Insurance Services Agency California | Ray Hammersley

Many of us buy life insurance because we want to make sure that our loved ones, especially dependents, remain financially secure after we die.  Income replacement is the #1 reason why people buy life insurance.  Non-working caregivers also have an important, and oft overlooked, economic value that should be covered by life insurance.  Those interested in achieving specific business or estate transfer goals also purchase life insurance.

There are several choices when it comes to buying life insurance and there are huge pricing differences in the market among different companies offering identical coverage.  Policies are now available from more than 1,500 life insurance companies in the United States.  Most financial planners recommend that each family income provider carry no less than ten times their annual income in life insurance.

Here’s an orderly way to go about shopping for life insurance:  1) assess your life insurance needs, 2) decide on the most appropriate policy type, 3) set high standards for the financial stability ratings of your insurance company and, then 4) shop until you drop to find the best price.

Life insurance is a long-term proposition, which means that you should pay particular attention, at time of purchase and throughout the life of the policy, to the financial stability ratings of your life insurance company.  While the average U. S. adult shops for life insurance once every seven years, it’s not uncommon for people to keep life policies in force for decades.

Assessing your life insurance needs

The first step in life insurance planning is to analyze your life insurance needs or, rather, the economic needs of the dependents left behind:

Before purchasing a life insurance policy, you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors.  For example, who will be responsible for your final medical bills and funeral costs?  Would your family have to relocate or otherwise change their standard of living?  The assumption of immediate death is necessary to determine the current life insurance needs for the family or individual.

Beyond the initial readjustment period, consideration has to be given to the longer term financial needs of the remaining family members.  Items of consideration should include dependency period income for children, income for the surviving spouse, mortgage and other debt payoffs, college education funds and an additional emergency fund.

Because life insurance needs change over time, your life insurance program should be reevaluated periodically.  We recommend a review at least once every five years or whenever you experience a major life event such as change income or assets, marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business.

The Illinois Department of Insurance points out the reasons you might buy life insurance will vary, depending on your age, financial situation and other factors.  Listed below are some examples:

Single person with no dependents:  Funeral expenses; medical bills; debts, such as credit cards or student loans; elderly parents who may be dependent upon you for support.  Note: Buying life insurance at a young age is cheaper. As you get older or possibly incur a serious health condition, it will be more expensive or difficult to buy a policy.

Single person with dependents: Funeral expenses; medical bills; outstanding debts; caretaker expenses for your surviving dependents; education costs for surviving children.

Couple with no children: Funeral expenses; medical bills; outstanding debts, especially mortgage or car payments.

Couple with children: Funeral expenses; medical bills; outstanding debts, especially mortgage payments; child-rearing expenses; education costs. Note: Even if one partner does not work outside the home, you may want to consider life insurance to help pay for childcare or other services performed by that partner.

Older couple: Funeral expenses; medical bills; impact on spendable income; outstanding debts, such as a new home, second vacation home, or recreational vehicle; impact on assets you may want to leave for children or grandchildren

In theory, you should have a declining need for life insurance as you age because fewer people remain dependent upon you for income support.  Exception to this rule would be for circumstances in which you want to protect a business entity or pay estate taxes for heirs.  If the purpose of buying life insurance is to pay estate taxes, then you’ll only want coverage that is guaranteed for the remainder of your life and that of your spouse as well.

Travel Insurance

California Licensed Insurance Agency | Ray Hammersley

When shopping for home insurance, there’s much more to consider than how much your coverage will cost.

You need to buy the right type of policy.  You need the proper level of protection, plus special provisions for valuables such as jewelry, your computer equipment and other possessions.  You might also need additional coverage for such things as earthquakes or flooding.

Lending institutions usually require mortgage customers to purchase homeowners insurance.  Don’t rely on the coverage levels mandated by your bank or mortgage company.  Those levels are designed to protect the house itself, but not necessarily your possessions.  That’s why it’s important to check with your agent or insurance company, to make sure you have adequate coverage.

Starting an application

When you apply for homeowners insurance, you’ll provide a great deal of information.  The insurance company will ask you about your current occupation and employment history, marital status, previous addresses, and date of birth and Social Security number. The insurer will check your criminal, credit, and insurance history to see if you are a “good risk.” The insurance company also will look at your “loss history” to see what kinds of home insurance claims you’ve made in the past.

Then, you’ll have to decide what type of homeowner’s policy you want, the deductible, and how you’ll pay for the coverage. Your agent or insurance company will determine how much it would cost to replace your home and many of the items inside.  For more expensive property, such as jewelry and computer equipment, you might need special coverage in addition to the basic policy.

Analyzing your home

Many factors go into determining the premiums for a homeowner’s policy.  The age of your home, the materials used to build it, where it’s located, the square footage, and the number of rooms all plays a role.

How do you heat your home?  What’s the overall condition of the house?  How many people live in your home?  How close is your home to the nearest fire station and fire hydrant?  The answers to these questions also help determine how much you’ll pay for your homeowner’s policy.

Ways to save

If your home is equipped with an alarm system, smoke detectors and deadbolt locks, you could save money.  Those items help make your home safer and more secure.  If you have an in-ground pool or a trampoline, you might pay higher premiums. You can also expect to pay more if you are located in a higher risk area, such as a coastline. Your insurance company will also want to know if you plan to use the home for any business purposes, of if you plan to rent all or part of the house, both of which can increase liability.

Armed with all this information, insurance companies can determine how much to charge you for insurance, sometimes in a matter of minutes.

California Insurance Agent