Seattle Quote Blog: Life
How to buy life insurance
The whole point of having life insurance is to know your loved ones will be okay if anything ever happens to you. It's basically a way to purchase reassurance and peace of mind. Life insurance also has several other advantages, but most people don't consider the possible disadvantages. Take the time to get a thorough understanding of the pros and cons of life insurance. This will enable you to make the best decision about whether a policy is right for you.
The basics: Term life versus whole life
There are actually several different types of life insurance. The two basic types are term life and whole life. It's important to fully grasp the difference between the two in order to comprehend which policy, if any, is right for you.
* Term life insurance offers protection over a specific period of time. You get to decide how long you'd like your policy to last. The most common policies cover between one and 30 years. With term life insurance, you pay a premium during the designated life of the policy. In the event of your death, your beneficiaries receive the pre-determined benefit payment.
* Whole life insurance offers lifelong protection as long as you pay your premiums. Whole life insurance is also known as permanent life insurance. As long as you are current on your premium payments, your death benefit will always be there. These policies are designed to be kept for the duration of your life and are priced accordingly.
Advantages of term life insurance
Term life insurance is relatively cheap compared to premiums required for whole life insurance. It essentially offers the highest level of life insurance for the lowest cost. In addition, the younger you are, the cheaper your premiums. This makes it possible to buy greater levels of coverage at a younger age which is often when your need for protection is greatest.
On top of the cheaper premium advantage, premium payments do not increase during the life of a term policy. In other words, if you opt for a ten-year term life insurance policy, you will pay the same amount of monthly premium over the course of those ten years.
Term life insurance allows you to cover specific needs that can be taken care of in a set amount of time. Mortgages, car loans, and college expenses for your kids are among the most common reasons to buy term life insurance.
Term life insurance also offers tax advantages. Your beneficiaries generally do not have to pay federal income taxes on any benefit payments they receive.
Disadvantages of term life insurance
The major disadvantage to term life insurance is that it expires. If you die while your policy is still active, you'll get paid your allotted benefit. But if you die after your policy expires - even if it's only the day after - then you'll receive nothing.
Another disadvantage is that premiums increase each time you renew your term life policy. While you'll pay only a set amount during the duration of each policy, you'll likely pay more each time you renew your policy. This is also because you'll be older each time you renew your policy and the higher your age, the greater your premiums.
Because the price of term life insurance goes up as you age, it becomes expensive to continue - particularly as you enter your golden years.
In addition, term life insurance does not offer a cash value. Your premiums are simply payments and do not go into a fund that you can later claim, as is the case with other types of insurance policies.
Advantages of whole life insurance
The most immediate advantage of whole life insurance is that you are guaranteed protection during your lifetime. The only requirement is that you pay your premiums in full by each allotted due date.
Whole life policies can also be very flexible as premium costs can be adjusted to match your individual financial needs.
A major benefit to whole life insurance is that most policies accumulate a cash value over time. In the majority of cases, you can borrow against this cash value. Keep in mind that if you do, your loans must be paid back with interest. If you do not repay the amount borrowed, your beneficiaries will receive a reduced death benefit.
Disadvantages of whole life insurance
The major disadvantage to whole life insurance is cost. It can be difficult to afford as much protection as you'd like given that premium levels rise with the level of allotted protection.
Whole life insurance is only a wise investment if you are committed to keeping your policy for a long time. If you don't, a whole life policy may prove to be more expensive than other policies such as those offered through term insurance.
Choose the right life insurance for your needs
Unless you have significant financial reserves in the form of savings or investments, taking out a life insurance policy is a wise move. The hardest part can be navigating the many different options available, so don't be afraid to ask for assistance from the carrier of your choice. Make sure you fully understand all your options before committing to a single policy.
Posted on March 24, 2009
Why every tenant should have renters insurance
What would you do if your life was turned upside down due to a burglary, fire, or natural disaster? Just think about all the personal items that you use every day and how much time and money it would require to replace them if something awful happened. I thought my belongings were minimal in quantity until I moved apartments. Was I wrong, and my buddies were rightfully angry when they helped me move it all.
Get your facts strait
A good place to start is knowing what exactly is covered by your renters insurance policy and what is covered by the landlord who owns or manages the property you reside at. The Washington State Office of the Insurance Commissioner offers some basic information that you as tenant should think about when looking for a policy.
Personal liability (protection against claims someone else makes against you)
Premises medical coverage (pays the medical expenses of others accidentally injured on the property you rent)
Additional living expense (pays for your living expenses if the living space you rent is deemed unlivable)
Personal property (contents) coverage (standard renter policies only cover the actual cash value at the time of the loss)
It will never happen to me
West Seattle Blog has some photographs and coverage of an apartment fire that happened at 9200 15th SW on January 7th, 2008. They seem to have a good eye on fires and crime in that part of the city. Just a few days ago a fire raged through two apartment units in a Kent housing complex displacing 19 people and destroying their belongings. Luckily no one was injured.
It seems like every evening I flip on King5, or whatever evening news, there is burglary or residential fire. Is it me?
People make up all types of excuses for not securing renters insurance. This may be due to the fact that it seems like an intangible product that can't be held. Another major factor is the dismissive attitude of "It will never happen to me". Well it can and you should prepare.
Posted on April 2, 2008
