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How much insurance do I need?
By Jeff Lakie
Insurance is a complicated business, and it can be unpleasant to talk
about because no one likes talking about death¡ especially their own
death! Because of those two reasons, many people do not think about
insurance very much. However, most people should have some kind of
insurance.
But how can you tell what kind of insurance you need? It is such as
specialized industry, with insurance brokers requiring licenses in order
to understand it and sell it, so it can sometimes make you feel like you
are at the doctor and you have no idea what the doctor is talking
about! What makes matters worse, is that insurance brokers (the only
people who know what they're talking about) are usually paid by
commission based on the amount they sell. So, while you are likely to
get an insurance broker who is a good, ethical person, you might still
be concerned that they are overestimating your need.
So how much do you need?
There are two secrets to knowing how much insurance you need:
1. Determine the need. The first is to identify the costs that will be
incurred at your death and the expenses that will go on after your
death. Cost that will be incurred at your death include estate taxes,
funeral costs, and wages that your loved ones will lose as they take
time off of work to mourn for you. Costs that will go on after your
death are things like, the mortgage on your house, as well as car
payments, saving for the children's education, the wages you'll no
longer be able to provide to your family.
2. Determine the period. The second step is to identify whether
these expenses are short-term expenses are long-term expenses.
Temporary expenses are ones that will only cost you money if you die
within a certain period of time. Temporary expenses include your
children's education and your house and car. It is possible, that these
may be paid off before you pass away. However, if you die before
they are paid off, it is good to have insurance to cover the rest of the
payments. On the other hand, permanent expenses are things that will
always be around. For example, your estate taxes, funeral costs, and
the wages that your loved ones will lose when they mourn for you are
all costs that occur once and they can be paid off¡ but it doesn't
matter when you die, those costs will always be there.
Once you have done these two steps you will have a pretty good idea
of how much insurance you need and how long you need it for. Now
you are ready to talk to your broker and you'll have a pretty good idea
what they're talking about. Bring the list with you and ask them to
address each one. They may suggest the more coverage (and
sometimes they may suggest less coverage) but having a little bit of
knowledge before you make the appointment will give you an
advantage and helped you know how much insurance you actually
need.
About the Author
Jeff Lakie is the founder of Insurance Information a website providing information on Insurance
Article Source: http://www.simplysearch4it.com/article/11947.html
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