« Life & Health Insurance

Beyond The Basics Of Life Insurance

Determine How Much Life Insurance Is Enough

After familiarizing yourself with the basic types of insurance, you need to deterrmine how much insurance you need.

First, you should gather some personal financial information and figure out what your family's needs would be. Here are some things to consider when you're determining how much life insurance protection you'll need:

* amount of final expenses, such as medical expenses, burial costs and estate taxes;
* money to finance a short-term re-adjustment period for your family, such as providing time for family members to find a job;
* continuing financial needs, such as monthly bills and expenses, tuition or retirement.

There is no hard and fast formula for figuring out how much you'll need, since each family's situation is unique, but one place to start is to consider buying life insurance that'is equal to five to seven times your annual gross income.

Choosing an insurance company

If you are already considering an insurance company, There are a few things you should find out about the comapny.

First, check with your state insurance department to be sure the company is licensed to do business in your state. Most companies that advertise in your state are licensed there, but it's wise to verify this anyway.

Always check a company's financial condition before you buy a policy. You can ask your agent or phone your state's insurance department. There are several services that rate the financial strength of insurance companies and you can usually find this information at your public library or get the information from the rating service. Don't forget that most companies now have websites that will provide this info, too.

Picking an insurance agent

An insurance agent should be willing and able to explain all of the details of the policies you are considering or that he or she is recommending. You should feel that the agent is listening to your concerns and trying to find a policy that will provide you with the right type and amount of insurance. If you're not comfortable with any aspect of the interaction with the agent, you should probably end the relationship and find another agent.

Get recommendations from friends, family and other sources. Here are some factors you'll need to check with regard to any agent:

State licensing

Every state requires agents to be licensed to sell life insurance. Also, agents who sell variable products have to pass examinations and be registered with the National Association of Securities Dealers (NASD) and obtain additional licenses.

Professional designations

Many agents will have professional designations such as Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) and Certified Financial Planner (CFP) . These designations indicate that the agents has spent considerable time and effort taking courses and passing examinations to gain these designations in an effort to provide more and better services to his or her clients.

Professional organizations

The major associations for agents is the National Association of Life Underwriters (NALU) and Professional Insurance Agents of America (PIA). These organizations provide seminars and training for their member agents to keep them current with trends and changes in the insurance business. Similar training and services are provided for financial planners by the American Society of CLU & ChFC, the Institute of Certified Financial Planners (ICFP), and the International Association for financial Planning (IAFP).

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