Friday, December 15, 2017

Top 9 Commonly Asked and Answered Life Insurance Questions

Life Insurance Houston

Life insurance in Houston may be referred to as the most important investment in your life, since you are doing it to take care of your loved ones when you are not around. Therefore, making the right decision is very critical. Choosing the right policy may be seem very difficult at first, but you can make the right decision after being informed of all the necessary details.

When people are looking to buy life insurance, they come across a number of complications. Many questions come to mind that they do not know the answers to. Keeping in view the concept of life insurance, it should be simple enough to understand. But on contrary to the expected simplicity, there are things that always prove to be very confusing. So, to make it a little simpler for you, 10 of the most commonly asked questions regarding life insurance are answered in the sections below.

1    What is the right amount of insurance for you?

When it comes to defining an amount for your life insurance, nothing seems to be adequate. Therefore, it is strongly recommended to go by the rule of thumb according to which you are supposed to multiply your annual salary ten times.

2     How long should the term of your insurance policy be?

The answer to this question depends upon your current age. For instance, if you are living your mid or late 30s, having a life insurance for 30 years might be a good idea.

3     How to figure out the best life insurance provider?

When you are planning on getting a life insurance, you come across numerous choices. But it is strongly recommended not to go for the first option that crosses your path. You need to research different insurance providers to find out the one offering the best benefits.

    What is the difficulty level of life insurance exams?

If you are a healthy person, there is no need to worry about anything. All you need to do is follow the instructions that you are asked to follow before appearing in a medical exam and you are good to go. On the contrary, if you are not confident about a perfect evaluation, you could always go for policies that do not require a medical exam by paying more money.

     Term insurance or whole life insurance?

If you are interested in arranging the right amount of money for your family, the best option is to go with term insurance since life insurance can be pretty expensive as you are getting it for your whole life.

6      Premium life insurance return – recommended or not?

Premium insurance can be very expensive. Keeping in view the benefits it offers, it is not worth the investment. The better choice is to get a life insurance policy and invest the extra money somewhere else.

7      Is it recommended to get life insurance for kids?

Personally, I see it as a good choice since your kid has their whole life ahead of them.

Bonus - How to look up for the rating possessed by your insurance provider?

There are different websites that provide information on ratings associated with different companies. You may check them out to find your answers.

     What happens in the event of your insurance policy lapsing?

In case your insurance policy lapses, it is strongly advisable to coordinate with your insurance provider, pay off the owed money, and get it back up and running.

     Should you ever buy more life insurance policies?

It is recommended to carry out an analysis of your existing life insurance policy after coming across different major life events. If you think you haven’t got the right coverage amount, it is recommended to purchase more policies. 

Visit our other insurance blog for other interesting reads.

Monday, December 4, 2017

How do I choose which life insurance is the best for me when there are so many options?

There are many people who at some point in their life struggle to spend days happily and pay their bills on time every month. These awkward situations might be the result of the economic environment of the country or because of internal personal issues.

Now, the economy all over the world and especially in America is on the greener side and people are paying close attention to various savings and retirement plans – and that constitutes life insurance as well.

Suppose that you are single and young, and do not make much money, then most would think life insurance wouldn’t be a concern. But, if you have dependents like children, spouse and aging parents, then in the unfortunate event of your death, they may suffer financially. So, it becomes more of a necessity to have a life policy.

But with so many options available, a life insurance buyer mostly gets confused. There is nothing surprising if you are also confused about the advantages your life insurance policy should feature. This article is aimed to remove the confusion you have about buying a policy.

Many surveys from different insurance quote websites conclude that today, almost 40 percent of Americans don’t have a life insurance policy and that around 35 percent of insured people do not completely understand their policy’s terms.

So, there is nothing to be more confused about anymore as there are broadly two types of life insurance people usually buy. They are called “permanent” and “term” life insurance.

Permanent Life Insurance

A permanent life insurance covers you for the whole life until your death. It does not matter if you die tomorrow or after completing more than 100 years, the death benefit will be paid. Furthermore, it is also a savings element which provides many tax benefits. It can also be a source of temporary (borrowed) funds to fulfill various purposes. Tip: Read your policy thoroughly as coverage can change from policy to policy.

A permanent life insurance can also help to borrow funds against it if you have a life event. In borrowing, the loan’s collateral is the death benefit. When death happens before repaying, firstly, dues will be repaid and then remaining amount will be paid to beneficiary.

Term Life Insurance

A term life insurance is best for people who want the coverage for a limited time period. For example, suppose that you are a homeowner, married with kids, who has a 30 year mortgage debt to repay, then, you can buy a term policy to prevent losing the property to the bank. Furthermore, your family will be able to keep the property without having to worry about finding another placed to stay.

In case you want higher coverage at a low premium, then you can go for term life insurance. You remain protected till the time period selected. If low premium and higher coverage in this kind of insurance are the positives, then this is a policy you should consider.

Although, these options will offer a level of protection, both permanent as well as term can be a good thing to have but remember the final decision should always be dependent upon the needs, preferences and pocket of the buyer. That’s why it is always suggested to do proper and thorough research before buying any policy.

You should note that if your financial requirements change over time, term life gives you the opportunity to convert it into a permanent policy. Generally, the conversion will not involve any medical examination, only higher premiums should be paid.

In case of permanent life insurance, the premiums are higher from the beginning and remains constant based on the duration selected.

So, these are the two broad choices you should consider choosing from a policy. Before finalizing the purchase of any policy, ask a lot of questions, especially about the coverage time, fees and charges, loan options and flexible repayments as a start. 

Monday, November 27, 2017

Why Flood Insurance Is Not Automatically Included In Your Homeowners Insurance

It is not unusual to find that insurance policies come with varying exclusions. One of the most common exclusions is flooding – it’s simply not covered by homeowners insurance, and very few homeowners bother with it. 
According to a 2016 survey by the Insurance Information Institute, only 12% of homeowners have flood insurance. In the previous year, that figure was 15%. Why homeowners do not seek cover for such a potentially devastating event could be due to many reasons, but the most probable might be an assumption by most people that their homeowners insurance covers them in the event of flooding.
Regardless of the reason, the fact remains that your homeowners insurance doesn’t cover flooding, and in this article, we take a look at why this is so. But before we proceed, it is important to know that there is a difference between water damage and flood damage. 
Water damage from a broken or leaky pipe in your home would be covered; but what is properly referred to as a ‘flood’ in insurance terms would not be. Flooding, in insurance terms, refers to a situation in which a body of water outside your home overflows to a point where it enters your home. Usually such events are due to a natural disaster and more than one home is affected. It’s this kind of flooding that’s not covered.
1.           Costs of flood losses exceed premiums collected

The first reason is a simple matter of economic sense – it doesn’t make any for insurance companies. The cost of damage associated with floods is simply astronomical. Interestingly enough, there was a time – before 1950 – when flooding was covered by the homeowners insurance. However, over time, losses incurred as a result of flooding increasingly became too much of a burden. As a result, many insurance companies started excluding flooding from their homeowners insurance packages. 
Eventually, in the early 1960s, all private insurance companies stopped offering flooding insurance because it wasn’t profitable. This created a huge gap and forced homeowners to bear their losses, many of which was simply too onerous owing to the high costs of the losses. This forced the government to step in. At first, the government provided public disaster aid to assist homeowners before the NFIP was established in 1968 to provide flood insurance.
2.           Relatively low numbers of properties involved

The way insurance works, so that it is profitable for insurance companies, is to have a lot of people subscribing to a policy. Larger numbers of people translates into a larger pool of money from premiums to offset losses from the few people who do need to claim on the insurance policy. 
When the reverse is the case, then the pool of money is smaller. And so insurance companies would literally be shooting themselves in the foot if they included flooding as part of homeowners insurance without extra premiums to make the pool of money larger. But of course, the ability to charge extra premiums is based on the premise that more people would be willing to pay it for flood insurance, a notion already negated by the 12% statistics cited earlier. 
However, private insurance companies offer additional insurance known as ‘excess coverage’ on top of the flood cover the government offers. The government only offers up to $350,000 in coverage - $250,000 for house structure and up to $100,000 for the contents and personal possessions in the house.

Ultimately, insurance companies need to make profits; providing flood cover diminishes that profitability and that is the main reason why flooding is usually not included in homeowners insurance covers.