Saturday, May 30, 2009

Convert Term Policy Before It Expires

Keeping an inexpensive term life insurance policy for too long can cost unprepared families lots of money in the long run.

While term insurance is a great way to protect your family from financial disaster, sitting on the same policy until it is too late to replace it with a permanent options can be a financial disaster.

Term life is temporary insurance. It pays a fixed death benefit if the policy holder passes away during a set period of time. For example, if you have a 20-year term policy and you die before the 20 years end, your beneficiaries will receive the face value of your policy.

Once the 20 years is up, the contract expires. The company keeps your premiums and you have to find new insurance, usually at a higher premium. Term insurance helps you to prepare for the unexpected.

Term insurance is the cheapest form of life insurance because it is temporary and not intended to pay out. Young families benefit from term insurance. In many cases, it is taken out to help support young children and a spouse in case the primary breadwinner passes away. That takes a large policy to accomplish.

Many young adults do not have substantial savings and investments yet. They have a lot of their money tied up in new mortgages and student loans. Term policies offer a cost-efficient solution.

But as families mature, the breadwinners grow older and the policies get closer to expiration. Situations change and families need to consider changing their term insurance into a more permanent option.

Many term insurance contracts have a clause that allows the policy holder to do just that.

You could think of it as leasing insurance with an option to buy. You can use the convertibility clause to convert without having to obtain a new insurance policy. For a price, families can transform their temporary insurance into permanent insurance without having to re-apply for coverage or have medical examinations.

Not all policies have conversion clauses. If you are buying term insurance, look for policies that include the clause. They are often more expensive, but well worth it.

For example, you have a 20-year term policy with a 10-year conversion clause. After nine years, you develop a major health problem. You are still within the 10-year conversion period, so you can convert the policy to a permanent policy. By doing so, you will not need a new physical exam and you will receive your coverage at a much lower rate than if your health problems were taken into account.

If the policy didn’t have the conversion clause, you would be facing an expiring policy and very expensive renewal premiums – if you could renew at all. You should always convert before it is too late.

You should review your policy with your agent on a regular basis. This will help to prevent that your conversion expiration doesn’t sneak up on you. When you are within a year of convertibility, you should take the time to look at your plan. Consider your health, finances, responsibilities and goals.

Don’t just look at your health in considering whether or not to convert a policy. The older you are, the more expensive you are to insure. By locking in a fixed rate and paying toward a permanent policy in your 20s, your monthly premiums will be much cheaper than if you had waited until your 50s.

Your financial needs transform over time. Your family matures and changes. When you are young, you often need a policy to replace your income and provide for your children. When you are older and your children are grown and your mortgage is paid off, you may find that you don’t need such a large policy.

The roughest rule of thumb is to take a multiple of your income. If you only need enough insurance to take care of your family for a few years after you die and set them up until they can get on their feet, buy 4-6 times your annual salary. If you want to take care of them for the rest of their lives, you can look at something quite larger, like 20 times your salary. That gives enough to establish a trust that they can life off of indefinitely.

One strategy involves buying the largest term policy you can afford when you are young. When you can afford more, supplement your term policy with a small permanent policy.

When your term insurance is set to expire, your children will be grown and your mortgage paid off. Then you can look at what coverage you will need.

Wednesday, May 20, 2009

Considering Long Term Care Insurance - Is it An Unnecessary Expense?

Long-Term Care Insurance is still fairly new on the market and a lot of people don't know that it even exists or what it covers. Even those who have heard the term don't know always when benefits are paid, how they are designed, and who qualifies or needs coverage. Many people don't think about this type of coverage until it is too late to get a great rate and higher benefits. They wait till they are past retirement age and closer to needing to cash in the benefits instead of investing earlier and maximizing your options. It is becoming more of a common practice for people to start thinking about what will happen 30, 50, or more years ahead. Many people invest in 401Ks, IRAs, stocks and bond, and other types of investments to prepare for the future. Many people think this will pay for living expenses and leisure activities once retired. Things don't always go according as planned.

What happens in the unfortunate incidence of an accident and you need help with your daily living activities? Or, you get to a point in your elder years that you require home care, as you grow older? You may decide you would rather live in you home for a long as possible and would need to have enough for personal home care. Some seniors enjoy assisting living facilities that provide 24 hour nursing care, but still let you be as independent as you can. There are also those unfortunate instances where nursing home facilities are need to tend to varying degrees of illness. Long-term care is designed to provide you help with these services due to a long-term illness or disability. The average cost of these types of care can cost around $40-$100 thousand per year and sometimes more. It is a very quick way to eat your saving and social security benefits. If you think Medicaid or Medicare will help, think again. Even if and when you qualify, your saving is now gone and they will only pay up to 50% of the cost, someone has to come up with the rest. Long-Term Care insurance can help with these costs in the unfortunate event you require nursing care.

Who should consider Long Term Care Insurance? If you think you will not qualify for Medicaid or full Medicare benefits due to a large saving, assets, or high income, this is a program for you. You do not want to end up having your children to pay for these expenses while you have to have them and possibly well after your death. It will keep you able to leave your loved ones a little something instead of sucking all your assets dry. Also if you can afford to pay the premiums you will likely not qualify for assistance so would truly benefit. If you currently have chronic health issues or have a family history of a long-term illness you would be off purchasing now than waiting. It will be too late to get a policy after you have already developed a long-term illness or disability. If you think at any point you might fall into any of the categories you might want to consider getting a plan earlier to be safe and covered. You can purchase a policy from most large insurance companies. As always, every state has different insurance regulations, therefore it is best to check with your state on specific determining factors and qualifications.

This coverage will help provide nursing-home care, home-health care, personal or adult day care usually for individuals above the age of 65 or with a chronic or disabling condition that needs constant supervision. LTC insurance offers more flexibility and options than many public assistance programs. Long-term care is usually very expensive, which is why most people need insurance. For example, on average, nursing facilities providing skilled care charge $150 to $300 per day, or over $80,000 a year or more. Even custodial home care at three visits per week, can cost over $9,000 a year. Most LTC insurance policies will cover only a specific dollar amount for each day you spend in a nursing facility or for each home-care visit. Thus, when considering an LTC insurance policy, read the policies carefully and compare the benefits to determine which policy will best meet your own needs.

Sunday, May 10, 2009

Comparing Auto Insurance Quotes Online

Auto insurance refers to the insurance which is used for insuring the automobiles against any kind of uncertain accidents that may cause damages to the vehicle. The main purpose that the insurance serves is to give protection against the losses incurred due to accidents. Auto insurance is a type of insurance that consumers must buy to protect the life span of their vehicles and also for any kind of damages that the vehicle may suffer in an accident. Auto insurance is used to insure many automobiles such as cars, trucks and any other kind of vehicles that may need it. Different kinds of coverage are available under these insurance schemes such as Third-Party Foreign Theft and Fully Comprehensive insurance, to suit the interest and the needs of the insured.

Before buying auto insurance, it is very important that the person requiring insurance analyses the companies that provide vehicle insurance quotes. Different companies offer different quotes for the insurance of the vehicle, so the consumer must look out for the best one, which suits his needs and which proves to be highly economical. Many companies also give different discount schemes to attract more and more consumers. The consumer can save a good deal of money while purchasing auto insurance by comparing the quotes of different companies and choosing the cheapest one which satisfies all needs.

Comparing the quotes of different companies on the internet for buying insurance provides a wider platform to the consumer, where they can compare quotes from several companies and choose one among them. The main thing about choosing a quote is that the quote need not necessarily be cheap but the company must be an established one which the customer can rely on should they have an accident.

The consumer should not only compare the quotes of different companies but also the company’s reputation and their way of service. While comparing, the consumer is more acquainted with the different kind of coverage that are available and can choose among them according to the needs. Buying insurance online is the most popular way of buying insurance because it is really fast and convenient, which suits to the busy life of people who have little time to phone around the various companies to relay the details of the insurance cover they are after over and over again. And the best part is that it is free of cost, i.e. no cost is involved in gathering the quotes online from different companies.

Auto insurances are needed because of the reckless accidents that happen on our roads day after day. These can only be reduced once the certainty of the accidents is reduced. The companies quote their prices for insuring depending upon various factors like the age of person to whom the vehicle belongs, the location where the car is bought and supposedly to be used and also many other factors like whether the driver already has points on their licence. The details regarding the car, like where it is being parked, whether or not it is kept in a garage (which is supposed to have less risk of being stolen) and also the mileage of the car are also deciding factors. If the car travels less than a specific limit of miles then such cars are likely to receive some kind of mileage discounts.