It requires you to do an inventory of all of your finances, and to think long and hard about how your beneficiaries would maintain their lifestyles without you. You also must consider inflation and, if you have children, future college education costs.

What not to do

What's the wrong way to calculate how much life insurance you need? Here are some common but misguided methods.

1. Multiply your annual salary by seven or eight: While it’s a simple formula, it fails to take into account your individual needs and obligations. Life insurance experts say there’s a good chance you’ll buy too little or too much coverage, simply by using a formula such as this.

2. Calculate your "human life value:" This method gives you the income you will earn from your present age until your retirement age, assuming a rate of interest that represents salary increases throughout that period. The problem is it does not take into account what your beneficiary's specific needs will be. You also end up with a figure that requires you to buy a huge amount of life insurance, possibly more than you may need. "There's all sorts of landmines in this," says Michael Snowdon, an instructor at the College of Financial Planning in Denver. "When you calculate this way, you're working with broad brush strokes."

3. Cover your debts. This involves buying only enough life insurance to cover debts such as your mortgage, student loan bills, or outstanding car notes. This method does not consider any future debts or needs, such as childcare or college education costs.

A classic formula

Many experts say the best way to pinpoint a smart life insurance figure is through a needs analysis, which can be broken down into a simple formula: Short-term needs + long-term needs - resources = how much life insurance you need. Snowdon says this method is "probably the most accurate approach in what is an inaccurate and imprecise science."

Experts advise you do an analysis at least once every three years, or whenever you have had a major life change. For example, if you have a new baby, you have to recalculate college education needs and child-care costs. If you own a home, a mortgage is likely your biggest financial burden. Because your mortgage balance decreases with each payment, it's important to include those revised figures in your calculations.

Five steps to a needs analysis

Step 1
Add up all of your short-term needs. These can be placed into three categories: final expenses, outstanding debts and emergency expenses. Among final expenses are medical, hospital, and funeral expenses, attorney or executor fees, probate court costs (if you do not have a will), and any outstanding taxes that would need to be paid if you died. Among outstanding debts are credit card balances, auto loans, college loans, and all other outstanding bills. Emergency expenses should include a cash reserve for medical emergencies and repairs to your home or car.

Calculating final and emergency expenses can be complicated, because you don't have a crystal ball that tells you how much your medical or hospital expenses will be, or if you even will have any.

Step 2
Next, add up your long-term debts, which include your mortgage and college tuition.

Calculating an education fund is tricky because you have no idea where your children will be going to college. Perhaps the best method is to use the present average college cost in the United States and the number of years away your children are from entering college. The average college costs for the 2002-2003 school year were $4,081 annually for a public, four-year institution, and $18,273 annually for a private, four-year institution, according to The College Board.

The U.S. Department of Education reports college costs traditionally have risen at about 5 percent annually, so you need to figure out what the cost will be when your child goes to college. (To calculate what costs will be in the future, see the last section: “A must-know: the equation for the future value of money.” Also be sure to calculate what the entire education will cost while taking into account the increased costs each year.)

Step 3
Next, calculate family maintenance expenses. These include such necessities as childcare, food, clothing, utility bills, entertainment, travel, and transportation. Calculate this figure based on a year's worth of expenses, then multiply that times the number of years you want to provide this income.
Once you've done that, add your short and long-term debts and your family maintenance expenses.

Step 4
Now that you've tallied all of your income needs, figure out what resources you have to meet them. To do this, add all available savings, stocks, bonds, mutual funds, existing life insurance (such as group life through your employer), and Social Security. You and your spouse can find out how much you'll get through the Social Security Administration (SSA) by visiting the SSA’s website, where you can get an estimate of how much you should have in Social Security benefits. Also add your present salary, and assume 5 percent compounded interest each year if you expect salary increases over time.

It's important to count only liquid assets (those that could be quickly converted to cash) among your resources. You shouldn't count items such as your home or automobile, because selling them for cash when you're gone would mean changing your family's lifestyle.

Step 5
Subtract your resources from your total expenses. The figure you get should represent the amount of life insurance you should buy.

Don't be daunted

Snowdon says the final figure that shows how much life insurance a person needs can be quite alarming. If you end up with an astronomical figure that requires a premium that is too high, he recommends you go through the analysis again and select areas for which you think you can allocate less money.

"Many people will look at the final figure and say, 'I can't do that,'" Snowdon says. "You have to look at it, figure out which is the most crucial, start making adjustments, and go from there."

A must-know: the equation for the future value of money

Calculating your life insurance needs will require two equations you may have picked up in Finance 101: the future and present value of money.

The future value of money equation tells you how much your money will be worth in a given number of years while earning a given rate of interest. This equation is essential if you are calculating how much money you'll need in the future because of inflation, or what your death benefit will be if you choose to invest the money at a given interest rate.

The present value of money equation tells you what your money is worth before it has been invested for a given number of years at a given rate of interest. This is important if you have an amount of money you need in the future, and you need to know how much life insurance coverage you should buy now.

If this sounds complex to you, don't fret. As long as you have a calculator (preferably a financial calculator, which is used by accountants and finance professionals), these equations are no sweat.

Here's how the future value of money equation works: Say that average college education costs are $20,000 annually for a private four-year institution, and you want to figure out how much it will cost in four years if college costs keep going up 5 percent per year. You would multiply 20,000 by 1.05 (1 represents the present cost, and .05 is 5 percent inflation) four times (or 1.05 to the fourth power).

How to Buy Life Insurance

Buying life insurance is an easy way to protect your family after you're gone. If you know what to look for, you can get great coverage at a price you can afford.

Why buy life insurance?
Topping the list of reasons to buy life insurance is the financial protection life insurance offers. If you're single and just starting out, you may not need life insurance. But as you take on more responsibilities and your family grows, your need for life insurance increases. The proceeds from a life insurance policy can replace the income lost to your family upon your death. You might also want to buy life insurance to pay off debts and expenses, leave money to charity, and cover final and estate expenses.

Choose term or cash value
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time (the term), and cash value (permanent) life insurance, which combines a death benefit with a cash value component. Cash value insurance offers lifetime protection, while term insurance may be the most affordable option if you're buying life insurance mainly for the financial protection it offers, and your need for life insurance is temporary (until your children leave the nest, for instance). Some term policies (called "convertible") will permit you to exchange the term life insurance policy for a permanent one at some point.

Decide how much coverage you'll need
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you're married, both you and your spouse should consider buying life insurance. One of the easiest ways to estimate how much life insurance protection you should buy is to use a life insurance needs calculator.

Pick a number between 1 and 30
Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing a term that matches your need for life insurance protection. For instance, if your main reason for buying life insurance is to protect your 7-year-old twins until they're out of college, you'll want to buy a policy with a term of at least 15 years.

How much will it cost?
How much you pay for life insurance will depend on a number of risk factors, including your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying. Keep in mind that the premium you're quoted initially will increase later. For instance, when you buy term life insurance, rates are guaranteed only until the end of the term (annually for annual renewable term or at the end of a specified number of years for level term). While most life insurance policies can be renewed at the end of the term, you'll pay a higher premium for coverage.

Shop around
When comparing quotes for life insurance, make sure that the insurance coverage you're comparing is similar. And remember, any policy that you buy is only as good as the company that issues it. Find out what rating the company has received from major ratings services, such as A. M. Best or Standard & Poor's. These companies evaluate an insurer's financial condition and claims-paying ability. The company giving you a quote should provide you with this information. You can also contact your state's department of insurance to find out more about an insurer's record.

Submit an application
Once you're ready to purchase a life insurance policy, you'll fill out a life insurance application that contains questions about your current and past health history and lifestyle. You'll generally be required to take a medical exam, arranged and paid for by the insurance company. The answers you give on your application, along with the results from the medical exam and your past health history, will help the insurance company determine whether to offer you a policy, and if so, at what price.

Learn the lingo
Maybe a life insurance contract isn't as exciting as a best-selling novel, but read it anyway. Policy provisions, the amount of benefits, the premium, and other charges you'll pay will be listed along with other important information such as the beneficiaries you've named and the premium guarantee period. Make sure you understand everything in the policy. Under the laws of your state, you may have a "free look" period (typically at least 10 days) during which time you can cancel the policy without penalty.

Top 10 Most Dangerous Jobs

Do you work in a dangerous occupation? According to the Bureau of Labor Statistics, the top 10 most dangerous jobs are:

1. Timber cutters
2. Airplane pilots
3. Construction laborers
4. Truck drivers
5. Farm occupations
6. Groundskeepers
7. Laborers
8. Police and detectives
9. Carpenters
10. Sales occupations

Do you have the life insurance protection you need?
It's a fact that some occupations are riskier than others. But no matter what you do for a living, take a look at your life insurance needs. Life insurance can help you financially protect your loved ones after you die. If you're single, and no one is depending upon your income for support, you probably don't need life insurance. But if any of the following is true, consider buying life insurance:

  • You're married and your spouse depends on your income
  • You have children
  • You have an aging parent or disabled relative who depends on your income
  • Your retirement savings, pension, or other cash accounts won't adequately support your loved ones after you die
  • You have a large estate and expect to owe estate taxes
  • You own a business

Calculators and worksheets are available online to help you determine how much life insurance you need. You may want to contact an insurance agent or broker who can help you determine what type of life insurance is best for you and the amount of coverage you need.

Do you have the disability insurance you need?
If you work in a high-risk occupation, you probably know how important it is to have disability insurance coverage. But don't rely on government programs such as Social Security and workers' compensation as your main source of protection. In reality, government programs pay only limited benefits under restrictive terms (e.g. you must meet a strict definition of disability to qualify).

Your employer may offer group disability insurance at low or no cost to you. But you may also want to consider purchasing an individual disability insurance policy. Although you'll pay more for individual coverage than for a group policy, you often get more benefits. And keep in mind that if you leave your job or otherwise terminate your relationship with a group, you can't take your disability policy with you, and you usually can't convert it to an individual disability policy. This means that you may be left without disability coverage when you need it most.

Shop around for coverage
Since many different types of life and disability policies are available, it's important to shop around for coverage to find a life insurance policythat meets your individual needs. Since premium costs vary widely, get quotes from several insurance companies. Just make sure you're comparing policies that offer similar benefits.


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