Archive for February, 2010
A life insurance policy is one of the most important things a person can take out against themselves, particularly family members who have children or spouses reliant upon them. A good L.I. policy will mean should you die a big lump sum will be given to the benefactors stated in your policy, which may be a spouse, children, or multiple people named.
It is shocking in this day and age how many people never consider taking out a LI policy, preferring instead to use the money they would be paying into the policy for enjoyment and living, but a L.I. policy isn’t about living. Sure, life is there to be enjoyed and shared as much as possible with your loved ones, but think for a second what will happen to them when you have gone, which could be absolutely any time, as we all know. Will they be able to cope financially, or will they struggle?
This isn’t scare tactics; this is simply the truth of the matter. No person would want to see their family suffer financially whilst they are still alive, and surely you would want the best for them once you have gone. It is only logical.
With L.I. policies the money isn’t dead money which will never be recouped, it is money which is definitely going to be recouped by you’re loved ones when you are no longer around. It is money which they may be reliant upon to help them survive, and is one of the most important things any person can do for their family.
L.I. policies come in many forms; some are from now until you die which are known as ‘whole life insurance policies’, whilst some are taken out for a specific term, known as ‘term life insurance policies’, therefore should you die within the term, there is a payout. Many companies offer vastly different terms, options and benefits, and there is much to be researched before taking out a L.I. policy. One of the most important factors is the life insurance rate. Don’t be misguided into thinking the lower the life insurance rate the better, because this more often than not means the life insurance policy isn’t a good one.
A person’s age and current illnesses or ailments which may in turn lead to death are taken into consideration by the life insurance companies in determining you’re rate and the type of life insurance policy you require. Do some research on the internet and try and find some established reputable companies you can meet with to discuss life insurance policies.
Now we’re getting into the large lengths of term life periods. 30 year term life insurance is typically the longest period of term that most life insurance companies offer and for good reason. Beyond this amount, you’re probably looking at whole life insurance and we covered the advantages of term life over whole life in detail. Let’s take a look at when 30 years of term life make sense when compared to the other short lengths of term.
Most life insurance companies offer term lengths ranging from 5 to 30 years. The length of term you choose partially depends on what age you apply for coverage at. The cost of life insurance is critical and 30 years of term term life at age 30 is much cheaper than 30 years at 40. The other major issue is the intent of life insurance. If you purchase 30 years of term at age 40, that takes you to age 70. This is even 5 years past Medicare and quite a few years past what is expected to take children into early adulthood. For this reason, 30 years usually makes the most sense for younger people who have the prescience and responsibility to shop for life insurance at such an early age (kudo’s to those individuals mature at such an early age). What if you’re older?
You really have to look at the premium difference. Run your instant quote and compare 30 year with 20 or 15. If there’s a huge difference in annual premium, you really have to take this into account. For example, if the premium difference for $500K of coverage between 20 and 30 years is $1000/annually, that is $20K over the course of the policy. $20K is quite a bit of money. You can to compare this against the additional 10 years of coverage and the financial responsibilities that you have and how long will they last. Will 20 years adequately cover your loved one’s financial needs? In most cases, 20 years will cover the majority of long term responsibilities. What about the 30 year mortgage?
Wouldn’t 30 years of term address the standard 30 year mortgage? Well…yes but it won’t be cheap. Insurance is rarely about insuring 100% of a risk. If it was, it would be too expensive. That’s why insurance has deductibles and co-insurance. Life insurance doesn’t have deductibles but you can think of insuring 20-25 years of a standard 30 year mortgage as the equivalent. Let’s look at this example. Let’s say you purchase a 20 year mortgage to cover a new 30 year mortgage and the unthinkable happens. There are two possibilities. One is that the life insurance benefit is typically paid out in a lump sum while the mortgage continues on a monthly basis. Depending on the amount of benefit, you may be able to invest that lump sum and generate enough interest/gains to pay all or most of the monthly mortgage payment.
What if the insured passes away late in the policy. There’s still 10 more years left on the mortgage in this case. Keep in mind though that the mortgage flips so that more and more is being paid towards the principle of the property. 80% of the house’s value may be paid off by this point. Your loved ones could re-finance the lower 20% for a much lower mortgage payment or even draw off the equity of the house as an additional source or income during this period of time. Again, insurance only make sense if you can afford to make the premium payments. You have to take this into account when comparing 30 years versus 25 and 20.
If you talk to most Arizona residents about cheap health insurance companies they’ll look at you as if you’re crazy. The very idea of cheap health insurance seems ludicrous to most people, especially when more than 50% of all Arizona residents who have health insurance report that they can barely afford to pay the premiums as it is. Fortunately there are several things which most people fail to take into consideration that could reduce the cost of their health insurance significantly.
A very simple thing that most people overlook is to pay their health insurance premium automatically every month from their checking or savings account. If your insurance company doesn’t have to mail you an expensive bill every month they pass the savings along to you.
If you don’t see your doctor often during a normal year, then why not increase your co-payment from the standard 25% to 50%? It will save you around 20% a month on the cost of your premium and should save you money in the long run.
What about your deductible? Can you afford to increase it? Obviously this is a question that you’ll have to consider carefully, but the higher your yearly deductible the lower your monthly premium payment is going to be.
If you’re serious about reducing the cost of your health insurance then you are going to have to be serious about not smoking or using chew or any other tobacco product. You simply will NOT get the cheapest price for health insurance if you smoke or use chew. Period.
If the cost of health insurance is still too high you might consider opening a Health Savings Account, especially if you are generally healthy. A Health Savings Account, also known as an HSA is a special savings account that you fund with cheap tax-free dollars. The catch is that you can only use the money in your HSA to pay for your medical needs during the year. Because the money in your HSA is tax-free it is equivalent to saving approximately 25% on your health needs.
Another advantage to an HSA is that if you do not use all of the money in your account in a given year then the balance rolls over into the next year, which would allow you, over time, to build up a nice tax-free nest egg.
As part of your HSA account you will be required to buy a very low-cost high-deductible health insurance policy. These cheap health insurance policies have a deductible so high that in a normal year they will not pay even a penny toward any of your health care needs – that’s what your tax-free savings account is for.
What these cheap insurance policies do is they act as a safety net to shield your life savings and even your home itself from an unexpected catastrophic accident or illness which results in enormous medical bills which otherwise could have wiped out everything you own.
There is one last thing you can do that will save you a bundle on your health insurance, and that’s to buy your policy online. In today’s world you would have to be crazy not to buy your medical insurance online since online insurance sellers offer their products at such deep discounts.
One of the tricks to finding the most affordable policy online is to make sure that you check out the prices on several different health insurance price comparison websites rather than relying on the results that you find from just one site.
But once you’ve made all of your comparisons then the fun really begins as you simply choose the cheapest health insurance company in Arizona and know that you are saving a ton of money every year while still getting the health insurance that you and your family need.