757-255-8090Insuring Your Future
Group insurance schemes have existed for literally thousands of years – from ancient Babylon to the Roman empire, people have been pooling money into funds to safeguard themselves against misfortune.
Today, with costs for everything from college tuition to medical care on the rise, insurance is more than a perk – it’s a basic necessity for a reasonably secure and stress-free life. In fact, certain types of insurance are mandated by law, car insurance being a good example. However, a prudent individual won’t rely on the law to tell them whether or not to insure themselves – every head of a household needs to have a generous life insurance policy, and it’s not a bad idea to insure the house and its contents, either.
How much insurance should you buy?
Naturally, the specifics are different for every individual, but when it comes to life insurance, a good rule of thumb is to get a policy worth between five and ten times one’s annual income. For a more specific figure, one needs to calculate the likely expenses of the policy’s beneficiaries, as well as make provisions for special cases, such as medical costs, education, day care and so on.
What type of policy is right for me?
The most basic and popular policy type is Term Insurance – it’s also the least expensive option, which makes it ideal for young people. Term insurance is just what it sounds like – a policy purchased for a specific number of years, which only pays off in case of misfortune within that period. Typically, fees increase as the policy-holder ages, although it is possible to buy long-term insurance for a flat rate.
Whole Life insurance covers the holder for their entire life, and can be used as a tax-deferred savings option and as an asset to borrow against. Universal Life insurance is similar to Whole Life, except it’s much more flexible: the benefits and premiums can both be adjusted according to the policy-holder’s wishes, and it can be pegged to a financial index, such as the stock market. The drawbacks include the fact that inuversal life coverage is usually more expensive.
There are many other kinds of insurance, and your finaicial adviser can help you choose between them.
From whom should I buy life insurance?
This part is just common-sense – as with all other financial purchases, look at the history of the insurance vendor. How long they have been in the market, what kind of assets the money is invested in, and what their track record is when it comes to payouts are all important factors in this decision.