Categories
Life Insurance

Buy a policy equal to seven times your annual salary

If you’ve ever been in the market for life insurance, somebody probably recommended to you that you buy a policy equal to seven times your annual salary. This is an old adage bandied about by the insurance industry to – you guessed it – sell more insurance. Let me tell you why this is flawed. Life insurance is designed to be income replacement. It’s designed to pay the bills when you’re no longer around to bring home the bacon. So the correct amount of life insurance factors in the expenses that need covered, the amount of time those expenses need covered less any existing assets that can be used.

Take a two income couple with kids in high school and college. Their insurance needs are much more finite than say the sole bread winner with a new born. Who needs more life insurance? Here’s a hint: It’s not a function of salary. Further, it fails to take into account the possibility of Social Security survivor benefits for your spouse and/or guardian of your children. This is routinely neglected when considering how the bills get paid in your absence. But it greatly reduces the amount of coverage that’ll you need.

Don’t buy life insurance by multiplying seven or any other number by your salary. Instead, look at the expenses that need covered and the amount of time they need covered plus things like college and wedding funds. Subtract out what could be covered by your existing financial assets and Social Security survivor benefits. The total you come up with is likely much different than just blindly using a multiple of your salary.

Categories
Life Insurance

Basic Life Insurance

Life Insurance Basics

What is life insurance?
Life insurance is a contract between a policyholder and an insurance provider. In essence, it says: “If you make all of your insurance payments as agreed upon in our contract, we, the insurance company, promise to pay out a benefit to your loved ones—the beneficiaries—when you die.”

That benefit comes in the form of a cash payment, which can be paid out in one lump sum or in increments, depending on what the policyholder wants. The total amount paid out is reflective of the premiums—the regular installments of insurance payments—made by the policyholder over the course of the life of the policy.

The reason people get life insurance is so that in the event of an untimely or even long-anticipated death, the deceased person’s loved ones are looked after financially and are not suddenly forced to scramble to make ends meet, pay bills or look after themselves.

Types of life insurance are generally broken up into four categories: term life, whole life, universal life and variable universal life policies. The differences between these are centered on how long the policyholder must pay their premium, when the policy expires and under what circumstances the policy is no longer valid.

Because life events such as marriage, childbirth and major purchases impact the long-term needs of beneficiaries, it’s important to frequently reassess your life insurance policy to ensure that those you love are adequately provided for.

Do I need life insurance?
The point of life insurance is to make sure that your dependents are looked after when you pass away. Therefore, assuming you have no dependents, life insurance may not be a worthwhile use of your money. If you do have dependents, you might consider asking yourself a few questions to determine if you need life insurance and, if so, how much you ought to purchase. Possible questions include:

How much money would your dependents need for living expenses and how long would it take until they became self-sufficient?
Will your dependents inherit assets that can help them support themselves?
Are there any friends or relatives on whose care and financial support your dependents can count?
In considering factors such as these, you can establish a ballpark estimate of how well taken care of your dependents will be. You can then decide how much or how little you need to contribute to a life insurance policy and which type of policy is best for you and your dependents.

How do I buy life insurance?
Before diving head-first into a life insurance policy, have some background knowledge so you can know what you’re looking for. Understanding the difference between different kinds of life insurance and their pros and cons given your circumstances will enable you to reach the goals for you have for providing for your loved ones after you’re gone.

Once you’ve established what kind of life insurance you need and how much coverage you require, your next move is to get quotes from as many different providers that fit your coverage specifications as possible. By comparing prices, you’ll be able to pick out the most-financially attractive offer on the table or, in some cases, use one offer as leverage for getting a better offer from a different provider.

Finally, after settling on the provider that’s right for you, all that’s left is the application process. This generally entails collecting the necessary personal documents, completing an application or interview and in some—but not all—cases, getting a medical examination. Note that there are policy providers that do not require medical examinations at all, so if that facet of the process is a non-starter for you, you may want to ask providers up-front whether that is a requirement for them or not.

After completing all of the necessary paperwork, tests and interviews, you simply need to wait for approval, sign any outstanding documents and, when the time comes, pay for your policy.

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Condo Insurance

What sort of investment property do you claim? Condo Insurance was good?

Proprietor Insurance

What sort of investment property do you claim? You may have a few multi-unit buildings. Possibly you reestablished a vintage fourplex in an architecturally significant area — or lease a solitary family house you acquired from an auntie.

Whatever your portfolio resembles, Farmers comprehends that private land speculations can accompany novel difficulties — to both your properties and your monetary steadiness. Proprietors can choose customized inclusion and get the protection they need.

What Landlord or Rental Property Insurance Covers

Inclusion for your investment property

A operator can help as you break down your property and the inclusion you need. Here are a few circumstances you may experience:

A tempest harms your investment property

Hazard:

Your inhabitant calls to state there’s vinyl siding strewn over the front yard — you’re not amazed since a thunder storm kept you conscious the greater part of the night.

Inclusion:

Discretionary complete property inclusion can help with harm if a tempest or other climate occasion is secured by your strategy.

A channel blasts

Hazard:

A channel in an upstairs restroom out of nowhere blasts, soaking the roof beneath. You land to assist clean with increasing the wreckage, yet the harm is as of now done.

Inclusion:

Named-danger inclusion can help with inclusion for explicit hazards that you pick, including water from blasting funnels.

Your occupant is harmed

Hazard:

Your occupant stumbles over a nursery hose you’re utilizing to water the flowerbeds. He lands palms-down on the ground — and breaks his wrist.

Inclusion:

Discretionary proprietor risk inclusion can help with emergency clinic bills and lost wages in case you’re lawfully answerable for his damage.

Discretionary Coverage

You should alter your arrangement with discretionary inclusion — here are a few choices:

Loss of rents

Loss of rents inclusion can help with the loss of rental salary if the property gets dreadful by a secured occasion like a fire or tempest.

Individual property

Individual property inclusion can help secure if individual things you store on the premises are harmed or taken.

Individual damage

Individual damage inclusion can help in case you’re sued for improper removal.

Different structures

Different structures inclusion can help with structures that aren’t physically associated with the habitation — including carports, sheds, pools and garages.

There are no arrangement or records charges, and you don’t need to gather individual data from candidates. All they need from you is an email address — they’ll contact the candidate and deal with the rest.

For complete subtleties on Farmers landowner and investment property protection, contact your nearby Farmers operator today