Determining how much life insurance you need

: When considering life insurance, you’re planning and preparing for an event most of us would rather not think about. But life insurance represents a critical step in managing your personal finances and ensuring your family’s well-being. The Two Approaches to Life Insurance You can use one of two approaches to estimate how much life insurance you should buy: the needs approach or the replacement-income approach. Using the needs approach, you calculate the amount of life insurance necessary to cover your family’s financial needs if you die. Using the replacement-income approach, you calculate the amount of life insurance you need to equal the income your family will lose. Let’s look briefly at each approach. You need how much? Using the needs approach, you add up the amounts that represent all the needs your family will have after your death, including funeral and burial costs, uninsured medical expenses, and estate taxes. However, your family depends on you to pay for other needs, such as your child’s college tuition, business or personal debts, and food and housing expenses over time. The needs approach is somewhat limiting. The task of identifying and tallying family needs is difficult, and separating the true needs of your family from what you want for them is often impossible. Replacing Income Using the replacement-income approach for estimating life insurance requirements, you calculate the life insurance proceeds that would replace your earnings over a specified number of years after your death. Life insurance companies sometimes approximate your replacement income at four or five times your annual income. A more precise estimation considers the actual amount your family members need annually, the number of years for which they will need this amount, and the interest rate your family will earn on the life insurance proceeds, as well as inflation over the years during which your family draws on the life insurance proceeds. Note: Do remember as you quantify the income you want to replace that Social Security provides generous survivors benefits if you’ve qualified. These benefits can easily total $2,000 a month or more. Calculating Replacement-Income Amounts with Excel If you’ve got access to a computer running Microsoft Excel, the popular spreadsheet program, you can use your computer to calculate the amount of insurance you need to replace a specified number of years of income. Suppose, for example, that you want to buy enough life insurance to replace the income from a $50,000-a-year job for 15 years. If you figure your family will earn 5% on the life insurance proceeds should the worst case scenario occur, you enter the following formula into a cell in an Excel workbook to calculate the replacement income life insurance amount: =-PV(5%,15,50000) Excel returns the formula result 518,982.90 indicating that you would need roughly $520,000 of life insurance, invested at 5%, to payout $50,000 a year for 15 years. Two Calculation Tips If you want to factor in inflation because you’re trying to replace income over a long period of time, you should use a real rate of return rather a regular, or nominal, rate of return. To calculate a real rate of return, subtract the inflation rate from the interest rate in the formula. For example, if you expect 2% inflation, you could replace the formula shown earlier with this formula: =-PV(5%-2%,15,50000) Here’s a final calculation tip: You probably want to round up your number. For example, if the formula provided earlier returns the value 518982.90, you might want to round up this value to $600,000. Or $750,000.

Car insurance quotes online money saving tips

Auto insurance is a must for all automobile owners, which repay you in case your automobile is stolen or damaged in an accident. Most people complain about the high prices of auto insurance policy. Here we offer you some money saving tips with the help of which you can get the best car insurance quotes online as well as best auto insurance policy. If you are a new car owner or your previous auto insurance policy needs a renewal then it’s time for you to search for a new one. You will be surprised to know that different insurance company offers different premium for the same coverage. Thus, it is in your interest to find a low premium, more coverage best auto insurance policy. Local market search will be not enough, go to the websites of auto insurance companies and request for car insurance quote online. While requesting for car insurance quote online provide all your details to the auto insurance company such as your name, age, zip code, address, your marital status, car’s annual commuting miles and safety features of your car because as default they will surely offer you high car insurance quote online. Your credit history matters a lot for auto insurance companies. Reviews of insurance companies have shown a correlation between credit scores and risk to an insurance company. Thus, manage your credit score to a positive level before requesting for a car insurance quote online. During the request for car insurance quote online keep an eye on discounts provided by auto insurance companies, mainly on their websites. With offered discounts, you can drop your premium. If you have a life insurance policy or health insurance policy or any other insurance, it is recommended to ask the same insurance company for auto insurance. They will surely provide lower car insurance quote online, as you are their client. By following all these recommendations, we are sure that you will be able to buy the best auto insurance policy to protect your car, truck or any other vehicle against theft or damage.

Earthquake insurance

We never know what the providence has in store for us. The best thing we humans can do is to remain prepared against any natural disasters or untoward incidents. Nowadays, insurance provides financial protection against losses for persons or businesses. Over the years, the domain has expanded to encompass almost every type of disaster that is of common occurrence on earth. Earthquake insurance is one such policy that covers one from losses incurred due to a cataclysmic earthquake or any earth movement such as mudflow, landslide, mudslide or sinkhole that involves the sinking, rising or shifting of earth. But it excludes losses incurred due to floods and tidal waves – even if the disaster had been compounded by an earthquake. An important thing one should realize is that earthquake insurance is not a part of the homeowner and tenant insurance policies. Instead, it is a different deal altogether that one needs to subscribe separately. Earthquake insurance – unlike other homeowner polices – mainly covers major losses. The claim is usually paid after accounting for all deductibles, which in the general case falls between 10% and 25%. Given the present trend, the deductibles are on a spiral up the scale. The payment structure works much like the auto insurance. The damage that exceeds the deductibles is only paid. Some policies take in to account, the structure and contents as different entities. In such cases, the deductible applies separately to the total losses on structure, of contents and the damage occurred to external structures like sheds, garages, retaining walls or driveways. Some insurance providers put forward stringent requirements before issuing a policy – they insist on an inspection of one’s property before signing the deal. For example, many insurance companies require that one’s home is securely bolted to the basement. The inspection also considers bracing on interior walls, the manner in which shelves are fixed and the way strapping guards are used to hold fixtures. But these are no big revamp and won’t be expensive. Ideally, the prospective customers should get their side clear before inviting the insurance company inspection team to the house. Once an earthquake occurs, no more earthquake insurance policies will be issued until the declared moratorium expires; that is after the chance for further damaging aftershocks has lingered. After the damage has occurred, it is very important to make the claim, supported with all the required documents, in a definite period of time as mandated by the company’s terms and conditions. Not reporting in the stipulated time is valid grounds for the insurance company to reject one’s claim for insurance. Consumers should consider their requirements and circumstances before applying for earthquake insurance. Sometimes, it can be argued that his/her house is situated in a low risk area. But it is always better to be in a safer side with one’s home. After all, our homes are our biggest assets.

Sick of wasting money on insurance what do you really need

It's a tough economy nowadays and you want to be careful not waste money on trivial costs...sometimes this includes health insurance. Here is what you really need health insurance for: 1. WHAT YOU REALLY NEED -The Catastrophic Event First and foremost, everyone absolutely needs to be covered for the big hit. With ever - escalating costs associated with medical care, especially critical care, you would be negligent not to evaluate the following two criteria while assessing your personal needs -Policy Maximums All true insurance plans have policy maximums. The plan maximum refers to the most an insurance plan will pay in total, no matter what the circumstances are. Some plans have individual lifetime maximums, some have family lifetime maximums and some have annual maximums for either the family or per individual. In the present state of escalating health care costs, you should be looking for a plan that has the highest maximums that you can find. It is our strong recommendation that you cover your family with at least $5,000,000 per person. Five million dollars per person is pretty much top of the line, and will go a long way towards ensuring that you and your family are protected now and for years to come. -Maximum Out-Of-Pocket/Stop Loss The "Max Out-Of-Pocket" refers to the most that you will pay in deductibles and coinsurance in any given year, no matter how large your medical bills are (up to plan maximums, of course). Your plan should have the "Max Out-Of-Pocket" and "Coinsurance Stop Loss" stated clearly and understandably in writing. With their Plan Design your "Max Out-Of-Pocket" and "Coinsurance Stop Loss" will not only be clearly stated, you will have a say in what the amount of it is. 2. WHAT POINT ARE YOU AT IN YOUR LIFE? Every individual and family has different needs. Some have a house full of children, others don't. Some people travel quite a bit, others stay close to home. There are an infinite number of situations and you need to evaluate yours if you are to make a decision that is proper for you. You should also consider your lifestyle while shopping for health plans. Please also consider your personal medical history as well as that of your family, including any hereditary issues. Please ask yourself the following questions: -What am I hoping to achieve with my health plan? -How do I plan to use my coverage? -How long do I need this plan? -How much of my medical expenses am I willing to cover myself? -Are there conditions in my family history that I NEED to be covered for? These are but a few of the areas that will be discussed during your plan design. 3. WHERE DO YOU SPEND YOUR TIME? If you are like most of us the answer is at work. We do design plans that cover you on the job. But the question goes deeper than that. -Do you travel? -Do you spend periods of the year is another part of the country? -Are you spending time in outdoor activities or sports? -Again, these are just some of the things that you should be considering and areas that will be discussed during your plan design. 4. WHAT CAN YOU AFFORD? Well, this question had to be asked sometime! Designing a plan that you can't afford will not do anyone any good. On the other hand, hiding behind the fear of a large monthly payment is not the answer either.