Why buy life insurance?
Topping the list of reasons to buy life insurance is the financial protection life insurance offers. If you’re single and just starting out, you may not need life insurance. But as you take on more responsibilities and your family grows, your need for cheap life insurance increases. The proceeds from a life insurance policy can replace the income lost to your family upon your death. You might also want to buy life insurance to pay off debts and expenses, leave money to charity, and cover final and estate expenses.

Choose term or cash value
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time (the term), and cash value (permanent) life insurance, which combines a death benefit with a cash value component. Cash value insurance offers lifetime protection, while term insurance may be the most affordable option if you’re buying life insurance mainly for the financial protection it offers, and your need for life insurance is temporary (until your children leave the nest, for instance). Some term policies (called “convertible”) will permit you to exchange the term life insurance policy for a permanent one at some point.

Decide how much coverage you’ll need
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you’re married, both you and your spouse should consider buying life insurance. One of the easiest ways to estimate how much life insurance protection you should buy is to use a life insurance needs calculator.

Pick a number between 1 and 30
Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing a term that matches your need for life insurance protection. For instance, if your main reason for buying life insurance is to protect your 7-year-old twins until they’re out of college, you’ll want to buy a policy with a term of at least 15 years.

How much will it cost?
How much you pay for life insurance will depend on a number of risk factors, including your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you’re buying. Keep in mind that the premium you’re quoted initially will increase later. For instance, when you buy term life insurance, rates are guaranteed only until the end of the term (annually for annual renewable term or at the end of a specified number of years for level term). While most life insurance policies can be renewed at the end of the term, you’ll pay a higher premium for coverage.

Shop around
When comparing quotes for cheap life insurance, make sure that the insurance coverage you’re comparing is similar. And remember, any policy that you buy is only as good as the company that issues it. Find out what rating the company has received from major ratings services, such as A. M. Best or Standard & Poor’s. These companies evaluate an insurer’s financial condition and claims-paying ability. The company giving you a quote should provide you with this information. You can also contact your state’s department of insurance to find out more about an insurer’s record.

Submit an application
Once you’re ready to purchase a life insurance policy, you’ll fill out a life insurance application that contains questions about your current and past health history and lifestyle. You’ll generally be required to take a medical exam, arranged and paid for by the insurance company. The answers you give on your application, along with the results from the medical exam and your past health history, will help the insurance company determine whether to offer you a policy, and if so, at what price.

Learn the lingo
Maybe a life insurance contract isn’t as exciting as a best-selling novel, but read it anyway. Policy provisions, the amount of benefits, the premium, and other charges you’ll pay will be listed along with other important information such as the beneficiaries you’ve named and the premium guarantee period. Make sure you understand everything in the policy. Under the laws of your state, you may have a “free look” period (typically at least 10 days) during which time you can cancel the policy without penalty.

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as “perils”. An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are (non-exhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set forth below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner’s insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner’s belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owner’s property.

Business insurance can be any kind of insurance that protects businesses against risks. Some principal subtypes of business insurance are (a) the various kinds of professional liability insurance, also called professional indemnity insurance, which are discussed below under that name; and (b) the business owners policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners insurance bundles the coverages that a homeowner needs.

Cheap life insurance can be purchased but some research is required before it can be determined what kind of insurance suits you best.

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Do you have the cheap life insurance protection you need?

It’s a fact that some occupations are riskier than others. But no matter what you do for a living, take a look at your life insurance needs. Life insurance can help you financially protect your loved ones after you die. If you’re single, and no one is depending upon your income for support, you probably don’t need life insurance. But if any of the following is true, consider buying cheap life insurance

Do you work in a dangerous occupation? According to the Bureau of Labor Statistics, the top 10 most dangerous jobs are:

1. Timber cutters
2. Airplane pilots
3. Construction laborers
4. Truck drivers
5. Farm occupations
6. Groundskeepers
7. Laborers
8. Police and detectives
9. Carpenters
10. Sales occupationsLife Insurance

* You’re married and your spouse depends on your income
* You have children
* You have an aging parent or disabled relative who depends on your income
* Your retirement savings, pension, or other cash accounts won’t adequately support your loved ones after you die
* You have a large estate and expect to owe estate taxes
* You own a business

Calculators and worksheets are available online to help you determine how much life insurance you need. You may want to contact an insurance agent or broker who can help you determine what type of life insurance is best for you and the amount of coverage you need.

Do you have the disability insurance you need?
If you work in a high-risk occupation, you probably know how important it is to have disability insurance coverage. But don’t rely on government programs such as Social Security and workers’ compensation as your main source of protection. In reality, government programs pay only limited benefits under restrictive terms (e.g. you must meet a strict definition of disability to qualify).

Your employer may offer group disability insurance at low or no cost to you. But you may also want to consider purchasing an individual disability insurance policy. Although you’ll pay more for individual coverage than for a group policy, you often get more benefits. And keep in mind that if you leave your job or otherwise terminate your relationship with a group, you can’t take your disability policy with you, and you usually can’t convert it to an individual disability policy. This means that you may be left without disability coverage when you need it most.

Shop around for coverage
Since many different types of life and disability policies are available, it’s important to shop around for coverage to find a life insurance policy that meets your individual needs. Since premium costs vary widely, get quotes from several insurance companies. Just make sure you’re comparing policies that offer similar benefits.

Because of the increased mortality risk associated with smoking, smokers almost always pay more for life insurance than their nonsmoking counterparts. Some life insurance companies distinguish between moderate smokers (20 or fewer cigarettes per day) and heavy smokers (more than 20 cigarettes per day) and offer somewhat lower rates for those who smoke less. The recent cigar craze has now raised numerous questions about how to classify cigar smokers. But unfortunately, there is not yet an industry-wide consensus on this issue.

Note: Life insurance companies now ask about the use of any nicotine-containing product, including chewing tobacco.

The ways in which life insurance companies categorize treatment of cigar smokers literally vary from one extreme to the other. A few companies have taken the position that all forms of tobacco are equally harmful, and thus charge cigar smokers and cigarette smokers the same rates. (However, there may be exceptions for very occasional use; for example, less than 12 cigars per year.) Other insurance companies take a middle-of-the-road position, charging cigar smokers more than nonsmokers but less than the heaviest-smoking class. Some insurance companies even consider cigar smokers to be nonsmokers, offering the lower rates typically reserved for those who don’t smoke cigarettes at all.

So, if you’re a cigar smoker, try calling your insurance agent or doing some research to find the best life insurance rates available. You should probably act quickly, too, as insurance companies could change their rules if clinical research determines that cigar smoking is more dangerous than previously believed.

Insurance companies will typically reevaluate your rates if you quit smoking for at least a year – something to keep in mind if you’re more just a part of the cigar trend than a truly dedicated stogie smoker.

Although it is typical for an individual to name his or her spouse, child, parent, or other relative as the life insurance beneficiary, non-relatives can also be named. For instance, you can designate your estate, trust, business partner, lender, or domestic partner as beneficiary of your life insurance policy.[ad#ad-1]
Check the laws in your state, though. A few states require that under certain circumstances an unrelated beneficiary have an insurable interest. An insurable interest exists when one party has a financial interest in another party’s life. The beneficiary of a life insurance policy must expect to suffer a financial loss if the insured dies.

Cheap life insurance can be purchased for this purpose, but research will be required.

Before designating a beneficiary, you should also make sure that you understand all of the tax implications. Life insurance proceeds are generally not income taxable, but there may be other considerations. For example, naming your estate as the beneficiary of your life insurance policy will increase the size of your estate and may necessitate probate and create an estate tax liability. Consult with an attorney or accountant for more information.

One other exclusion that can be costly is the Ordinance or Law exclusion. Building codes established by governmental bodies that drive up the cost of rebuilding or repairing after a loss occurs might not be covered by your insurance policy. Thus, if you discover when replacing damaged property that current law demands higher grade or more expensive materials than those you’re replacing, the new materials might not be covered fully.

Although many disabled children and adults receive benefits from two government programs, Supplemental Security Income (SSI) for disabled individuals and Medicaid, no government or private insurance product has been created specifically to save for and fund the future care of disabled children. However, one very common insurance product, life insurance, can play a critical role in securing your child’s financial future.

Term or permanent (cash value) life insurance can be used to fund a special needs trust, a legal arrangement that allows you to provide for your disabled child throughout his life (even after you die) without risking his eligibility for SSI or Medicaid. To receive SSI and Medicaid, your child must have minimal income and assets, which means that you potentially jeopardize his eligibility for benefits every time you save a dime towards his future care.

Because the funds in a special needs trust are managed by a trustee and legally do not belong to your child, they are not considered “countable” for SSI and Medicaid eligibility purposes. However, funds in the trust must supplement, rather than replace, government benefits. They must be used for expenses, like clothing and transportation, which are not covered by government programs.

Once the trust is created, you can fund it using any asset you choose (e.g., cash, stocks, personal property, etc.), but many people choose to fund a special needs trust with life insurance. The trust can own a life insurance policy or can be named beneficiary of your policy in the event that you die. Many special needs trusts are funded (at least in part) by “survivorship” or “second to die” insurance because it’s less expensive than other types of life insurance, an important consideration if you’re trying to find room in your budget to save for your child’s future care. However, talk to a professional advisor. Other options are available that may better suit your needs.