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Insurance Options and Terms
To navigate the maze of insurance options, it's helpful to understand the terminology:
| Annuity | A life insurance product that pays benefits over the benefactor's lifetime |
| Appraisal | A survey to determine a property's value (to insure in case of loss) |
| Claim | A documented demand for benefits, as provided by the insurance policy |
| Co-pay | The fee you pay for health-care services; insurance will pay its part |
| Coverage | The defined scope of insurance protection |
| Deductible | The amount you pay on claims, before the insurance company's payments begin |
| Policy | A written insurance contract or certificate and all attachments |
| Premium | The amount(s) you pay to purchase / continue insurance coverage |
| Rider | A modification regarding provisions of a policy, i.e. adding / excluding coverage |
| Risk | The chance / probability of loss, or the amount of loss for the insuring company |
| Term | An affordable form of life insurance or a length of time or... |
| Terms | The written conditions of an agreement |
| Whole life | "Permanent" life insurance, valid your whole life, as are the premiums you pay |
Not all Insurance is Created Equal
The most common thing about insurance is the wide variety of coverage and prices. Lifestyles affect
insurance rates. Bad habits, like smoking, can affect not only health insurance, but auto, home / renter's,
and life insurance, as well. Your credit score can also make a difference in the amount you pay for insurance.
It's all about risk. The insurance companies want low-risk individuals; otherwise they will charge steeper
rates to high-risk clients.
It pays to comparison shop for any type of insurance. Life insurance rates, for instance, can
vary greatly according to age, length of insured time (term), and other factors. Ask your insurance agent if
discounts are available for combining multiple types of insurance. Grouping vehicle, home, and life insurance
with the same company can result in a sizeable discount on all the products in the group. After comparing,
thoroughly understand any policy terms and conditions before you sign your documents.
Protection
To adequately protect loved ones in case of personal loss of life, it is recommended to have life
insurance coverage of 6-10 times the amount of yearly income. This could cover a mortgage, future
education expenses, and keep the same quality of life for your family.
Whole Life vs. Term Insurance: Why combine a savings account with a more-expensive Whole Life insurance
policy? You could most likely get a better return on your "savings" through a different investment vehicle.
Cash value within a typical whole life policy may not begin until the 3rd year. If you need your money, you
must borrow and pay it back. If you die, all "savings" would be lost, and only the insurance value would be
paid.
Term Insurance gives you more coverage at a lower price for a specific term, such as 10, 20, or 30 years.
Web search for parents:
Free Life Insurance
When Enough is Enough
Every adult should have health insurance, personal property protection, vehicle insurance, and especially
if a parent, life insurance. For other types of insurance, it's important to weigh the cost factor against
the protection. Why add in-case-of-death-insurance to your mortgage loan if your life insurance would cover
this expense? Credit card companies offer life, disability, & job-loss insurance to insure they will be paid.
Are the standard warranties enough coverage? An $1100 extended car warranty under a 5-year loan contract
with interest...adds up to an astronomical amount. If you saved that amount for emergencies or your next
car, you could earn interest, instead of paying it. Likewise, there may be no need to extend an appliance
warranty if you already have a home-service repair contract. For electronics-computers, monitors, portable
products, etc., extended warranties can be a wise choice. Take time to review the contract terms.
Planning to "Take Good Care of Yourself"
Is Long-Term Care Insurance right for you? If you have sizeable assets to protect and desire to plan ahead in
the event you need home care or the services of an assisted living facility, it is worth checking into this type
of insurance. Premiums may be tax-deductible and paid benefits are not counted as income.
Age, the daily / monthly benefit amount, and the length of time benefits pay are a few of the factors that are
considered to determine the premium amount, along with one's health rating.
Long-Term Care is more expensive in latter years and not cost-effective for those with limited assets, receiving
social security benefits, or about to receive Medicaid. Grown children, however, can pitch in together to purchase
long-term care insurance for their parents.
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