Best Life Insurance Plans – Which one should you Choose?

A life insurance policy is as important as having savings. Life insurance is something that is becoming increasingly necessary to have yourself insured under because of the unstable economy and lives of people all around the world with the ever rising prices with the number of rising crimes and accidents that are costing livelihoods.

Life insurance coverage is a policy that provides for you and your family in certain situations. There are many different types of life insurance policies that offer different insurance coverage as well as investment opportunities. In case of the unfortunate death of the insured person, the nominees or the family of the insured are the ones that will get the benefits of the life insurance policies.  This will ensure the continuation of the daily functioning of the family though financial aid.  The whole idea is to help in maintaining the same lifestyle as the family has with the income of the policy holder, when they were alive.

One should choose the best life insurance plans tenure very carefully. Insurance plan tenure can be for as many years you choose it to be – 5, 15, 10 or 20 or even 25. You should choose a tenure which will last as long as you will have dependents that depend on your income for food, clothing or shelter. If you have a child who will most probably start earning their own income in 10 years and you are going to take up a life insurance policy, you can take up a 10 year term after which your child will not depend on you for finances anymore and can fend for themselves.

Which life insurance plan should you choose?

• Choose the one which has a good market share

Now, a high market share determines how well an insurance company is doing. It shows that the majority of the market is buying the product or service from that insurance company. And this happens over a period of time by gaining the trust and loyalty of the customers by delivering as promised and giving them all the benefits and covers at premiums which are affordable. So, life insurance plans by insurance companies with a good hold on the market are the companies from which you should be choosing your life insurance policies from so that you have a certain sense of guarantee and security. The best life insurance plans come from the insurance companies with the highest share in the insurance sector market.

Let’s look at one of the most populous countries in the world for an analysis – India.  There is no larger life insurance company in India than LIC.  LIC is on the top with a market breaking 70.5 % market share (2015-16) making it the top major player among its other insurance company counterparts. Following are few of the insurance companies with the highest market shares and you can see that only LIC – Life Insurance Corporation of India has made it to double digits. You should choose a life insurance policy from any one of the following insurance companies as they are the top 6 major players in the insurance sector with the highest holdings in the market. There are a lot more but they all fall in the 1 % or less category.

• Choose the one that is offered by a company with a high claim settlement ratio

A company which has a high claim settlement ratio has settled a lot of claims which were made. There are always some reasons due to which an insurance company does not necessarily settle claims because of various factors.  Such as the reasons are not covered in the policy or the policy holder provided wrong information which might have led to the termination of the insurance policy or the cancellation of the claim settlement. A company with a high claim settlement ratio has made sure that all the families, nominees and the policy holders that are eligible to get the claim are given the settlement. You should choose a life insurance policy from such a company so that the chances for the settlement of your claims are also high enough. The best life insurance plans are those which cover for you when you claim for the right reasons.

• Choose the one which gets you the maximum benefits

You should choose a life insurance policy which will provide you with with the maximum amount of benefits for a premium rate that seems reasonable and not too much for what you are getting. The best life insurance plans will be those ones that offer all the benefits needed at reasonable prices so that taking up the life insurance seems worth it. The benefits that are given should be worth the price of the premium rates that policy holder has to pay. Choose the best life insurance plans to get the maximum benefits.

Few of the best life insurance plans you should choose from

LIC New Jeevan Anand

If you are in India, then the New Jeevan Anand offered by LIC is one of the best life insurance plans and is a type of life insurance which is an endowment policy. This plan will provide coverage to the insured and their family throughout the life of the policy holder or till they are 100 years of age. The sum assured is paid regardless of whether the policy holder survives the tenure or dies during the term of the insurance policy.

iTerm Plan by Aegon Life

Choose the iTerm plan which is one of the best life insurance plans as it gives a good coverage at very affordable premium rate prices. It can be bought online which eliminates the hassle and the manipulation of the middlemen like the insurance agents. This plan also offers five riders, which are optional, that you can choose from to customize your plan according to the requirements that you have.

Final Thoughts

Get the best life insurance plans and live a financially hassle free life. The best life insurance plans are waiting for you and provide you with good benefits.  If you have dependents, then you definitely need to strongly consider getting a life insurance plan today!

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How to Choose a Life Insurance Plan

There are several different life insurance plans available, and it may be challenging to choose the right one for your lifestyle and specific needs. I have written posts before such as ensure you are not over insured.  It pays before you decide which type of life insurance to choose to decide an amount you want to be covered for.  One you have that figured out, it can be a good idea to reach out to someone for help if you are unsure how to proceed.  For example, consultants such as Chris Pivik can help you understand the medical issues for choosing the right life insurance policy that will give you peace of mind. The main aim is that your family should not experience financial hardship after you die. Some policies are valid for a short time and other build up cash value. Here are some guidelines that explain the different options and may help you make an informed choice.

Term Life Insurance

Term life insurance is for a limited time such as 10 – 30 years. The amount you pay each month, your premium, will not change throughout that time. At the end of the term, the policy becomes invalid. However, you may be able to extend it, but for an extension, you may have to pay a higher premium.

Term life insurance is the most cost effective insurance policy if you only need it for a specific time period. For example, if you want your children’s college education to be guaranteed, you may take a 20-year term. It is also a good option if you need a large amount of insurance, but have a limited amount you can pay per month. Because this type only pays if you die within the time limit of your policy, the risk is lower than for a permanent policy. This is why the premiums can be lower. Remember – term life insurance does not build equity or give a cash savings!

Permanent Life Insurance

A permanent life insurance policy, also called universal or whole life insurance, will be valid as long as you live. It will pay a benefit if you die next week or in 100 years. Whole life insurance also provides a savings element that will grow over the years and could be used as collateral for a loan. The savings is tax-deferred, which means you only pay taxes on it when you use it or on a predetermined date. Universal life insurance is flexible, so you can increase or lower your coverage as well as your premium over time.

How to Choose a Plan

The best life insurance policy may not necessarily be the cheapest. It will depend on your family’s needs. A universal plan may be suitable if you want coverage for a short period, but also want to build cash value that you can borrow against while you are living.

If you need estate planning to be part of your life insurance coverage, a whole life insurance plan may be the best option. This will help you transfer your wealth to your beneficiaries.

The only real help you get from term life insurance is a low monthly payment and financial help for your family if you die during the term of the policy.  As mentioned, this is usually the best way to go for most folks because once your kids are on their own, the need for a bunch of life insurance drops off…

Final Thoughts

Once you evaluate your needs, you will also need to consider the cost. In general, the healthier you are, the lower your monthly cost will be.  As mentioned earlier, consultants such as Chris Pivik, can help you navigate optimal insurance rates if you are in good health with a low-risk lifestyle to give you a better chance of getting a low premium payment. Some of the medical factors that are considered are your family medical history, if you smoke or have smoked in the past, and your cholesterol level. These factors will help determine how much you pay for life insurance.

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Now For The Low Low Price Of

Just because something is professed to be on sale, that doesn’t really mean it’s a good deal!

Retail Brainwashing

I covered this a little bit in an old article around retail brainwashing – did you know there is a whole science around tricking people into buying stuff?  As humans, we find it difficult to resist a good limited time sale!  We have evolved over the centuries to make the most of limited resources.

See the below example of a retail snafu that my wife and I found in Sams Club recently:

Now For the Low Low Price Of – Sams Club

Do you see anything funny about the picture below?  You kinda have to wonder about the person highlighting the original price and just what they were thinking

Now for the Low, Low Price of… – Final Thoughts

What’s my point in all of this?  In your day-to-day shopping, maintain a level of skepticism when it comes to sales!  Just because something is on sale does not mean that you are getting a good deal!

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Find A Competent Insurance Agent

The following is a sponsored post:

A reasonable approach to personal finance is to examine the insurance coverage that you carry on an annual basis. This will ensure you have the proper amount of coverage and that you are not over-paying for the coverage amount that you’ve settled on.  Insurance coverage as a whole cost the average family over $5,000 in 2012 according to the Bureau of Labor Statistics!  This substantial annual investment should be considered carefully with the assistance of a good insurance agent.  I prefer to handle all of my insurance needs through the internet/phone for time efficiency, but some folks still like the personal touch of sitting down with someone to discuss the best coverage for them.  This also gives a chance to ask any questions that are on your mind.

Find a Competent Insurance Agent – Points to Consider

Types of insurance provided that you should discuss with your insurance agent or consider are

• Automobile insurance – Liability coverage to comply with laws, physical damage coverage for the automobile, as well as uninsured motorist’s protection to protect you against legal liability and damage to your property.
• Homeowner’s insurance – Whether you own your home or rent, you’ll need to protect yourself against loss due to loss of your home, the property contained in it, and your legal liability should anyone be injured as the result of carelessness on the property you own or control.
• Boat and RV insurance – If you own a boat or RV, you will likely need this type of insurance.
• Umbrella Insurance – This is a type of insurance policy to protect you in the event that your legal liability exceeds your limits of liability on the primary automobile, homeowner, boat, or RV you own.  It’s wise to request this type of coverage if you have a large net worth and desire to protect it from risk.
• Life insurance – Everyone should be familiar with what life insurance is.  Read my post titled Ensure You’re Not Over Insured for more details on how to determine the right amount of life insurance for you.
• Flood insurance – This covers you financially if your home encounters a flood.  Consider this type of insurance if you qualify and it is necessary. A coastal area such as North Carolina, Virginia, etc. has insurance challenges that may be addressed only by a knowledgeable insurance agent.
• Health and disability insurance – This is another type of insurance that you may consider.  Read my article titled: Do You Need Short Term Disability Insurance? to learn more.

Find a Competent Insurance Agent – Final Thoughts

A competent and reliable insurance agent can provide families with savings on insurance premiums and ensure that you have adequate protection from life’s risks. If you are looking for a more personal touch, then a qualified agent can be a great resource for you.  They can envision necessary protection from catastrophes that may occur to you or your property. If you happen to live in Wilmington, North Carolina, then click here to find insurance agent through the listings provided in this link.  Insurance agents can examine your insurance portfolio to advise you about amounts of coverage needed, types of coverage needed, and reasonable places to purchase that insurance.

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Life Insurance and Short Term Disability Recap – How we saved $1,500 a year!

So, I wrote a couple of posts on making sure you have the right amount of life insurance and if you really need short term disability.  You can find them here:

• Do You Need Short Term Disability Insurance?
• Ensure You’re Not Over Insured
• How Much Life Insurance Do You Need?

I wanted to write a quick recap post to talk about how my wife and I just got all of this straight and ended up saving ourselves about ~$1,500 a year.  Read on to find the details!

 Money Saving Breakdown – Life Insurance and Short Term Disability Insurance – Recap

• Difficulty (Super Easy/Easy/Medium/Hard/Expert): Hard
• Average Savings per Year ($/year): 1,467
• Time Required (mins): 120
• Savings for your time ($/hr): 734

The Insurance Savings Details

So, it was kinda a pain in the ass to go through running all of the calculations to determine how much life insurance my wife and I actually.  Also, sitting on the phone with the benefits folks isn’t exactly my idea of a stimulating conversation.  That’s why I rated this money saving idea as “hard”.  But after about two hours of work, I think we have all of our life and short term disability insurance straight!

Here’s the savings breakdown:

• I reduced my life insurance from $600K to $300K.  This saves $155.88 / year.
• I had $200K of spouse life insurance.  I am increasing this to $250K as my wife’s work covers her for free for $50K ($250K+$50K = $300K – my magic number).  This will cost an extra $18.60 / year.
• I cut accidental death insurance I had for spouse & kids.  This was $250K spouse, $50K child.  This saves $100.80 / year.
• My wife had additional $350K life insurance through her work.  We cut this and saved $403.20 / year.
• My wife ditched her Short Term Disability.  This saves $826.02 / year.

 Grand Total Saved per Year = $1,467.30

My Wife Was Crazy Over-Insured

Now, we’re both insured for $300K, we have no life insurance for our kids (no need), and my wife has no short term disability (not planning on having any more rugrats).  We feel that this is the proper amount of insurance for us.

One crazy thing is that before we made these changes my wife was INSANELY over-insured for life insurance.  Let’s look at the payout if she died in an accident:

• $50K life insurance provided free from her company.
• $50K accidental life insurance provided free from her company.
• $350K life insurance my wife was paying for through her company.
• $350K accidental life insurance my wife was paying for through her company.
• $200K life insurance I was paying for through my company.
• $250K accidental life insurance I was paying for through my company.
• TOTAL = $1,250,000!!!!  Holy Crap Batman!!!

I’m glad we reduced her life insurance coverage just to keep me honest  Accidents are happening more and more these days…

Final Thoughts

So, what is the morale of the story here?  Take the time to make sure you are properly insured.  In our specific case, we were WAY over insured because we never took the time to think through how much we’d actually need if something were to happen.  We just always assumed that more insurance was better.  As a result, we’ve wasted tens of thousands of dollars over the years in insurance that was overkill.

Please – if you haven’t taken the time to look at how much you’re spending on insurance do yourself a favor and check!  You could be in for a big surprise!  “Right-size” your life insurance and short term disability insurance today!

Bonus Pro-Tip

Normally you aren’t allowed to change your benefit elections during the middle of the year unless you have a “qualifying life event”.  You’d have to wait until the benefit election period in the fall.  I’ve heard that you can get around this by telling the benefit folks that your spouse just recently changed jobs.  They don’t really have a way to check this I guess…  If you’re running into this issue, give it a try – it may work for you!

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Ensure You’re Not Over Insured –  Too much life insurance can be restrictive!

Can you ever have too much life insurance?  From the recent article I wrote on How Much Life Insurance Do You Need, I discovered that I’m most likely over insured with life insurance.

You might be saying big deal!  How can being over insured really be that bad?  Generally if you’re over insured for something, you’re wasting money on the monthly premiums!  I always assumed that more life insurance was better.  I care about my family and I want the best for them.  Also, life insurance comes pretty cheap when you’re relatively young (less than 35).

In this article, I’ll go over a real life example to show you how you can ensure that you’re not over insured.  Read on to find out how I plan to save $300 / year by properly adjusting our life insurance benefits to properly fit our family’s needs.

Ensure You’re Not Over Insured – Personal Example – A Detailed Approach

For detailed approach, I’ll fill out the questions I posed in the previous post How Much Life Insurance Do You Need and total up the results to get a final life insurance coverage amount.  I encourage you to follow along with your own info to see your total!

1. How much do you need for funeral costs (the current average is ~$7,300 for a funeral)
   1. Assume $10,000 for funeral.
2. How much debt do you have that you’d like to cover with your policy (house, car(s), credit cards, student loans, etc.)?
   1. House and wife’s student loans = $277,000.
3. If your spouse is currently not working, will you assume they’ll go back to work?
   1. She’s currently working, assume she would continue.
4. If you’re a US citizen, what amount of what amount of Social Security benefit will your family receive if you die?
   1. If I’ve done the math correctly, the SSA calculator shows that the maximum family payout would be ~$1,500 a month until the kids are 18 if I die now.
5. Considering your answers to questions #2, #3, and #4, what annual expenses will the policy need to cover?
   1. If the house and student loans are paid off by the insurance policy, then the amount of bills I normally cover each month is ~$500 per month or $6,000 a year.  
   2. The Social Security benefit would cover all of this – so the policy will NOT need to cover any additional annual expenses.
6. How many years of expenses will need to be replaced?
   1. In general, I would assume the policy will cover 10 years of expenses with current standard of living.  
   2. Because the Social Security benefit is greater than the monthly expenses, this is not applicable for me.
7. Should your policy include money for any kid’s college tuition?  If so, how much total?
   1. Our current savings should cover the kid’s college at an in-state institution.
8. What amount of savings, retirement savings, college savings, etc. do you already have?
   1. Assume all non-retirement savings goes to kid’s college and my 401k retirement fund would roll into wife’s retirement.
9. Do you need a lump sum payment to keep a family business running in the short term or any other lump sum payments?
   1. Assume lump sum of $15,000 for used car purchase.

Other Assumptions

• I’ll assume that she would remarry at some point as she’s in her early 30s.
• I’ll assume she plans to retire at 55 – should be no issue with current retirement savings rates.
• I want to assume my family will maintain a similar standard of living after I die.

TOTAL = $10,000 + $277,000 + $0 * 10 years + $0 – $0 + $15,000

TOTAL = $302,000.

As you can see, the amount my family would need is GREATLY reduced because our expenses are low enough that the Social Security benefit would cover these monthly expenses, and we already have non-retirement savings that could be used for our kids’ college tuition.  That being the case, for us the term life insurance really only needs to cover funeral expenses, paying off the house and student loans, and include a lump sum payment for another used car.

Ensure You’re Not Over Insured – Personal Example – A Simplified Approach

If you’re not a details type of person, then this rule of thumb is for you.  Try this: Funeral expenses + your YEARLY TAKE HOME PAY times 5.  It’s that simple!  Here, take home pay is defined as pay after taxes, 401Ks, life insurance, health insurance, etc. are deducted from your paycheck.  Quite simply, just the amount your paycheck annualized.  For me, this would be:

$10,000 + $56,000 * 5 = $290,000.

So for me, the detailed and simplified approach give just about the same answer.  It is telling me that I should be carrying a life insurance policy right around $300,000.

I am Way Over Insured

Yes, I’m over insured.  This is the first time I’ve sat down and actually gone through the numbers specific to our family’s situation.  I’m currently insured for ~$600,000 because I just figured more is always better.  This means I’m current over insured for life insurance by about $300,000!!!

But wait, there’s more!!  I discovered when looking through my work benefits that I’ve been paying a monthly premium for $200,000 life insurance coverage for my wife and accidental death insurance for my wife and kids.  This is something I setup 3-4 years ago and left on autopilot, but it has been sitting there sucking away money from my paycheck twice a month.

All together this means that I’m spending $292.14 a year on additional term life insurance/accidental death insurance that is most likely overkill for our family’s current situation.  I need to look into reducing the amount I’m insured back down to $300,000, review the amount my wife is insured for under her work benefits, and eliminate the accidental child life insurance.  I’ll plan to roll this into a future monthly savings goal for myself.

Final Thoughts

If you haven’t gone through and analyzed how much you’re spending on life insurance each year I strongly suggest you take 30-45 minutes to review it.  Following the simple questions I’ve outlined for you here, you can make sure you don’t make some of the same mistakes I have.

You owe it to yourself to ensure you’re properly insured.  If you’re lucky, you could save several hundred dollars a year by ensuring you’re properly covered.  You could also discover that you need more life insurance.  If new dependents have come into your life and you haven’t updated your life insurance policies you could just as easily be under insured which could be even worse!

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How much life insurance do you need? – you probably want at least enough to cover your funeral arrangements…

If you’re anything like me, you probably don’t give life insurance that much thought.  The question is: how much life insurance do you need?

This article will help you decide if you need life insurance, what type of life insurance you may need, and answer the question of how much life insurance you really need.

With all of the life insurance options out there, it can be pretty difficult for the normal person to determine how much life insurance you need.

Don’t be like Donny and end up in a Ralph’s Folgers coffee can (I couldn’t resist the Big Lebowski reference).  Read on for everything you wanted to know about life insurance but were afraid to ask!!

Do You Even Need Life Insurance?

You may be surprised to hear that many folks don’t really have a need for life insurance!  If you aren’t married or don’t have any dependents, then there is really not much need for life insurance.

Life insurance is there to help your dependents make ends meet when you pass away.  If you don’t have any dependents, there is no real need for life insurance other than to cover your own funeral expenses.  You wouldn’t want to stick Mom and/or Dad with the bill now would you?

Assuming you have dependents (or you’d like to get a small amount of life insurance to cover your funeral expenses) let’s move on to talk about the different types of life insurance.

What Type of Life Insurance is Right For You?

There are four main types of life insurance that you’ll need to consider when deciding what type of life insurance is right for you.  I’m sure there are many more creative variations on these, but the four basic types boil down to:

1. Term Life Insurance
2. Universal Life Insurance
3. Variable Universal Life Insurance
4. Whole Life Insurance

Here a quick table I threw together to illustrate the important features of each type of life insurance.

For most ordinary folks, term life insurance is the easiest and best way to go.  It is the cheapest form of life insurance, offers the most flexibility, and is the easiest to understand.  I’d venture to guess that 90+% of folks would fall into this category, although consumers can research and compare term vs permanent life insurance to find the right type for their specific needs.

Universal life insurance can be a plus if you personally have a hard time saving money.  This is because universal life insurance has a built in cash value component.  This means that a certain portion of each monthly premium goes into a cash account that earns a set amount of interest.  This interest is usually less than the market average, so it really isn’t for folks that are adept at saving money without “help”.  This type of life insurance is more expensive than term life insurance.

Variable Universal life insurance is very similar to vanilla universal insurance except it lets you determine how you’d like to invest the cast component of your premium payments.  This give the potential for better returns, but adds an element of risk in that your cash component could lose value.  Again, I don’t see the point if your skilled at saving and investing your own money.  This type of life insurance is more expensive than term life insurance and generally a little more expensive than just vanilla universal life insurance.

Whole life insurance is the most expensive type of life insurance, but can be important in certain situations.  In these cases, you’ll pay a fixed premium for your entire life and you’ll know exactly how much you’ll get when you croak.  I’ve heard that this can be a viable option for folks that have known health issues, but I haven’t done in-depth research into it.  This type of insurance is the least flexible, as once you sign on the dotted line the policy is set in stone.

Now that you’ve selected the type of life insurance to get (most likely term life insurance), let’s answer the question – how much life insurance do you need?

How Much Life Insurance Do You Need?

So, how much life insurance do you need?  We can answer this question by looking at a couple different aspects of your current life and the plan you have for your dependents after you pass away.  After you’ve considered each of these questions, it’s simple math to arrive at the final total life insurance coverage that you’ll need.

Things to consider:

1. How much do you need for funeral costs (the current average is ~$7,300 for a funeral) 
2. How much debt do you have that you’d like to cover with your policy (house, car(s), credit cards, etc.)?
3. If your spouse is currently not working, will you assume they’ll go back to work?
4. If you’re a US citizen, what amount of what amount of Social Security benefit will your family receive if you die?
   1. Click the link above, read short description.
   2. Click calculator to determine your benefit.
   3. Basically, your spouse and each kid get 75% of your benefit each up to a family maximum of 180% of your benefit.
   4. To find your benefit, assume you retire now (die) at your current age.
5. Considering your answers to questions #2, #3, and #4, what annual expenses will the policy need to cover?
6. How many years of expenses will need to be replaced?
7. Should your policy include money for any kid’s college tuition?  If so, how much total?
8. What amount of savings, retirement savings, college savings, etc. do you already have?
9. Do you need a lump sum payment to keep a family business running in the short term

Other topics to consider:

• Will you assume that your spouse will re-marry at some point?
• When will your spouse plan to retire?
• After you pass away, do you want your family to be: “living on easy street”, largely the same as before, or “on their own” to come up with a new life style in a couple of years?

Other Life Insurance Tips

Here are some other life insurance tips/facts that you may find useful that I ran across while conducting my research:

• Each year that goes by the typical person will need less and less life insurance.  This is because theoretically: you’ve saved more, your debts (home, student loans, etc.) are decreasing, your spouse is one year closer to retirement/social security, and your kids are one year closer to being on their own.
• Life insurance is really to protect against catastrophic loss for your family.  This means it will help them from getting thrown out on the street if you die.
• If you’re a US citizen, Social Security kicks in for your spouse (if caring for children under 16), and your kids (if under 18) up to a family maximum.  Read more about it here on the Social Security Administration’s website and try their calculator here.  For my family, this would run ~$1,500 a month if I die tomorrow.
• The minimum insurance I’d recommend would be to pay off funeral expenses and eliminate all debt for your family.  If you’re on your own, your debt will disappear at your demise – so, you’ll really only be interested in funeral expenses.
• One quick way to calculate how much coverage you need – funeral costs plus 5-years TAKE HOME PAY (this actually works pretty well and matches up with my more detailed analysis you’ll see in a future post).
• Assume $10,000 for burial expenses just to be on the safe side.
• This is to protect your family, not make everyone wealthy and lazy.
• Funny quote: Get enough life insurance to keep your wife and kids from getting thrown out into the streets, but not so much that her next husband is having a party.
• A life insurance disbursement will pass to your spouse tax free.
• There is really no need for life insurance on children.  You are not dependent on them.  You’re better off having savings/investments that could cover a funeral if that unfortunate event were to happen.

Final Thoughts

There you have it.  This should be a good guide to help you get started on assessing if you need life insurance, the right type to select for yourself, and how much life insurance coverage you’ll need.

Stay tuned for my next post where I’ll go into details (using the questions above) to see if I’m over-insured.  If so, we’ll look at how much I’m losing each year by paying for unnecessary insurance.  There could be a money saver there!!!

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