Calculating How Much Life Insurance You Need

A friend recently related a story of how a man and his wife had bought and re-bought new life insurance policies several times over the past 5-10 years. As their income increased and their responsibilities grew, they had steadily outgrown their coverage.  It’s a common occurrence and easy-to-understand.

While a standard rule of thumb is to lock in a term policy for 8x or 10x your annual salary, the actual coverage amount that is right for your family depends entirely on your personal situation. If you want your life insurance policy to provide support for your family for an extended period of time, you’ll obviously need more coverage. If you’re comfortable with your insurance policy being a short-term stopgap, you can get away with less.

Efinancial offers an online life insurance calculator that allows you to enter data on anticipated one-time expenses, ongoing living expenses, years of need, and any special savings goals you may have. Just a few seconds is all it takes to “crunch the numbers” and give you a cushion to fall back on.  In addition, Efinancial also offers Insurance Calculators to determine your Net Worth, estimate the Cost of Raising Children, or calcuating an Annuity.  Just scroll down the Efinancial home page to find these handy and informative Insurance Calculator choices.
Learn how to calculate your life insurance needs

Five Ways to Recoup Lossesh

With retirement cushions beginning to look more like throw pillows –  many families are wondering: “How can we recoup some of our losses?”

Bloomberg commentator John F. Wasik spelled out five ways any household  can save and use their money prudently even in a bad year.

One, keep investing, but do it in yoursellf!  Continue to contribute to your 401(k) plan. Keep in mind that taking your employer’s matching contribution, if you have one, is still a 100 percent initial return on investment. If you don’t feel comfortable investing, save up cash and put it in money-market funds, I-bonds or certificates of deposit.

Two, appeal your property taxes. Do this every year by reviewing your home’s assessed valuation. If it’s too high compared with similar properties, talk to your local assessor or appeal it on the county level. If you win the argument, you can usually freeze or lower your real-estate tax bill.

Shop Around for Insurance
Three, yes, shop around for insurance. Everything from increasing your deductible, or out-of-pocket expense, to lowering premiums across the board on life, health, homeowner’s and other policies. [Efinancial can help in this department. - Ed.]
Learn more insurance and investment tips

The Motley Fool’s Question of the Week: Life Insurance – Do I Need It?

The Motley Fool’s U.K. bulletin board has asked plenty of brain teasing questions over the years. But this week’s installment takes the cake for pure common sense: Life Insurance – do I need it?

A single woman who has mortgage insurance protection writes: “I’m a single twenty-something with two properties, both of which are mortgaged. One is an interest-only mortgage, the other is a repayment mortgage. I have life insurance policies in place over both properties along with a benefit in work of four times my annual salary should something happen to me. I have no dependants and feel that I am perhaps a little over-insured. Ahh, so the question  may not be so simple. is this person over-insured?

When do you need life insurance?

The Motley Foll has always been famous for cutting to the quick. In this case, the answer to “Do I need life insurance?” is straightforward. Generally-speaking if you have people in your life who depend on you financially — whether it’s your partner, your children or someone else — then it’s a good idea to take out enough life cover to provide for your family’s financial well-being should the worst happen to you.

Read more about why life insurance is necessary

Can Life insurance Help With a Business Loan?

According to a recent article penned by a New York Life securities partner, Life insurance may be a player in the credit game.

When banks evaluate a loan application from a business client, they frequently take into consideration whether a key employee in that business has life insurance. In the event that the employee’s loss causes a business disruption, the life insurance could serve as a means of secondary collateral. In a sole proprietorship or other closely held business, a life insurance policy can possibly be a deciding factor to the bank as to whether or not to grant the loan. The chances for obtaining a loan approval may be enhanced if the business itself is named as the policy beneficiary.

A life insurance policy can help in the following ways:

It may make a lender more willing to grant credit or a loan.
It may open access to higher amounts of credit.
In some instances, it may result in a more competitive loan rate.

Term Life Insurance is often used, especially when:

Protection needs are short-term or limited, such as to cover a single loan for a specific period of time.
The situation calls for a high dollar amount of coverage.
Dollars are tight. Term insurance provides coverage for a lower immediate premium dollar than does permanent insurance.
Most businessowners prefer no-frills protection. You can buy it when you need it and drop it when you’re done.

Writing the Life Insurance Book on Value

The Efinancial Life Insurance Blog returns after a short hiatus. We are in the process of updating our blog software to better serve our readers. Changes are in progress so please stay tuned!

We all deal with a handful of complicated, poignant points in our lives, and the better prepared we are for those monumental moments, the better chance we have for success. A new book by life insurance analyst Anthony Steuer provides a Life Insurance Toolbook. The book is called, simply, Questions and Answers on Life Insurance.

Questions and Answers on Life Insurance covers the need-to-know facts about life insurance, including:

• The types of life insurance and how to choose a policy right for you
• Choosing a life insurance company and an agent
• Understanding underwriting
• Monitoring your policy

“This book has many references, tools and worksheets and is completely non-biased,” says Steuer. “It’s consumer friendly and not just a life insurance selling vehicle.”

Questions and Answers on Life Insurance allows the reader to quickly identify their particular area of interest. Steuer sheds light on most any quandary, from choosing the right amount for your policy to the not-so-common load of information one can gather from a term life insurance illustration.

Check out the book at the iUniverse Website.

4 Questions Everyone Must Ask About Life Insurance

Certifiied Financial Planner Michael Rubin reaffirms that there are four simple questions everyone must ask about life insurance.

“I know that talking about death isn’t fun,” Rubin states. “But failing to put life insurance in place is among the riskiest things you could do to your child. You’d never leave your son alone on a bridge. You’d never look the other way while with your daughter on a boat. Life insurance is much more that just the safety railing or the life raft. Life insurance is you looking after them, just in case, some day, you’re not.”

Here are the four most frequently asked questions about life insurance that, left unanswered, can prevent a parent or spouse from taking the right steps.

Question # 1: Do you need life insurance?

Not everyone will answer this question exactly the same way. You need to consider who will be harmed financially by your untimely demise. If it’s only your hair stylist, you don’t need life insurance. But if you’ve got children, or have a significant other or parent who depends on your income, life insurance is critical.

“It is not only those making an income who need to be insured,” says Rubin. “Even if you work full-time in the home and receive no salary, there is a tremendous financial cost to the survivors resulting from your early death. How would your surviving husbandor wife be able to keep his job and perform all your responsibilities if you were gone? Quite likely, it would be impossible. It is life insurance on the homemaker spouse which would enable the surviving spouse to keep the job he has and afford to hire others to help with the tasks you formerly performed.”

Question # 2: How much life insurance do you need?

Your main goal with life insurance is to satisfy your family’s needs for a specific period of time after you are gone. As a parent, you are protecting your husband or wife from having to work for the rest of the time your children were expected to live in the home. Another consideration is for your children’s expected college expenses. Take advantage of the tools available such as the Efinancial Life Insurance Calculators to get a firm grip on the amount of insurance that’s right for you.

Question # 3: What kind of life insurance should you buy?

While there are circumstances where whole life insurance policies make sense, most young families with limited budgets need to maximize their protection per dollar spent and choose term insurance. You pay premiums for the specific length of time (the term) the policy covers. If you pay your premiums and you die during the term of the policy, your beneficiary receives the life insurance proceeds. If you do not die during the term of the policy, you get nothing. It’s that simple.

Generally speaking , you’ll see you can afford much more protection for the same dollar amount buying a term policy compared to a whole life policy.

Question # 4: Where do I buy life insurance?

“Even if your employer offers you a life insurance benefit at work, you owe it to yourself to get a quote for a private policy. Especially if you are young, healthy, and a non-smoker, you’ll likely find that a privately purchased policy will be less expensive than the one offered to you at work,” states Rubin.

Keep in mind that life insurance you purchase privately does not depend on your continued employment at your current job. When you go to work for another company or take some time out of the workforce, you can keep your privately purchased life insurance. This is called “portability.” Life insurance purchased through your employer is typically not portable, since it is usually not available to you should you leave your job. In most cases, this is true regardless of the reason you leave: quit, layoff, or disability.

Important questions, one and all. Let a fast life insurance quote from Efinancial help you find the answers!

How to File A Life Insurance Claim

Death comes uninvited. The initial shock and the sorrow of a sudden loss can make even the simplest, most straightforward steps, like filing a life insurance claim, seem overwhelming and complex. All too often, the spouse of a family breadwinner does not have the details about how to go about claiming life insurance.

While procedures, conditions and requirements may vary, common sense and full disclosure of information typically represent the simplest path to filing a life insurance claim.

Filing A Life Insurance Claim

If the the original policy is on file or in hand, the claims process is considerably easier. If the policy is missing, or out of reach, the details should be gathered and made available to to the insurance company, including the name of the policyholder, the policy number and the date of issuance of the policy.

Completing a Life Insurance Claims Form

After the policy has been found, the next thing to do is to locate the agent who sold your spouse the policy. If the agent cannot be found, the insurance company can be approached directly and the life insurance claimant or “nominee” can fill out the claims form. When completing the claims form, the nominee has to specify the date, place and cause of death. Along with this, details of the insurance policy also need to be filled in.

The claims form needs to be accompanied by a set of documents. The most important of the lot is the death certificate, issued by the municipality where the person was buried or cremated. This has to be accompanied by a statement by the doctor(s) who treated the policyholder before death.

Life Insurance Claims In Case of Accident

In case the death was due to an accident, then a first information report needs to be filed with the police, a copy of which has to be filed along with the claims form. Along with this, a police report, which has details of the circumstances of the death, and a post-mortem report (if at all it was carried out) also need to be filed.

Also, the nominee needs to prove that he or she is the nominee mentioned in the policy. In this a case, a copy of any photo identity card suffices.

There is no fixed timeframe within which the claim needs to be filed. The only thing that the nominee needs to prove is that the policy was in force when the policyholder died.

What if the premiums haven’t been paid?

If a term insurance policy has lapsed, because the policyholder has not paid the premiums, the insurance company does not process the claim.

Term insurance is pure insurance. In term plans, in case of death of the policyholder during the period of the policy, his nominee gets the sum assured (commonly known as the cover age amount). Of course, if the policyholder survives the period of the policy, he does not get anything.

In case of insurance policies other than term plan, however, a more lenient view is taken, provided the policyholder has paid premiums for three consecutive years before defaulting. After deducting for the premium due and other charges, the proportionate sum assured is paid out.

Find more information in the EFinancial Insurance E-Learning Center.

What is Term Life Insurance?

When you’re looking for a straight answer to an honest question these days, you could visit Wikipedia, the online encyclopedia created by millions of users across the Internet, or, if the subject is “life insurance,” you could check out EFinancial’s own Insurance E-Learning Center a virtual personal insurance library for helpful, life insurance information.

Take a basic question like ‘What is Term Life Insurance?” Wikipedia starts out: “Term life insurance is the original form of life insurance and is considered to be pure insurance protection. And continues, “Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.”

Why buy Term Life Insurance? Term life insurance is appropriate for you, if you are:

• in need of coverage for a limited period of time,
• a young person who is looking for lower premiums,
• buying a home or car, where the financial burden of a loan will disappear in time.

Term life insurance policies must be renewed when each term ends. Before buying a term life insurance policy, you should ask about the renewal provisions for the protection of your future insurability. There are some typical choices:

• Annual Renewable — he premium go up each year.
• Level Term — the premium stays the same for specific period like 5, 10, 15, or 20 years, then increases sharply.
• Automatic Renewable — you’ll have to pay more for this feature.

Some other options when shopping for term life insurance policies may include:
• Re-Entry – it requires a lower premium than an automatically renewable policy. You can renew at the same low rate offers to new customer; but you’ll have to pass a physical examination. If you’ve developed any health problems, your premium could go up and cost more than an
automatic-renewable policy.
• Convertible term – you’ll have the option to convert to a whole life insurance policy in later years.

And that, in a nutshell, is a textbook description of “Term Life Insurance.”

Understanding Life Insurance Fine Print

A recent Life Insurance Tutorial in the Business Standard points out some of the general “rules of the road” which policy holders can encounter. It is important to know all of the relevant clauses in “the Fine Print,” before signing on the dotted line.

Here are a few of the general “rules of thumb.” Policies vary so you’ll want to check your specific insurance policy to see how these may apply to your individual situation.

1) In investment-oriented life insurance policies, a policy will usually get converted into a fully paid-up policy, only after the premiums for the first three years are paid. Otherwise the policy lapses, and the policy holder does not receive any proceeds at the end of the tenure.

2) In a term life insurance policy, there is no concept of fully-paid up as there are no maturity benefits payable. Hence the policy lapses if the premium is not paid every year.

3) A grace period (usually 30 days), is sometimes given to the policy holder whereby the insurance policy remains valid from the due date of the premium, to allow the insured to pay the premium during the said period. Should the insured die during the grace period, the insurer is liable to pay the death benefits to the beneficiaries less any amount outstanding (including the unpaid premium).This provision helps the insurer to minimize the risk of policy lapse unintentionally.

4) A lapsed policy may occaoccasion be reinstated if it is carried out within a certain period. However, this may only happen if the insurance company is convinced that the erstwhile policy holder is still an insurable risk, and the health or financial condition of the person has not changed for the worse. For reinstatement, all overdue premium and interest must be paid.

5) A suicide clause provides that during a period (usually one year from the inception of the policy), if the insured commits suicide, the insurer will not be liable to honor any death claim. However, the onus to prove that the death was due to suicide lies with the insurance company.

6) An incontestable period (usually two years and beyond after the policy is in force) is imposed. Once this period is in force, the insurance company cannot nullify or void a policy on the basis that the policy holder has made any misrepresentation or omission at the time of entering into the insurance contract. This usually pertains to non-disclosure of health related conditions prevalent at the time of application. However this clause will not affect the rights of the company, in case there is any fraud involved. But, the onus of proving fraud lies on the insurance company.

7) A misstatement of age clause is inserted by the company to protect itself against the insured wrongly stating his/her age. The redeeming part is that in case this happens, the policy will not turn void. It shall be valid, except that in the event of the insured’s death, the death benefit shall be adjusted in accordance with the actual age of the insured.

An assignment clause is also usually present. Assignment refers to a transaction where a person’s rights and benefits under a contract are transferred by him to someone else. Oftentimes, the policy owner can assign the policy to whoever he wishes. He can make an absolute assignment, in which event the benefits of the policy is irrevocably transferred to the assignee or it can be by way of a collateral assignment, where the policy is a collateral for a debt and the it will be reassigned once the debt has been paid off. These are few clauses that you need to know so that you and your beneficiaries are not subjected to financial strain after the policy holder’s death.

These general ground rules could apply to your insurance policy, but since your mileage may vary, it always pays to examine your personal policy for details. Check out the Efinancial Life Insurance E-Learning Center for lots more information on life insurance policy features, topics and restrictions.

When you compare insurance rates and shop for the best deals in term life or other types of life insurance, it pays to know the score.

Efinancial Launches Life Insurance E-Learning Center

Efinancial Life Insurance E-Learning Center Educates on Best Buys, Smart Choices in Buying Life Insurance Online

SOURCE: http://www.marketwire.com/mw/rel.jsp?id=737392 – May 07

BELLEVUE, WA–(Marketwire – June 1, 2007) – When’s the best time to buy life insurance for men, women, married couples and retirees? How can you save hundreds, even thousands, of dollars in premiums by choosing among different life insurance policies? How can you buy affordable life insurance with no medical exam required? What are the most innovative features in life insurance products today? And how do life insurance payments and claims actually work?

Efinancial.com, the Internet insurance brokerage leader that has introduced online insurance comparison shopping for locating the most choices and best values in term life insurance as well as other insurance products and services, wants you to know the answers to these questions. The admired company considers an educated Web shopper to be its best customer. To demonstrate its commitment to educate consumers on life insurance savings, features and options being offered by some of America’s leading insurance companies, Efinancial has launched the Efinancial Life Insurance E-Learning Center.

Featuring more than 150 concise articles written in easy-to-understand, non-jargon-filled language, Efinancial provides helpful information on a wide range of insurance information topics.

Click and learn about: How to Buy Life Insurance Online, Life Insurance Policies In a Nutshell, Bargain Hunting for Cheap Term Life Insurance, and How to Compare Life Insurance Rates. The Efinancial E-Learning Center demystifies the process of getting the greatest insurance return on your personal insurance investment.

Efinancial Founder Michael Rowell sees the Internet as leveling the playing field for life insurance products of all kinds provided that consumers know where to look and what to ask for. “Efinancial wants to help consumers truly understand the smart choices they can exercise when it comes to buying life insurance and protecting the financial security of their dependents. To us, that means letting visitors find accurate answers to questions at their own pace, from the comfort of their own home or office, without being pressured or confused.”

The Efinancial Life Insurance E-Learning Center can be accessed directly at http://www.efinancial.com/bestValue/TermLifeInsurance/LifeArticleTOC.shtml.

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