Tuesday, February 28, 2012

How Much Life Insurance Should I Have?

The answer to the question, “How much life insurance should I take out?” is often met with the seemingly counter-productive question, “How much life insurance do you need?” This is not because life agents wish to be difficult or mysterious but because this question is not one they can answer for you but one you must answer for yourself.

Uses of a Life Insurance Death Benefit
Life insurance is the only type of insurance policy that you can use to create a lifestyle for your heirs after you pass on. This makes it an extremely individual product. Instead of deciding what the value of an object is and then insuring said object for that amount, with life insurance you must decide how powerfully you want your death benefit to affect the lives of your beneficiaries and assign a value to that power and legacy creation.

The first step toward deciding how much life insurance you need is to really understand what your beneficiaries can use the death benefit for. These uses include:
- Paying off debt
- Saving for retirement
- Supplementing an income
- Replacing your income
- College tuition
- Starting a business

Considering Your Situation

When you look at the above list of possible uses for a life insurance death benefit there are probably some that immediately appeal to you and others that don’t. Those that do are based on your lifestyle, your family and the people that you have chosen to receive your death benefit.

When you are deciding how much life insurance to take out, write down all the things you want your death benefit to be used for and then estimate the amount of money that goal or use would take.

For instance, let’s say you want your beneficiaries to be able to use your death benefit to pay off your home and car, replace your salary for 3 years and pay the college tuition expenses for your child. Write down each of these uses and the amount of money each requires. The final amount that you get is a good reflection of the actual death benefit you probably want to purchase.

Adding in a Dash of Budget

Now that you have the amount of life insurance you’d like to have, it’s time to deal with your budget. Using the death benefit amount you have chosen, ask your agent to give you a quote for both term insurance and permanent insurance. Compare prices and see if you can afford one type of coverage with your actual desired death benefit. If not, then consider shaving off a little here and there until you reach an amount that gives you a premium you can afford.

And that’s it—you’ve created an individual life insurance policy with a death benefit that reaches as far as you want it to and a premium you can sustain.

If you would like more information or a quote on life insurance, please call us at (845) 565-2200 or visit us online to get a Life Insurance Quote

Also, visit us online for a free Life Insurance Calculator

Saturday, February 11, 2012

Life Changes...So Should Your Insurance. When to Review your coverages.

Insurance is a static product—but it shouldn’t necessarily be. Your insurance plan should be dynamic and should respond to the changes that you go through over the course of your life. But the only way for your insurance policies to be dynamic is for you to review them regularly so that you can ensure that they keep up with the pace of your life. Here are six different life events that should prompt you to review your insurance coverage and come up with a more fitting plan.

College graduation: When you graduate college, you might not have much more than an auto insurance policy. But this is the time to consider life insurance and, if you move into your own apartment, a renter’s insurance policy. After college you will probably have a lot of debt to deal with. A life insurance policy will ensure that your family isn’t responsible for the debt that you leave behind. Renter’s insurance will protect your contents from possible damage and will protect you from liabilities if anyone is hurt in your home, because the last thing a new college graduate needs is a lawsuit form someone who is injured in their apartment or the expense of replacing items damaged during an insurable incident.

Getting married: As a Newlywed you face the challenge of adjusting to the idea you are now, and will be, part of united partnership. You are no longer a single individual trying to make your way through the financial pitfalls of life. You must now consider joint expenses, joint financial responsibilities and a joint future. You may need to increase your life insurance death benefit while changing your primary beneficiary, talk about changing the limits and deductibles on any renters or homeowners insurance policies since living together could double the value of your personal contents, add your spouse as a driver to your auto insurance policy and consider an umbrella policy to fill any liability gaps you might have.

Having a baby:
With a new baby on board, your life is going to change completely—and so are your insurance policies. This is a good time for you and your spouse to increase your life insurance death benefits, adjust your contingent beneficiaries to whomever will get custody of your child should you both pass away, increase the limits on your homeowners or renters insurance and even consider reducing your deductibles so that you have fewer out-of-pocket expenses to worry about. You also should consider adding a life insurance policy for your child so that you can lock in rates that they will still be able to pay once they have children of their own.

Moving: When you move to a new home or apartment, you must consider the new area you live in and any additional risks it might bring. You must also think about any new furnishings you will be adding to your new residence and the possible increase in insurance limits they might require. Lastly, consider any new debt you’ve taken on in the move and adjust your life insurance policy to account for that.

Changing careers: If you change careers, you might have a longer drive to work which could require an adjustment to your auto insurance policy. In addition, if your income has increased along with the change, then you will need more life insurance coverage. If your new career involves working from home or for yourself, then you have new liability issues that your homeowners insurance policy will not cover, so you need to make the proper adjustments there as well.

Divorce: The ending of any relationship is sad and requires a lot of lifestyle and emotional adjustments. But it also requires some adjustment to your insurance policies. You might need more life insurance coverage depending on how much debt you are left with after the divorce and depending on your future childcare needs. You also need to adjust your life insurance beneficiary information. Your homeowners or renters insurance may need some changes in deductibles and limits and you might want to consider adjusting your auto insurance coverage especially if the divorce results in your driving more to see your children, driving further to work or simply being forced to drive around more often during the course of the day.

While these examples all give you a starting place for determining when you might need to update your insurance policies, they certainly don’t represent every change you could encounter that will result in the need for an updated insurance policy. At a minimum, make sure you review all policies annually to catch any other changes that need to be made along the way.

Not sure when your last review was? Call us (845) 565-2200 to schedule a review now or visit us online at!