Life Insurance Rates Quotes

<body> <p>Deciding on adequate life insurance coverage (~~~~~~ Gannett News Service A good life insurance policy is the cornerstone of any long-term financial plan. That's easy to say, but choosing a policy, determining how much protection you need and for how long, is where frustration can set in. The types of policies and number of companies offering them increase every year. And your financial status also changes, possibly altering your insurance needs. With that in mind, how do you decide what's best for you? ``Take a good look at your financial situation and what it's likely to be when you pass,'' said Laurie Stein, a certified public accountant and financial planner on Merritt Island. ``It's important to have adequate coverage. Buy as much insurance as you think you will need. It's better to have too much than too little.'' Stein and other experts say before choosing or renewing a policy, family heads need to sit down and ask themselves several questions. Among them are: -- Do we need life insurance? If you have children, rely heavily on work income or have a large amount of debt, such as a mortgage or business loan, you definitely need life insurance, Stein said. In rare instances, however, individuals with a lot of liquid assets or substantial savings could do without insurance. However, dependents or heirs could be stuck with a huge estate tax bill, said Robin Fisher, owner of a State Farm insurance agency in Titusville, Fla. -- How much insurance do we need and how long will we need it? A general rule of thumb is to provide six to 10 times the insured' s annual salary. But this may be inadequate if a heavy debt load is expected in the future, Fisher said. ``There is no set formula,'' Fisher said. ``You have to be able to cover expected and unexpected expenses.'' The best way to go, Fisher said, is to determine final expenses after death, including estimates of loan, mortgage, credit card and car payments. Also, factor in future expenses, such as college costs. Additionally, decide how much of your income you would like to preserve for your family. If you live in a two-income household both breadwinners should be insured, Fisher said. He also recommends buying insurance for children for three reasons: To cope with burial costs, should they die as youngsters. -- To guarantee their insurability in adulthood and to provide them with low-cost coverage for their entire lives. -- The money that builds up in a cash value insurance policy could be used by your children to pay for college or to help them buy a home. But Annette Miller, owner of S. Annette Skaggs, an accounting firm in Vero Beach, Fla., said insuring children could be a waste of money. Especially, if in the event of death, you can easily secure a short- term bank loan, borrow money from family or have adequate savings to cover burial costs. ``Children don't earn income and they don't have debts. That's what insurance is for: to preserve income and pay debts,'' Miller said. Next, add up all your expected expenses. The total is approximately how much coverage you will need. It might be a good idea to get even more coverage, Fisher said, because estate taxes can easily eat up 50 percent of one's bequeathment. Now, subtract the amount of any insurance you already have. Many employers offer as part of their benefits package life insurance equal to or slightly more than an employee's annual salary. Additional low-cost coverage can usually be purchased through employer-sponsored benefit plans. Also, many credit unions offer free accidental death insurance to their members. The amount is usually only a few thousand dollars but it still counts. Families likely will need more coverage than employers and credit unions offer for free. But Stein said having these coverages will reduce what you have to buy out-of-pocket. If you're single with no dependents, your employer's insurance might be all you need, Stein said. But she said the earlier you buy additional insurance, assuming you plan to marry and have children, the cheaper it will be. Be aware that in some instances as you become more financially secure and lower your debt load, you may not need as much insurance. -- What can we afford? If you can't pay one lump-sum premium for insurance, your monthly premium will have to fit into your budget. Decide on specific coverages you need, and unless your needs change drastically, stick to them. This will help prevent you from overspending or getting more coverage than you need. After walking through that maze, it's time to decide what type of policy best suits your needs. Despite the many fancy names attached to life insurance policies, experts say, there are basically two types: Term and cash-value. -- Term insurance. This low-cost insurance provides a fixed benefit for a specified time period usually for 10 or 20 years. Miller said it's the most insurance you can buy for your premium dollar, because you're paying only the cost of insurance and not for frills, like investing and cash-value. Younger or lower-paid workers benefit because they can get a lot of coverage for very little money. Also, these policies can often be converted to whole life (policies that build cash value) without proving insurability through a physical exam or questionnaire. Stein said term insurance is perfect for someone who needs a large amount of protection for a short period of time, to cover a business loan, for example. The downside: Renewing term insurance is costly, because premiums increase with age. -- Cash-value. Known by many names -- whole life, universal life, variable life and straight life -- cash-value policies are the most popular type of life insurance. Like term insurance, cash-value policies have a fixed premium and death benefit. But these policies build toward a fixed cash value that can be borrowed against or withdrawn if the policy is surrendered before maturity. For this benefit, companies charge a premium much higher than for term insurance. Most of the premium goes into the company's investment portfolio where it earns interest. A percentage is credited at specific intervals to the policyholder's account as cash value. The remainder of the premium finances the actual policy. Interest earned on the policies grows tax-deferred until it is withdrawn as a loan or awarded as interest earnings on dividends. The downside: Cash-value policies are expensive to service and the policyholder pays the total cost up front. As a result, it can take years for significant cash value to accrue. Also, some critics say life insurance companies keep an inordinate percentage of the true cash value, a charge the industry denies. Other types of cash-value insurance, such as universal life, straight life and variable life are just mutations or hybrids of term and whole life. Though popular, they are all regularly criticized. ``Cash-value policies are a rip-off,'' said Ross Sloan, an Alabama insurance agent and author. ``It takes forever for cash value to build up and then the company keeps most of it.'' Sloan, author of a book touting term insurance, said it's not a good idea to combine insurance and savings into one product. He adds that greedy insurance agents often push cash-value policies because they pay higher commissions than term insurance. ``Term is really all most people need,'' Skaggs' Miller said. ``Most people just need the insurance, so that's all they should pay for. Investing should be separate.'' Life insurance agents disagree. ``Because of advantages in tax law, with tax-deferred growth, there are some instances where insurance can be used to save money, even though that's not it's main purpose,'' said Bill Chaney, an independent insurance agent in Cocoa, Fla. ``For some people it's beneficial.' ' Even so, some financial planners recommend that individuals buy term insurance and invest what they would have paid in higher premiums into a 401(k) or individual retirement account. There are no hard and fast rules. ``Decide what's best for you,'' Stein said. The bottom line: Research and careful planning can save consumers a lot of money and headaches down the line. ``If the coverage you buy or already have is not right, you can always change it,'' Miller said. Graphic and illustration on GGN Copyright 1998, Gannett News Service, a division of Gannett Co., Inc. DWIGHT R. WORLEY, Deciding on adequate life insurance coverage., Gannett News Service, 02-11-1998, pp ARC. </p> <p><a href="http://www.4freequotes.com/insurance/11/au">Request Quotes</a></p> </body>