FAQ
Frequently Asked Questions
You’ve Got Questions - We’ve Got Answers
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Why do I need to buy insurance?
If you must provide security for your spouse, kids, or other family members in the event of your death, you should get life insurance. Depending on the policy amount, life insurance death payments might assist beneficiaries with mortgage repayment, education expenses, or retirement savings. A cash value component that increases over time is an element of permanent life insurance.
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When purchasing a life insurance policy for a family member, it's crucial to inquire about the policy's purpose. Elderly people and children may not have any significant income to replace, but in the event of their passing, burial costs might need to be paid. A parent may choose to purchase a moderate-sized policy for their child when they are young to safeguard their future insurability in addition to paying for funeral costs. By doing this, the parent may guarantee that their offspring will be able to support their future family financially. In some cases, only 25% of the current policy amount on the parents' lives may be invested in life insurance for their offspring.
How do I make sure I’m not over-insured?
Examine your residence, health, life, and auto insurance policies as well as any other coverage to see if you are overinsured. Examine your insurance levels, rates, and insured risks to determine whether you have enough coverage or too much.
Consider the following questions for yourself:
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Do Policy Amounts Seem Too High?
Insurance is supposed to cover potential risks, not to bring in a windfall. Amounts of coverage ought to be determined by need. For example, the majority of people's financial responsibilities do not warrant the exorbitant expense of a $10 million life insurance policy.
Use this calculation to find out how much life insurance you require:
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Calculate the amount of debt you still owe. This covers your personal, home, and auto debts.
Determine the required amount of replacement income. If you pass away, your heirs will probably need to replace your income, albeit just how much will depend on your circumstances. For instance, if the kids are living at home, your spouse may need to replace your entire income; however, as the kids move out, that requirement will decrease.
Add any additional expenses you would like to pay for. For instance, you may like to have enough life insurance to cover the cost of your children's college education or your funeral.
Total up your liquid assets. This covers money in cash, certificates of deposit (CDs), savings accounts, and other investments that your loved ones may quickly liquidate.
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Finally, deduct your debts from your liquid assets. To determine how much life insurance you need, add this sum to your other expenses and the amount of income you intend to replace.
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Additionally, keep in mind that you can have inadequate or no insurance in certain areas while having enough insurance in others. For example, you may have life and dental insurance covering you for every imaginable risk, but not auto insurance. Making changes to your over-insured zones can free up funds for under-insured coverage. Determining your insurance needs can be aided by a financial counselor or insurance broker.
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Do You Possess Multiple Policies?
If you purchase insurance policies carelessly, you may end up with duplicate coverage. For example, if you have life insurance via your employer and another policy that you bought on your own, you may find yourself with numerous plans.
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Have You Got Redundant Insurance?
Risks that are already covered by other means may be protected against by your insurance. For instance, roadside assistance and a complimentary rental car, while your own is in the shop, are frequently charged for under auto insurance packages. You are, however, overpaying if these risks are covered by your credit card, auto warranty, or auto club membership.
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Could You Cover the Expenses on Your Own?
If you can afford to replace a loss, you might not require insurance. Collision and comprehensive insurance, which cover theft or damage to the car itself, are included in standard auto insurance. Consider canceling this coverage if you have an older car that is only worth a few thousand dollars and you have the funds to replace it.
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Do You Own Two Policies for Health Insurance?
Some individuals receive insurance via both their spouses and their jobs. One health insurance policy is regarded as primary and the other as secondary when you have both. Your secondary coverage begins to pay once your primary plan has paid its portion of your bills. Having two insurance could cover more conditions or pay a larger portion of your payment. For example, one coverage may pay for chiropractic and acupuncture care, but not the other. Examine your insurance coverage, medical expenses, and coverage carefully to determine whether the benefits exceed the additional costs.
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Do Premiums Put a Financial Burden on You?
The fact that additional insurance coverage and riders are placing an excessive financial strain on you is a key indicator that you may be overinsured. Insurance overspending might hinder financial objectives such as retirement savings, down payment savings on a property, or college money for the kids. It can also deplete the funds necessary to establish a substantial emergency reserve.