Insurance Products and Services

insurance products and services

2009-10-30T04:35:00.000-07:00

What is a Health Insurance?

2009-10-16T04:14:00.000-07:00

It's a fact of life — you need health insurance — and the time to get it is before you have an accident, suffer a serious illness, or discover you're pregnant. Insurance doesn't cover health care for medical problems or conditions that start before the moment you have your policy. Finding adequate coverage may seem overwhelming, but knowing the basics can help make your search less stressful.

What Are My Health Plan Choices?

Choosing between health plans is not as easy as it once was. Although there is no one "best" plan, there are some plans that will be better than others for you and your family's health needs. Plans differ, both in how much you have to pay and how easy it is to get the services you need. Although no plan will pay for all the costs associated with your medical care, some plans will cover more than others. Almost all plans today have ways to reduce unnecessary use of health care–and keep down the costs of health care, too. This may affect how easily you get the care you want, but should not affect how easily you get the care you need.

Plans change from year to year, so you should carefully consider each plan, using the questions outlined in this booklet. If you get health insurance where you work, you should start with your employee benefits office. Its staff should be able to tell you what is covered under the plans available. You can also call plans directly to ask questions.

Health insurance plans are usually described as either indemnity (fee–for–service) or managed care. These types of plans differ in important ways that are described below. With any health plan, however, there is a basic premium, which is how much you or your employer pay, usually monthly, to buy health insurance coverage. In addition, there are often other payments you must make, which will vary by plan. In considering any plan, you should try to figure out its total cost to you and your family, especially if someone in the family has a chronic or serious health condition.

Indemnity and managed care plans differ in their basic approach. Put broadly, the major differences concern choice of providers, out–of–pocket costs for covered services, and how bills are paid. Usually, indemnity plans offer more choice of doctors (including specialists, such as cardiologists and surgeons), hospitals, and other health care providers than managed care plans. Indemnity plans pay their share of the costs of a service only after they receive a bill.

Managed care plans have agreements with certain doctors, hospitals, and health care providers to give a range of services to plan members at reduced cost. In general, you will have less paperwork and lower out–of–pocket costs if you select a managed care type plan and a broader choice of health care providers if you select an indemnity–type plan.

Over time, the distinctions between these kinds of plans have begun to blur as health plans compete for your business. Some indemnity plans offer managed care–type options, and some managed care plans offer members the opportunity to use providers who are "outside" the plan. This makes it even more important for you to understand how your health plan works.

Besides indemnity plans, there are basically three types of managed care plans: PPOs, HMOs, and POS plans.

Where Do I Get These Health Plans?

Group Policies

You may be able to get group health coverage–either indemnity or managed care–through your job or the job of a family member.

Many employers allow you to join or change health plans once a year during open enrollment. But once you choose a plan, you must keep it for a year. Discuss choices and limits with your employee benefits office.

Individual Policies

If you are self–employed or if your company does not offer group policies, you may need to buy individual health insurance. Individual policies cost more than group policies.

Some organizations–such as unions, professional associations, or social or civic groups–offer health plans for members. You may want to talk to an insurance broker, who can tell you more about the indemnity and managed care plans that are available for individuals. Some States also provide insurance for very small groups or the self–employed.

Medicare

Americans age 65 or older and people with certain disabilities can be covered under Medicare, a Federal health insurance program.

In many parts of the country, people covered under Medicare now have a choice between managed care and indemnity plans. They also can switch their plans for any reason. However, they must officially tell the plan or the local Social Security Office, and the change may not take effect for up to 30 days. Call your local Social Security office or the State office on aging to find out what is available in your area.

Medicaid

Medicaid covers some low–income people (especially children and pregnant women), and disabled people. Medicaid is a joint Federal–State health insurance program that is run by the States.

In some cases, States require people covered under Medicaid to join managed care plans. Insurance plans and State regulations differ, so check with your State Medicaid office to learn more.

Pre–Existing Conditions

A pre–existing condition is a medical condition diagnosed or treated before joining a new plan. In the past, health care given for a pre–existing condition often has not been covered for someone who joins a new plan until after a waiting period. However, a new law–called the Health Insurance Portability and Accountability Act–changes the rules.

Under the law, most of which goes into effect on July 1, 1997, a pre–existing condition will be covered without a waiting period when you join a new group plan if you have been insured the previous 12 months. This means that if you remain insured for 12 months or more, you will be able to go from one job to another, and your pre–existing condition will be covered–without additional waiting periods–even if you have a chronic illness.

If you have a pre–existing condition and have not been insured the previous 12 months before joining a new plan, the longest you will have to wait before you are covered for that condition is 12 months.

To find out how this new law affects you, check with either your employer benefits office or your health plan.

What Plan Benefits Are Offered?

Most plans provide basic medical coverage, but the details are what counts. The best plan for someone else may not be the best plan for you. For each plan you are considering, find out how it handles:

Physical exams and health screenings.

Care by specialists.

Hospitalization and emergency care.

Prescription drugs.

Vision care.

Dental services.

Also ask about:

Care and counseling for mental health.

Services for drug and alcohol abuse.

Obstetrical-gynecological care and family planning services.

Ongoing care for chronic (long-term) diseases, conditions, or disabilities.

Physical therapy and other rehabilitative care.

Home health, nursing home, and hospice care.

Chiropractic or alternative health care, such as acupuncture.

Experimental treatments.

Some plans offer members health education and preventive care, but services differ. Ask questions such as:

What preventive care is offered, such as shots for children?

What health screenings are given, such as breast exams and Pap smears for women?

Does the plan help people who want to quit smoking?

What Is Most Important to Me in a Plan?

In choosing a plan, you have to decide what is most important to you. All plans have tradeoffs. Ask yourself these questions:

How comprehensive do I want coverage of health care services to be?

How do I feel about limits on my choice of doctors or hospitals?

How do I feel about a primary care doctor referring me to specialists for additional care?

How convenient does my care need to be?

How important is the cost of services?

How much am I willing to spend on premiums and other health care costs?

How do I feel about keeping receipts and filing claims?

You might also want to think about whether the services a plan offers meet your needs. Call the plan for details about coverage if you have questions. Consider:

Life changes you may be thinking about, such as starting a family or retiring.

Chronic health conditions or disabilities that you or family members have.

If you or anyone in your family will need care for the elderly.

Care for family members who travel a lot, attend college, or spend time at two homes.

How Do I Find Out About Quality?

Quality is hard to measure, but more and more information is becoming available. There are certain things you can look for and questions you can ask. Whatever kind of plan you are considering, you can check out individual doctors and hospitals.

Many managed care plans are regulated by Federal and State agencies. Indemnity plans are regulated by State insurance commissions. Your State Department of Health or insurance commission can tell you about any plan you are interested in.

You can also find out if the managed care plan you are interested in has been "accredited," meaning that it meets certain standards of independent organizations. Some States require accreditation if plans serve special groups, such as people in Medicaid. Some employers will only contract with plans that are accredited.

Several national organizations review and accredit plans and institutions. You can contact these organizations to see if a plan you are considering, or an institution in the plan, is accredited.

Another approach is to ask the plan how it ensures good medical care. Does the plan review the qualifications of doctors before they are added to the plan? Plans are supposed to review the care that is given by their doctors and hospitals. How does the plan review its own services, and has it made changes to correct problems? How does the plan resolve member complaints?

Some managed care plans survey members about their health care experiences. Ask the plan for a report of the survey results.

Some plans and independent organizations are also beginning to produce "report cards." These reports often include satisfaction survey results and other information on quality, such as if a plan provides preventive care (for example, shots for children and Pap smears for women) or if the plan follows up on test results. Report cards may also include information on how many members stay in or leave the plan, how many of the plan's doctors are board certified, or how long you may have to wait for an appointment.

Report cards can only give you an idea of how a plan works and may not give a full picture of a plan's quality. Ask plans if their activities have been reported in report cards developed by outside groups (business or consumer organizations).

Also keep any eye out for magazine articles that rate health plans.

Finally, you can talk to current members of the plan. Ask how they feel about their experiences, such as waiting times for appointments, the helpfulness of medical staff, the services offered, and the care received. If there are programs for your particular condition, how are the patients in it doing?

What is a Life Insurance?

2009-10-16T04:13:00.000-07:00

Life insurance is bought by someone in order to protect his or her family in case of death. This may be mainly bought by people who are the sole breadwinners of the family: without that money in the event of that person's death, the family couldn't survive. However, not many people truly know how life insurance policies work. Many people don't believe they can afford any life insurance and a few see it as an unneeded cost.

Purchased life annuity
Also known as an immediate annuity, this type of contract provides, in return for a single premium, an annual payment starting immediately and continuing for the rest of the annuitant’s life.

Annuities can be on a single life or joint lives, most usually husband and wife. These policies are particularly popular for retired people who want a guaranteed income for as long as they live. They may be bought with the tax free cash available from a personal pension on retirement.

Where an annuity is being used to provide retirement income for a married couple, it would not be advisable to have a single life annuity, because if the annuitant died first, payments would cease and the surviving spouse would be left with nothing. This has led to joint life last survivor annuities. These contracts pay an annuity for the joint lifetimes of the two annuitants. Payments usually continue in full after the first death, but sometimes reduce by a set amount, say a third.

What is homeowner insurance?

2009-10-16T04:08:00.000-07:00

Homeowners is one of the most popular forms of personal insurance on the market. The typical homeowners policy has two main sections: Section I covers your property, and Section II provides personal liability coverage (to cover you in case of lawsuits arising from things that happen on your property). Almost anyone who owns or leases property should have this type of insurance. Often, homeowners insurance is required by lenders as a requirement to obtain a mortgage.

Why you need a Homeowner Insurance?

The largest single investment most consumers make is in their home. The consumer can protect his or her home, possessions, and liability with a homeowner’s insurance policy.

In addition to its availability to homeowners, similar coverage is available to those who rent homes or apartments. These policies are referred to as tenants’ or renters’ homeowner’s policies. If you are a renter, you do not need protection against damage to the building itself, but you do need protection against damage to or theft of your personal property and liability in the event someone falls or gets hurt on the part of the premises you rent.

A condominium owner may purchase a condominium homeowner’s policy to insure personal property. Some policies may also include any additions or alterations not insured by the condominium association. It is important to check with your condominium association and your agent before buying a policy to make sure you are adequately covered.

Basic Coverage included in Homeowner's insurance

The homeowner’s insurance policy is a package policy that combines more than one type of insurance coverage in a single policy. There are four types of coverages that are contained in the homeowner’s policy: dwelling and personal property, personal liability, medical payments, and additional living expenses.

Property Damage Coverage

Property damage coverage helps pay for damage to your home and personal property. Other structures such as a detached garage, a tool shed, or any other building on your property are usually covered for 10% of the amount of coverage on your house.

Personal property coverage will pay for personal property including household furniture, clothing, and other personal belongings. The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchased replacement cost coverage.

Your homeowner’s policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home. Your insurer will reimburse you for the cost of replacing your suitcase and its contents if it were lost or stolen while you were on vacation, but only for replacing them with items of like kind and quality.

Personal Property Floater

Your homeowner's insurance policy may provide only limited coverage for furs, jewelry, silver, and other valuables. It may be necessary to insure these valuables with a special addition to your homeowner's policy, such as a personal property floater. A personal property floater itemizes each article, gives a description of the article insured, and lists excluded perils. It often provides coverage that is broader than the coverage granted in the home insurance policy. You should discuss this with your insurance company or agent to determine the availability and cost of this additional coverage.

Your homeowner’s insurance policy does not cover your pets, your car, and any aircraft. Although your policy does not cover your pet or damage it does to your possessions, it will cover damage your pet does to others or their possessions.

Personal Liability Coverage

Homeowner’s policies provide personal liability coverage that applies to nonauto accidents on and off your property if the injury or damage is caused by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and paying for any damages the court rules you must pay. And unlike the other coverage in your policy, liability insurance does not have a deductible that you must meet before the insurer begins to pay losses. The basic limit for liability coverage is usually $100,000 for each occurrence. You can request higher limits that are available for an additional cost.

Medical Payments Coverage

Medical payments coverage pays if someone outside your family is injured at your home regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to you and members of your household. The medical payments portion of your homeowner’s policy will also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage limits are generally $1,000 for each person. Higher limits of medical payments coverage are available at additional cost.

Additional Living Expenses

If it is necessary for you to move into a motel or apartment temporarily because of damage caused by a peril covered by your policy, your insurance company will pay reasonable and necessary additional living expenses. The typical policy will pay an amount up to 20% of the policy limit on your dwelling for these expenses. If you move in temporarily with a friend or relative and do not have any extra expenses, you will not be paid any additional living expenses by your insurance company.

How to determine your homeowner's coverage

Your first step in determining the right homeowners coverage is estimating the replacement cost of your home. The second step is selecting the coverage amount that best fits your needs. We recommend that you purchase an amount of coverage equal to the estimated replacement cost. But the choice is yours. Determining your home’s estimated replacement cost is important because this will ultimately determine which policy options are available to you. Since it is impossible to predict today what the exact cost will be to replace your home in the future, it’s important to have enough coverage to account for unforeseen circumstances.

Understand the difference between market value and replacement cost

“Replacement cost” is the amount needed to repair the damage or to rebuild the home to its pre-loss condition. The replacement cost of a home is NOT the market value of the home, its purchase price or the outstanding amount of any mortgage loan. It does not include the value of the land, but is the cost of rebuilding your home. New improvements or required upgrades are also not accounted for in the replacement cost.

You've worked hard to get your home. We’ll work hard to help you protect it

Before you purchase a new home, make sure that you determine the appropriate amount of coverage needed. When you have the home appraised, ask if a replacement cost estimate is available. Or consult with your local builder association or a reputable builder for an estimate.

Be aware of any architectural details or unique building materials that may affect your estimated replacement cost, such as:

Upgraded bathrooms or kitchens (including cabinets)

Additional rooms

Custom molding or arched windows

Other unique features

A contractor or appraiser can help estimate your home's replacement cost

Building contractors or professional replacement cost appraisers are a good source for obtaining an estimated replacement cost of your home. Estimates from these sources should reflect your home’s features, like those mentioned above. If you are unable to obtain a detailed estimate from these sources, your State Farm agent can help provide one for you.

Review your policy annually to make sure that your coverage meets your needs

Have you recently remodeled or improved your home? When you upgrade or improve your home, you may increase your home’s estimated replacement cost.

Has the rate of inflation risen since your last appraisal? Your agent provides coverage that automatically adjusts each year in an effort to compensate for increases in construction costs in your area. However, certain conditions such as severe weather can increase the demand for labor and materials, and raise costs beyond normal inflation. It is important to update your coverage amount each year to keep up with the changing economy.

What influences the building costs in your area? Market conditions in your area may impact the amount it will cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor, and cost of construction materials. Staying abreast of the current market conditions in your area, and changing your coverage amount accordingly, will help you maintain 100% estimated replacement cost coverage for your home.

Some important things to consider when determining your coverage amount: Your home’s estimated replacement cost is different than its market value (real estate cost)

Each time you remodel or improve your home, you should adjust your coverage amount accordingly.

If your home is made of unique building materials, make sure they are reflected in your replacement cost estimate.

Stay abreast of the fluctuating building costs in your area and update your coverage amount accordingly. Make sure that you maintain coverage at 100% of your home's estimated replacement cost at all times.

It is important to review your coverage annually and inform your agent of any changes you’d like to make.

Disability Income Insurance

2009-10-16T03:49:00.000-07:00

Why Disability Income Insurance?

If you were unable to work for an extended period of time due to an injury or illness, how long would you be able to pay your bills and meet your day-to-day expenses? Do you know how much income you would receive from outside sources -- and for how long?

A long-term illness or injury could wreak havoc on even the soundest financial plan and can occur at any time. With that in mind, your best defense against such a financial catastrophe may be the purchase of a disability income insurance policy with enough coverage to compensate for your lost wages.

Disability income insurance replaces part of your income if you become unable to work due to an injury or illness. It provides you with cash that you can use for paying your mortgage or rent, buying groceries, and meeting your daily living expenses. Even if you don't have an immediate need for disability income insurance, it also gives you some peace of mind that comes from knowing that you have a financial plan already in place.

2 The Most Important Insurance Policy of All?

In fact, some may argue that disability income insurance is the most important type of insurance policy you can purchase -- more important than homeowner's, health, auto, or even (in certain cases) life insurance. That's because disability income insurance protects one of your most important and valuable assets: your ability to earn income. After all, it is your ability to earn income that allows you to have a car, a home, and a particular lifestyle, as well as to purchase the various insurance policies that safeguard your net worth and the financial well-being of your loved ones.

3 Putting Policies in Perspective

For most people, there are two main forms of disability income insurance to consider: employer-sponsored policies and private insurance policies. Employer-sponsored policies (called "group" policies) are relatively inexpensive to purchase and generally remain in effect for as long as the individual continues to work for the company. However, there are often significant limits on the benefits provided by group policies, so it's important to determine whether the coverage is enough to address your potential spending needs. (Government-sponsored disability income insurance programs and policies also exist, but they generally have strict eligibility requirements and therefore don't apply to many people.)

Private insurance policies are paid for by individuals and provide coverage when group policies don't apply or don't provide enough income. On the surface, a private policy is usually more expensive to purchase than a group policy. However, a private policy's potential to provide much greater benefits over time may make it a more prudent long-term choice. And considering that group policies often end up providing inadequate benefits, even those workers with group coverage should consider purchasing a private policy in order to fill the income gaps frequently associated with group-only coverage.

Keep in mind that some people may be eligible for disability benefits through other sources -- such as worker's compensation programs, Veterans Administration pension programs, state vocational rehabilitation programs, and Social Security, among others -- but coverage and availability vary significantly.

4 Who Needs Disability Income Insurance?

For all practical purposes, if you need the income you earn at work, you probably also need disability income insurance. Consider this: Almost one third of Americans between the ages of 35 and 65 sill experience a disability of at least 90 days at some point during their working lives. Among those most likely to benefit from disability income insurance are:

Small-business owners and the self-employed. People in this group may be most at risk of financial hardship arising from a disability, since most don't have group coverage and time out of work generally means that income stops flowing. Small-business owners may want to consider purchasing group coverage for themselves and their employees. Offering group disability income insurance coverage does more than simply enhance the financial security of current employees -- the benefit can also help to attract new employees.

High-income professionals. These individuals typically would not receive enough income from a group policy to cover their usual spending needs and to maintain their preferred lifestyle.

Primary "breadwinners." Regardless of whether an individual already has some group coverage, it's important not to be lulled into a false sense of security. Quite often, group coverage just doesn't provide enough money -- even for those with relatively modest spending needs.

5 How Much Disability Income Insurance Do You Need?

The key to determining your disability income insurance needs is to assess exactly how much money you would be required to spend during each week or each month that you would be unable to earn your normal pay. For example, if you would need 80% of your pretax earnings, but your group policy would only pay an amount equal to 60%, then you would in all likelihood need additional disability income insurance coverage.

Finally, keep in mind that disability income insurance coverage varies in availability based on your occupation. Some higher-risk jobs may not be covered. Others may offer only limited coverage. That's why it's important to seek the assistance of a qualified insurance professional. He or she can help you assess your disability income insurance needs and find a policy that's most appropriate for you.

6 Disability Defined

The way in which a disability income insurance policy defines disability can determine your eligibility to receive insurance benefits should you become disabled. Generally speaking, you want a policy with the most favorable definition of disability. Here's a quick overview of the three basic definitions of disability:

Own-occupation. The most comprehensive definition of disability. It essentially states that you're unable to perform the material and substantial duties of your own occupation. Generally speaking, the insurer will consider your occupation as the job you were performing at the time of your disability.

Income replacement. Similar but less comprehensive than the "own-occupation" definition. Policies with income replacement coverage define disability as sickness or injury that doesn't allow you to perform the material and substantial duties of your own occupation and typically stipulate that you're not currently engaged in any other occupation.

Gainful occupation. The least desirable definition. These policies define disability as your inability to perform the material and substantial duties of your occupation or any other occupation that you are considered to be reasonably qualified for by way of your education, skills, or training.

Summary

* Disability income insurance provides replacement income to individuals who are unable to earn income from work as a result of an extended illness or injury.
* There are two main types of disability income insurance: employer-sponsored (or "group") policies and private policies. Group policies are typically less expensive, but they may also have more restrictions and limitations than private policies.
* Many people with group policies may have a false sense of security due to the mistaken belief that the group policy would provide enough money to meet spending needs. In reality, it may also be necessary to supplement group coverage with private coverage.
* Among those most likely to need disability income insurance coverage are small-business owners, the self-employed, high-income professionals, and anyone who is the primary earner in his or her household.
* Disability income insurance coverage varies based on your occupation.

Buying Life Insurance: What Kind and How Much?

2007-06-26T03:53:00.000-07:00

Finding the middle ground between being "insurance poor" and unprotected requires assessing real needs and choosing products that are affordable. This article introduces different types of insurance products and the role that they can play in a personal financial plan.

Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient.

Who needs life insurance? If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.

Term insurance is the most basic, and generally least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums increase at the end of each term and can become prohibitively expensive for older individuals. A level term policy locks in the annual premium for periods of up to 30 years.

Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.

Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.

Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees.

Drawbacks to this type of insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.

Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.

Universal Variable Life insurance is the most aggressive type of policy. Like variable life, you control your investment in mutual funds. However, there are no guarantees on universal variable policies beyond the original face value death benefit. These policies are probably best suited to affluent buyers who can afford the risks involved.

Key Terms and Definitions

Face Value -- The original death benefit amount.
Convertibility -- Option to convert from one type of policy (term) to another (whole life), usually without a physical examination.
Cash Value -- The savings portion of a policy that can be borrowed against or cashed in.
Premiums -- Monthly, quarterly, or yearly payments required to maintain coverage.
Beneficiary -- The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
Paid Up -- A policy requiring no further premium payments due to prepayment or earnings.

A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs.

Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt.

Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.

Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.

Survivorship life insurance (also referred to as last-to-die or second-to-die) is a unique type of contract that insures the lives of two people. It pays a death benefit upon the death of the second insured. Therefore, it is typically less expensive than two individual policies. Survivorship life is often used for estate planning, where it may be possible to potentially leverage today's dollars -- via insurance premiums -- into a potentially significant death benefit that can be used to fund estate taxes, create wealth for future generations, or benefit a charity. These policies may be available if one insured is medically "uninsurable."

First-to-die life insurance insures the life of at least two people and pays a benefit upon the death of the first insured. This policy is useful for covering a mortgage or other large debt obligation where there is more than one debtor. In addition, it can be an ideal tool for funding a buy-sell agreement within a closely held business.

Life insurance is an important component of a sound financial plan. Buying insurance involves asking a variety of personal lifestyle and financial questions. If you are not already working with an insurance professional, you may want to consider the advice of a fee-for-service financial planner who can offer you an objective review of your insurance options. When you decide on what you want, there are many solid insurance companies to choose from. Consult your library or an independent insurance professional for companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor's, and Moody's.

Summary

Term insurance is basic, inexpensive coverage with premiums that increase over time and have no cash value.
Consider a term policy that is renewable and convertible to whole life should your needs change.
Whole life provides level coverage with level premiums. A portion of those premiums goes into tax-deferred savings.
Check rates on whole life policies and compare them to other investment opportunities.
Variable life offers control over your investments.
Premiums on variable policies are fixed, but face value and the value of your investments can fluctuate.
Universal life offers more investment options, but is highly sensitive to interest rate changes. Universal variable life is highly flexible, but offers no guarantees beyond the original face value.
Insurance needs are based on income replacement and personal preferences.

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2007-06-16T05:53:00.000-07:00

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At http://insuranceproductsandservices.blogspot.com/, the privacy of our visitors is of extreme importance to us. This privacy policy document outlines the types of personal information is received and collected by http://insuranceproductsandservices.blogspot.com/ and how it is used.

Log Files
Like many other Web sites, http://insuranceproductsandservices.blogspot.com/ makes use of log files. The information inside the log files includes internet protocol ( IP ) addresses, type of browser, Internet Service Provider ( ISP ), date/time stamp, referring/exit pages, and number of clicks to analyze trends, administer the site, track user’s movement around the site, and gather demographic information. IP addresses, and other such information are not linked to any information that is personally identifiable.

Cookies and Web Beacons
http://insuranceproductsandservices.blogspot.com/ does use cookies to store information about visitors preferences, record user-specific information on which pages the user access or visit, customize Web page content based on visitors browser type or other information that the visitor sends via their browser.

DoubleClick DART Cookie
.:: Google, as a third party vendor, uses cookies to serve ads on http://insuranceproductsandservices.blogspot.com/.
.:: Google's use of the DART cookie enables it to serve ads to users based on their visit to http://insuranceproductsandservices.blogspot.com/ and other sites on the Internet.
.:: Users may opt out of the use of the DART cookie by visiting the Google ad and content network privacy policy at the following URL - http://www.google.com/privacy_ads.html

Some of our advertising partners may use cookies and web beacons on our site. Our advertising partners include ....
Google Adsense

These third-party ad servers or ad networks use technology to the advertisements and links that appear on http://insuranceproductsandservices.blogspot.com/ send directly to your browsers. They automatically receive your IP address when this occurs. Other technologies ( such as cookies, JavaScript, or Web Beacons ) may also be used by the third-party ad networks to measure the effectiveness of their advertisements and / or to personalize the advertising content that you see.

http://insuranceproductsandservices.blogspot.com/ has no access to or control over these cookies that are used by third-party advertisers.

You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://insuranceproductsandservices.blogspot.com/'s privacy policy does not apply to, and we cannot control the activities of, such other advertisers or web sites.

If you wish to disable cookies, you may do so through your individual browser options. More detailed information about cookie management with specific web browsers can be found at the browsers' respective websites.