Tuesday, October 12, 2010

The Facts of Life Insurance

Even if consumers are aware of the importance of life insurance to protect their families economically in need of significant help in determining the type and amount of coverage appropriate at different stages of life, according to the National Association of Insurance Commissioners (NAIC).

Although many adults with children living at home know they need life insurance to protect their families, not everyone has it, and few young singles even take the time to evaluate their options.Consumer research conducted by the NAIC earlier this year indicates the following:

Only 35 percent of young singles have life insurance. Furthermore, few young singles (28 percent) express high levels of confidence to know the difference between the two basic types of life insurance, temporary and permanent, and a similar number (27 percent) are uncertain to hire a life insurance when they are young are guaranteed coverage in the future.

Among young families, two thirds (64 percent) almost think it "very important" for both spouses to have life insurance. But less than half (48 percent) say they actually bought life insurance for either spouse.

At all stages of life, a significant number of consumers (around 40 percent) did not review their life insurance policies on an annual basis.

What All Consumers Should Know About Life Insurance?

According to NAIC has three life insurance basics that all consumers should consider:

1. To begin with, considering how many people are financially dependent on you, what are their major expenses are likely to be and is likely to leave them with substantial debts or taxes payable on your estate. Life insurance can help on all these fronts.

2. Evaluate the two main types of life insurance: term and permanent. As the name suggests, term life insurance pays a death benefit if the loss of a certain time (usually at a time in 20 years). In contrast, permanent life insurance (which comes in many varieties such as whole life, universal life and variable life) is both a death benefit and the ability to construct the present value over a lifetime.

In general, the term life insurance is much cheaper than permanent life. In fact, the term of life have fallen significantly over the past ten years due to the fact that Americans are living longer on average. Consumers who purchased a more than a few years ago should check the current prices. In addition, consumers should ask about the policies they are considering charges of tax issue or cancellation if they decide to abandon the policy or switch to another.

3. Understand the key factors that can affect life insurance premiums. Some are uncontrollable, such as age, of which one to buy a policy or a serious pre-existing medical conditions such as cancer or heart disease. Other factors are much more dependent on individual behavior, such as poor health habits (eg smoking and excessive alcohol), driving record (eg accidents and driving while intoxicated citations), engaging in dangerous hobbies ( For example, sky diving, car racing or rock climbing) and also one in which he lives, because the mortality rate within the geographical area may be used to help create the life insurance premiums.

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