Term Life Insurance Is A Great Buy

With the introduction of new term life insurance products, deciding where to find the cheapest rates is only part of the solution to finding the best deal on life insurance.

Lets begin with need. How much insurance should you buy? Consultants generally advise between five and seven times your gross salary. But that's only a guideline. The best way is to estimate your survivors expenses if you die. You'll want to make sure that there's enough money to pay any debts and burial expenses.

Don't over insure. Many younger people without children need very little insurance. Older couples may need just enough coverage to pay for final expenses and provide their surviving spouse with enough money so that they can avoid major financial decisions for the rest of their lives.

Cost of Long Term Care Insurance
A real quick way to determine the amount of coverage you need is to total up the expenses that your family will have after you're gone. First, the one time expenses at death and then the ongoing ones. Take the ongoing expenses and divide by .07. What that says is that you'll want a lump sum of money earning about 7% each year to pay those annual expenses. Add to that lump sum the amount you'll need to cover the one time expenses. The total should approximate the amount of life insurance you need.

A simpler method is to add your mortgage debt, all other debts so that everything is free and clear. To that add a lump sum which, if invested at say 5%, will produce sufficient income to keep you spouse and family going.

Single Term Insurance
Many people favor term insurance. After all it is cheaper. But as you get older you'll probably want to consider 'permanent insurance'. With this type of insurance, as long as you continue to pay the premiums you'll have coverage no matter what your health condition.

Other Types of Life Insurance
Permanent insurance goes by a variety of names. Basically, they're all variations on the same policy. One of the most common is called 'whole life'. Here you'll pay a consistent premium for the rest of your life. The premium is split into two parts. One part actually pays for the life insurance for that year. The other part is invested in the early years and can be used to pay your premium in later years.

In some policies you'll be given a choice of where to invest the money. Youll sometimes be able to choose either a fixed rate investment or a stock mutual fund.

You'll find no lack of variety available. The choices are almost endless. One popular option allows you to 'borrow' the accumulated investment from the policy. This can come in handy for college tuition or other major known expenses where it's nice to begin saving a little bit on a regular basis.

Selecting an insurance company can also be challenging. According to industry sources there are over 2,000 companies that sell life insurance in the United States and Canada. Prices vary significantly. I ran a comparison of a 10 year renewable term for myself and found rates from $535 to $3,814 for a yearly premium!

But there's more than price to consider. Make sure you select a company with a high rating. But see what term life insurance will cost.

When you get right down to it there's only three good things to say about shopping for life insurance. First, it's available to cover our needs. Second, we can select a plan that meets our needs. And finally, it's not something that you have to buy each year!

Ivon T. Hughes, The Hughes Trustco Group Ltd.

Online Insurance Broker - Get a FREE Ebook TODAY!

Tel: (514) 842-9001 Email: info@trustco.ca

Website: http://www.hughestrustco.com

Articles from July 2007
More articles from Year 2007

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