Do you need life insurance?

If no one would suffer financially if you died, you probably don’t need life insurance. However, if you have unsecured debts such as credit card debt that would need to be paid after your death, you should probably have life insurance.  If you have family members who depend on you financially, you should have life insurance.

Here is a life insurance needs estimator.
http://moneycentral.msn.com/Investor/Calcs/N_life/Main.asp

What do these terms mean?

• Insured: the person covered by the policy.
• Owner: the person who holds the policy.
• Beneficiary: person who will receive the proceeds if the insured dies.
• Face amount: the dollar amount of coverage that is purchased.
• Annual premium: amount paid each year to have coverage.
• Endorsement or rider: amendments and additions to the policy that can expand or limit coverage.
• Death benefit: the amount that will be paid upon the death of the insured person.

What kind of life insurance should you buy?

Although there are many different life insurance policies, they can be separated into three main types: term, whole life, or universal life.

• Term insurance insures for a stated period of time.
• Whole life is a combination of term insurance and a savings account.
• Universal life does not have a guaranteed rate of return to the savings account portion (and whole life has a guaranteed rate of return to the savings portion).

How should you choose an insurance company?

Insurance companies are rated according to their financial strength. You can go to the library and look up the ratings in these guides: (or call them, but there is a fee if you call).

• A.M. Best at 1-800-424-2378
• Standard & Poor’s at 212-208-1527
• Moody’s at 212-553-0377

The companies use slightly different ratings so it is helpful to compare them at the library where you can read about each rating system. Each company also has a website.

 

How can you learn about the cost of life insurance?

You can meet with a life insurance agent and ask about costs. If you decide on term life insurance, there are several quote services that are available by phone or on the Internet.

• QuoteSmith at 800-556-9393
• QuickQuote at 800-867-2404
• Life Quote at 800-521-7873

You will also find these quote services and other companies on the Internet. It is more complicated to compare the value of cash value policies. 

 

This calculator helps you analyze whether it is better to buy term or whole life insurance.

 http://partners.leadfusion.com/tools/choosetosave/lifeins01/tool.fcs

   

Check list for buying a life insurance policy.

ü      Determine how much life insurance you need, if any.

ü      Decide which type of policy is best for you.

ü      Compare the financial strength of insurance companies.

ü      Compare the cost of policies from different quote services.