Three Reasons For Buying Life Insurance

We live in economically uncertain times and finding financial security has become increasingly tough. Baby boomers have seen their life savings dwindle during the 2007 economic crash. Worldwide natural calamities and political upheavals have made life more fragile than ever. That’s why it is important now, more than ever, to consider buying a life insurance policy.

Life insurance is used to resolve the financial gap that would occur if an earning member of the family or a stay-at-home spouse were to die unexpectedly. The loss of income this would incur would have a severe impact on the family’s financial status. For instance, if you died with outstanding loans or mortgages, the burden of paying off those loans would fall on your family. Calculating just how big a financial impact your death would have on your family is the key to life insurance planning.

1. Purchase life insurance for its numerous benefits

The first obvious reason to buy a life insurance policy is to protect your loved ones from a financial catastrophe. But life insurance has many more benefits you should consider:

Your life insurance coverage can serve as a partial replacement of income to the surviving members of your family, whether it is a spouse, your children or elderly parents who depend on your income.
Life insurance can pay for your funeral expenses. Burial costs and funeral services can be very expensive; death benefits can help offset those costs.
Life insurance can be used to pay off estate taxes. If you have a large estate, your beneficiary could use the coverage to pay off estate taxes and avoid liquidation of assets.
You can use your life insurance as an inheritance to pass on to your children or grandchildren so that they have a good start in life.
You can use your life insurance policy to make a generous donation to your favorite charity. Many people designate proceeds to their church or a relief organization.
If you are an elderly couple, death benefits from your life insurance policy can offer greater financial security to a surviving spouse. It can compensate and prevent a surviving partner from eating into retirement funds to pay for unexpected medical costs.

2. Purchase life insurance because it is totally affordable

This is the best time to purchase term life insurance. According to the Insurance Information Institute, from 1994 term life insurance premiums have plummeted 50 percent for standard-risk term insurance. A term life insurance policy is the most affordable life insurance policy.

Term life insurance is the most basic insurance policy you can buy and the simplest to understand. You pay a premium based on your age, sex, health, lifestyle, occupation and other factors that may be incorporated into a life insurance company’s underwriting process. In return, your family will receive a predetermined death benefit after you die.

If you are young and in good health, there’s a good chance you’ll be applicable for the best life insurance rates. You’ll be able to lock in those rates for a long time if you take a level term life policy covering a 30-year term period.

3. Purchase life insurance because it is convenient.

Let’s face it. Convenience plays a huge factor! Most of us lead very busy schedules and are driven by convenience. We need a process that is convenient and quick. Online life insurance quote providers offer just what you need�”convenience. Such providers will take just a few moments of your time. You will be required to fill in an online questionnaire. Once this is submitted, you will instantly receive the best life insurance quotes from top-rated life insurance companies that suit your personal situation.

Most of us are tech-savvy these days and the introduction of an electronic life insurance application process is paperless and can be done in the convenience of your own home or office. With e-signature, the entire process can be done online without having to meet a life insurance agent.

Conclusion

Life insurance is a competitive business. The underwriting process differs from company to company. Some companies offer a more specialized look into unfavorable health conditions and therefore can offer you better premium rates than others. Since online life insurance quote providers have an expansive database that holds information from hundreds of life insurance companies, they can easily locate companies that �favor� your pre-existing health conditions or your smoker’s status.

The Financial Crisis And Your Auto Insurer

In what many experts have called the worst financial crisis since the Great Depression, millions of people have begun questioning whether their auto insurance companies are stable. They’re wondering if their insurers will have the financial resources available to pay claims. The economy continues to roil; headlines are splashed with news of high-profile bailouts. Drivers’ concerns are understandable. However, most of that concern is unwarranted.

There is a support structure in place that all but guarantees that claims will be paid. Below, we’ll provide a quick overview of the auto insurance regulatory structure. We’ll also explain how your insurer’s financial stability affects you and when you might want to make the decision to switch carriers.

Separating Fact From Fear

A lot of drivers are worried that the current financial crisis places their car insurance policies at risk. They’re afraid that carriers won’t be able to pay a claim in the event of a traffic accident. Some of this fear comes from the memory of property insurance companies being decimated in the wake of Florida hurricanes years ago. But, that situation was completely different. The equivalent for the auto insurance industry would require that every driver be involved in a catastrophic collision on the same day. In effect, an impossible scenario.

Auto Insurance Regulatory Structure

The underpinnings of the auto insurance industry are founded upon a strict regulatory structure. State regulators work closely with the industry in general as well as with each individual carrier. They do so to ensure that resources are always available to pay policyholders’ claims, even in the case of an economic and financial crisis.

Every auto insurance company is required by the state to set aside a given level of loss reserves. The purpose of these reserves is to pay claims. Insurers are also required to annually report their financial viability to the state insurance department. That way, state regulators can review the potential risk assumed by policyholders in light of each carrier’s financial status.

In the event that your carrier becomes insolvent or files for bankruptcy, the loss reserves remain available to pay immediate claims.

The Next Level Of Consumer Protection

Because an insolvent auto insurance company represents a potentially severe economic impact to a state, regulators have created another level of protection for consumers: state insurance guaranty funds. Car insurers are required to contribute funds to the pool. If a carrier becomes insolvent and its loss reserves are insufficient for paying its policyholders’ claims, the guaranty funds are used.

Should You Switch Auto Insurers?

Even though there is a regulatory structure in place to protect policyholders, it’s still worthwhile to review your auto insurer’s financial stability. If your carrier shows signs of impending insolvency, consider switching to a new insurance company. It’s also important to review your policy once or twice each year. Consider the rates you’re paying, the coverage you’re enjoying, the service you’ve received, and your current needs.

If your auto insurer is habitually late in paying claims or worse, refuses to pay many of them, it may be time to switch. You can often find lower rates with better coverage at insurers who are willing to compete for your business. If you decide to change car insurance companies, remember to keep your current policy in effect until you have signed a new policy. Then, cancel your old policy in writing.

The current financial crisis is unlikely to expose you to the risk of not having your claims paid. But, there may still be reasons to consider making a change.