Term insurance is the most basic type of life insurance. It is a ‘pure protection’ policy because it only provides a death benefit and accumulates no cash value. Term insurance is similar to property insurance (i.e. home, auto) because coverage is rented and when the insured dies, the insurance company will pay the death benefit. If death does not occur before the term expires, no death benefit is paid and the policy must be renewed to maintain coverage. Most term policies are “guaranteed renewable” which means that they can be renewed without having to prove insurability. [Read more…] about Introduction to Term Life Insurance
Should You Buy Life Insurance for Your Kids?
Some insurance companies offer life insurance policies for children. Though a small percentage of families are in the position to consider buying life insurance for their children, let’s take a look at the advantages and disadvantages.
The advantages: Allows the child to have some sort of coverage as they age, they can borrow against the policy later and the policy seems inexpensive compared to the cost of insurance for adults.
The reality: These policies seem inexpensive compared to a life insurance policy for an adult, but when the expected cost is taken into consideration, they are relatively expensive (even after figuring burial costs). This money that is spent to insure the life of a child could be invested in an education fund, emergency fund or some other type of fund for the child at a significantly higher interest rate. What is the purpose of insuring the life of a child?
The important individuals to insure are the breadwinners, the individuals the family relies on for income or other essential support that would otherwise cost money to replace (i.e. stay at home mom taking care of children) and most children do not bring in substantial, if any income. If there are extra funds, consider it. But a family that can afford an insurance policy for a child is typically sufficiently well off that they don’t really need the coverage. I consider these policies controversial at best.
Introduction to Life Insurance
The primary purpose of life insurance is to ensure that, in the unfortunate event of your passing, all of your financial obligations are taken care of. If you’re single these obligations could be limited to burial costs, student loans, a car payment, a mortgage, etc. If you have a family, these obligations may also include ensuring that your family has sufficient future income to maintain a reasonable quality of life (this is especially important if you are the sole breadwinner), that your kids can attend college, etc. [Read more…] about Introduction to Life Insurance
Uninsured & Underinsured Motorist Coverage
Uninsured motorist coverage is another type of coverage available as part of a personal auto policy. Uninsured motorist coverage allows the insured to recover damages from his or her own carrier from accidents in which the other driver is at fault and either has no coverage, whose carrier refuses to cover losses, is insolvent or from hit and run drivers. It is important to understand that (1) the other driver must be at fault, and (2) the insured’s own carrier covers the cost of damages. [Read more…] about Uninsured & Underinsured Motorist Coverage
Intro to Medical Coverage for Car Insurance Policies
The medical payments coverage part of a personal auto policy covers the costs of medical services for anyone in the insured’s vehicle. Limits on this coverage are typically low because most individuals have their own individual or group medical insurance policies that cover most of the these costs. This coverage is specifically for individuals in the insured’s vehicle, not for medical expenses of pedestrians, other drivers, or any other injured parties. Damages to other parties are covered under liability coverage with much higher limits. [Read more…] about Intro to Medical Coverage for Car Insurance Policies
Intro to Liability Coverage for Car Insurance
Auto liability coverage is the part of your personal auto policy that provides protection against others’ claims due to bodily injury/death and property damage to other parties. This also includes defense and settlement costs of claims.
Most policies include a single limit, or maximum amount of damages paid for each accident, no matter how many individuals are injured or how much property is damaged. [Read more…] about Intro to Liability Coverage for Car Insurance
