Life Insurance Basics –
The first in a series of Household Money Saving Tips on Susies-Coupons.com

Is life insurance important or not? Many people think they can go without it. But, for many of us, it’s a necessity.

Of course, it’s more critical for some than others. If you’re in your 20s and have no financial dependents, there’s little point. But if you do have people who rely on you financially, it’s wise to look into it.

If your kids are younger, they might need money for 10 to 15 years before they are ready to support themselves. Then, of course, there’s the cost of college.

And don’t forget funeral expenses. These can be extremely high – in many instances the costs can be $10,000 or more. That’s not the main reason to get a life insurance policy, but it is a huge benefit.

How much life insurance coverage should you get?

A good rule of thumb is to get roughly eight to ten times what your annual income is. This will ensure your kids have enough money to maintain the current standard of living for a long time.

If you have a lot of debt, you might want even more. If you have quite a bit socked away in savings, you might want less. Talk with an agent to discover the best solution for you.

What kind of life insurance coverage is best?

There are basically two kinds of life insurance – term and whole. Whole insurance is much more expensive. Whole insurance is used as an investment vehicle, in addition to providing coverage. That means a certain percentage of the money you pay per month is put towards your investments. The reality is, most whole life insurance policies aren’t going to gain anywhere close to what a mutual fund would. The investments usually don’t get more than a 5% return, as compared to 10% or more for a mutual fund.

With whole life insurance, you are also locked into having the policy for the rest of your life. Often, the company will have a maximum premium you have to pay during the course of the policy. This just guarantees you will not have to pay more than that premium during the whole policy.

This is a distinct advantage over term. With term life insurance coverage, oftentimes the rates increase dramatically if you have some sort of health problem before the policy is over. When it comes time to apply for your next coverage, the prices will either go up significantly, or you will get rejected for coverage altogether.

Talk to a life insurance agent to find out how much coverage you need based on your income, savings and debt, so you will be ready for an emergency.

Whole Life Insurance versus Term Life Insurance

Life insurance comes in a number of varieties.  We hear terms such as whole life insurance, term life insurance, variable life insurance, etc., and it can be very easy to become overwhelmed quickly.  One very popular life insurance choice is whole life insurance, which provides coverage for a lifetime, assuming continued premium payments.  There are a number of advantages of whole life insurance over term and variable life insurance, some of which will be outlined below.

Whole life insurance features level premiums, which means that the amount you must pay for your whole life insurance policy is better the younger you are.  So if you are relatively young, buying whole life insurance can be a great investment.  This pricing policy makes sense as insurance companies offer lower premiums if they incur lower risk.

The chances are good that the insurance company will not have to pay a claim on a healthy and young individual for many decades, which means that they are likely to profit on the policy.  If the individual stops paying for the policy for any reason during his or her life, the total amount paid in premiums becomes pure profit.

Another real advantage of whole life insurance policies is that there is the potential to earn dividends.  This surprising benefit occurs when the amount that the company has to pay to administer the policy turns out to be less than what was anticipated.  Of course, dividends are never guaranteed, but are a very nice plus when they do occur.

Another aspect of whole life insurance policies is that they carry actually cash value.  You can choose to cash in your insurance policy for that cash value, and it is also possible to take out loans against the cash value in your whole life insurance policy.

The Pros and Cons of Term Life Insurance

Term life insurance is, as its name implies, life insurance that is good for a particular term and then must be repurchased.  The term is usually a year, but there are also term life insurance policies that may be two or five years, or other increments.  Term life insurance is often offered by employers as part of a benefits package, and can also be purchased by private individuals who do not want to pay the higher premiums of whole life insurance or variable life insurance.

One thing to keep in mind when purchasing term life insurance is that you must re-qualify at the end of each term period in order to continue the term life insurance coverage.  Should an illness or issue occur during the term that decreases your insurability, you may find that you no longer qualify for the term life insurance policy or that you must pay higher premiums.

Another disadvantage of term life insurance versus whole life insurance is that term life insurance policies have no cash value.  That means that you cannot cash in your term life insurance policy, nor can you ever borrow against it.  Term life insurance is strictly a short term arrangement.

While it is clear that the coverage offered by whole life insurance is often more comprehensive than that offered by term life insurance, term life insurance is a great option for those who do not want or cannot afford the expense of a whole life insurance policy and for those who receive free or substantially subsidized term life insurance policies from their employer.

Term life insurance is certainly scaled back in relation to whole life insurance but, depending on your current position in life and your goals, may be the best type of life insurance for you.

A Few More Insurance Saving Tips

Insurance provides “risk management solutions” to consumers to evade possible danger of financial shortfall. If you know how to buy good insurance policies, you can definitely save more money.

However, not all insurances are equal. Insurance policies may differ depending on the type of coverage they provide. So it is best to be aware of these things to avoid further charges.

Here are some of the best tips that you can find to help you in choosing the best type of insurance that you need and still cash out some great savings.

1. Do your homework.

To cut back unnecessary expenses on insurances, it is best to learn everything about the insurance policy first. In this way, you will know the necessary rates available and the particular items you are required to pay. Not all charges are deemed necessary, depending on the type of insurance policy that you have.

If you know your way around, you won’t be lured to pay things that are, in reality, not required.

2. Get quotes and compare

To save more money on insurance, it is best to get price quotes first. In this way, you get to compare the rates as well as the essential charges stipulated within a particular policy.

Once you have a good quote, try to assess the important factors that can affect them. Remember, price quotes aren’t the actual rates of insurance. They are just estimates of the definite rates of insurances.

Prices may still vary depending on the nature of the insurance. But quotes can be very helpful in assessing the estimated cost of insurance.

3. Get the coverage that’s just right for you.

It does pay to ensure you and your family’s future by getting insurances such as life insurance, auto insurance, or mortgage insurance.

But it doesn’t necessarily mean that you have to get every protection that your insurance can provide you. Statistical reports show that nearly 65% of insurance policy holders are paying extra premiums that they really don’t need. Just imagine how many dollars they can save if they will shun away from those extra payments.