What if I already have life insurance coverage
Even if you have life insurance, keep in mind that life changes and, as it changes, so do your needs for protection. Your life insurance needs should be reviewed every few years. Any of the changes listed below should prompt you to sit down with your insurance agent to make sure your plan is still appropriate.
- You have recently married or divorced
- A child or grandchild has been born or adopted
- Your health or your spouse's health has deteriorated
- You have begun to provide care or financial help to a parent
- A loved one will require assistance or long term care
- You have recently purchased a new home
- Your children or grandchildren are about to enter school or college
- You or your spouse retired or will retire early
- You or your spouse has been promoted recently
- You have refinanced your home mortgage in the past six months
- You or your spouse has received an inheritance
Can I trade or replace my policy?
You can trade or replace your policy, but it's not something to be considered lightly, regardless of whether you are thinking of switching policies within the same company or switching from one company to another. New policies typically have high costs the first few years and there is normally a new "contestability period" during which the insurer can cancel the policy and refuse to pay death benefits if an application was misleading. If you want to increase your total life insurance, it is probably better to keep your old policy and simply add a new one, or increase your specified face amount under the same life insurance policy. For example, suppose your objective is to have $100,000 of life insurance and you currently have $50,000. It maybe better to keep the existing $50,000 policy and buy a second $50,000 policy to reach your goal of $100,000. Your existing policy premiums will generally be less than those for the new policy, because you bought it when you were younger and you won't lose any existing cash value. Be sure to ask your agent, financial advisor or insurance company about the best alternative for your specific situation.
What are some other reasons you may want to consider life insurance?
In addition to the comfort of knowing that you have provided for your loved ones after your death, there are several other reasons you may want to consider life insurance, including:
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If your policy has cash value, the cash value may be used to help with big-ticket items such as college education or a down payment on a home. Most cash-value policies enjoy a tax-deferred status, meaning that you do not pay taxes on any cash value accumulation until you receive funds from the policy.
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Life insurance can be used to pay estate taxes and funeral expenses. If an individual dies in 2004 and his or her estate is worth more than $1,500,000, federal estate taxes at rates as high as 48% may be payable, usually due within nine months of death. So, even if you have a substantial sum of money, life insurance can be a benefit. The proceeds usually go directly to your beneficiaries without going through the probate process.
Do I need life insurance?
The ability to earn an income can be considered your family's most valuable asset because your income allows you to obtain other assets, particularly the necessities of life and, of course, the creature comforts. However, as we know, the ability to earn an income is not guaranteed. Yet, the need for income may continue for those who were financially dependent upon you. Consequently, your need for life insurance and the amount will depend upon your personal and financial circumstances. If any of the following statements apply to you, you probably do need to consider life insurance:
- You have a spouse.
- You have dependent children.
- You have an aging parent or disabled relative who depends on you for support.
- You have another loved one that you wish to provide for.
- You have business or estate planning needs that life insurance can satisfy
- Your retirement pension and savings are not enough to insure your lived ones' futures against a rising cost of living.
House Insurance
When should I think about adding coverage?
Generally, you should contact your agent about reviewing your coverage whenever you change something significant about your home or its contents, for example:
- When you put on an addition to your home
- When you start a business from your home
- When you make a major purchase, such as jewelry, a computer, a boat or other recreational vehicle
Am I covered against losses from fire, lightning, tornadoes, wind storms, hail, explosions, smoke, vandalism and theft?
Yes. Typically, your homeowners insurance covers a large number of perils, including all those listed. There are some limits, however, on the amount of insurance you have so you should always consult with your local agent.
A pipe bursts and water flows all over my floors. Am I covered?
Yes. Typically, homeowners insurance covers you for accidental discharge of water from a plumbing system. Check your plumbing and heating systems once a year. While you are covered for this type of damage, who needs the mess and hassle?
A neighbor slips on my sidewalk and threatens to take me to court for damages. Does my homeowners policy protect me?
Yes. Homeowners insurance will pay for damages, if the accident is the result of your negligence. It will also pay for the legal costs of defending you against a claim. Also, the medical payments part of your homeowners policy will cover medical expenses arising from an injury to a neighbor or guest. Your insurance agent can periodically review your policy limits to help ensure you have adequate coverage.
Is my jewelry covered by my homeowners policy?
On a homeowners policy, there is limited, standard coverage available for your jewelry. In most cases, you will need to purchase a Personal Articles Floater, which extends protection for your jewelry when its value is higher than the limits stated in your homeowners policy. Your insurance agent can help determine if you need to purchase Floater coverage.
FAQ