If you are planning to purchase a life insurance policy or an annuity contract. You should first consider your needs and understand the Different Type of Insurance products that are available. Many more consumers are guide to life Insurance and annuity products as part of their financial planning goals.
Consumers spend substantial sums of money each year on life insurance policies or annuity contracts knowing very little about what it is that they are getting. This guide was developed to help consumers make educated decisions and to help them. Understand both the benefits and the risks involved in financial planning.
Guide to Life Insurance and Annuities
The purpose of this information guide is to help you understand. What type of life insurance policies or annuity contracts are available. If one type of policy or contract does not fit your needs. Then ask and find out about other available policies or contracts, many of which are described in this information guide.
You can research more information on life insurance policies or annuity contracts by checking with a licensed life insurance agent or a licensed Life Insurance Company. You can also visit your public library for material or books on financial planning.
Life insurance or annuity information is also available on the Internet. In addition, The California Department of Insurance (CDI) has a toll-free Hotline telephone number and website that can provide further information and assistance on life insurance policies and annuity contracts. Please see the many ways to contact the CDI on the last page of this information guide. This information guide is divided into two sections: Life Insurance and Annuities.
Defining Your Needs
The purchase of life insurance is an important decision for both you and your family. There are many reasons why life insurance policies or annuity contracts are purchased. But these reasons should be based upon your financial planning needs.
Factors such as your marital status, number of dependents and cost for their support, future education needs, current and anticipated family income. And your current assets and debt obligations all play a role in determining the amount of life insurance that is right for you.
Steps To Determine How Much Life Insurance You Need:
- Determine how much life insurance you need based on the factors mentioned above.
- Decide how much money you can afford to pay.
- Choose the type of life insurance policy that meets your coverage goals and current family budget. Fitting these two factors together will move you toward a successful overall financial plan.
Once you have completed these steps, you will be able to move ahead and contact several life insurance companies (through an agent or broker) to shop for the right type of policy for you.
There are many reasons for purchasing life insurance, among which are the following:
- Insurance to provide financial protection and security for surviving family members upon the death of the insured person.
- Insurance to cover a particular need such as paying off a mortgage or other debt upon the insured’s death.
- Business insurance to compensate a company on the death of a key employee or to provide a surviving partner. The resources to buy out the deceased partner’s share of the business.
- Insurance to provide funds to pay estate taxes or other final obligations necessary to settle a deceased person’s estate.
- Insurance to provide the funds necessary for the deceased person’s burial expenses.
Your need for life insurance will vary with your age and responsibilities. The amount of insurance you buy should depend on the standard of living you wish to assure for your dependents. You should consider the amount of assets and sources of continuing income available to your dependents when you pass away. Simply stated, you should choose an amount of life insurance that is determined necessary to meet the needs you are trying to satisfy.
A balance needs to be achieved in this process. To be over-insured can negatively affect your budget and threaten your long range financial goals just as much as being under-insured can. While each person must individually assess their responsibilities, needs, and financial situation. It is important to be careful to choose an amount of life insurance that reflects your specific circumstances without under-insuring or over-insuring.