The general rule that most insurers suggest is to buy a policy that is seven to ten times the amount of your annual salary. That's a good ballpark figure, but if you really want to make sure your family is protected you'll want to consider a few things:
Current debts. How much do you owe on the mortgage? On the car, credit cards, other loans? Total up all of your debt. That is how much your life insurance will have to pay to eliminate debt as a source of stress on your family after you're gone.
Burial costs. The typical Australian funeral costs up to $7,000 and the price keeps going up. Make sure you include at least this amount when deciding how much insurance to buy.
Cost of living. Being out of debt does not mean your family will have enough to survive on after your death. Consider the everyday costs of living: food, utilities, clothing, car repairs, etc. Do you have children? How much will it cost to see them to the end of their schooling, until they are grown and ready to handle life on their own? All of this should be considered in order to make sure your family is going to be able to make their way in the world without you.
Tuesday, July 12, 2011
Why do people who are overweight pay more for life insurance than thin people?
While it is true that a few extra pounds don't necessarily mean you're unhealthy, for the most part being overweight does increase your risk of illness and death. Obesity definitely makes you riskier to insure. That risk shows up in the size of your premium.
Being 50 or 60 pounds overweight can increase your premium by 50% over what you would pay at a normal weight for the same policy, and that's if you have no health problems. Add in any health issues such as cholesterol problems and your premium will likely be higher still. If you are having other problems as well, such as high blood pressure or pre-diabetes symptoms, you may find it difficult to get an affordable life insurance policy.
There is good news, though. If you lose the excess weight, you will often be able to shed problems such as high blood pressure along with it. Then when your weight and health are better, contact your insurance company for a reduction in premium. Don't wait until you've lost all the weight, either. You can continue to request premium reductions as you work your way to a normal weight
Being 50 or 60 pounds overweight can increase your premium by 50% over what you would pay at a normal weight for the same policy, and that's if you have no health problems. Add in any health issues such as cholesterol problems and your premium will likely be higher still. If you are having other problems as well, such as high blood pressure or pre-diabetes symptoms, you may find it difficult to get an affordable life insurance policy.
There is good news, though. If you lose the excess weight, you will often be able to shed problems such as high blood pressure along with it. Then when your weight and health are better, contact your insurance company for a reduction in premium. Don't wait until you've lost all the weight, either. You can continue to request premium reductions as you work your way to a normal weight
Is it better to insure my home and contents for the actual cash value or should I choose replacement cost?
Many homeowners struggle with these two options when taking out policies for home and contents. Actual cash value, which is standard on many insurers' policies, is a less expensive option than replacement cost. It will pay you what your home or contents are currently worth—the calculated value after depreciation is deducted from the original cost. If your belongings have been around for several years and you are hit by fire or another covered event, the cheque you get from the insurance company will be for the amount of what your current belongings were worth prior to the event. This amount may not be enough to replace your damaged goods with new ones. If it is the home that must be repaired, you may end up paying much of the cost out of your pocket.
If you choose the replacement cost option, your insurance company will pay whatever it costs to buy a new item to replace the old one you lost. You can take out full replacement, which pays the entire cost of replacing items. Or you can take out a set dollar amount, which may leave you to pay some of the replacement costs when you hit the limit on your policy.
If you carry a mortgage on your home, the mortgage company may not give you a choice on
If you choose the replacement cost option, your insurance company will pay whatever it costs to buy a new item to replace the old one you lost. You can take out full replacement, which pays the entire cost of replacing items. Or you can take out a set dollar amount, which may leave you to pay some of the replacement costs when you hit the limit on your policy.
If you carry a mortgage on your home, the mortgage company may not give you a choice on
Why do pensioners get discounts on their home and contents policies
Pensioners enjoy discounts on a wide variety of purchases, including many types of insurance. The discount on home and contents policies is usually five to ten percent, and companies offer discounts for a variety of reasons. One is because such discounts are a somewhat traditional perk of age. Another is because pensioners typically live on a lower income and tighter budget than other age groups.
However, the primary reason pensioners are granted discounts for home and contents insurance is because there is less risk to the insurance companies. Statistically, older people tend to be more careful with their belongings and take more measures to reduce risk: they install security systems, they make certain their smoke detectors are working properly, etc. When risk is reduced, insurance companies respond with lower premiums.
However, the primary reason pensioners are granted discounts for home and contents insurance is because there is less risk to the insurance companies. Statistically, older people tend to be more careful with their belongings and take more measures to reduce risk: they install security systems, they make certain their smoke detectors are working properly, etc. When risk is reduced, insurance companies respond with lower premiums.
Why do insurance companies cancel your insurance after you make your first claim?
If you have a car accident where you are at fault, your insurance premium may go up. If the accident is your fault, plus the result of reckless or drunk driving, your premium will certainly increase. Premiums are based on risk. If you've had an accident due to bad behavior, you become a much greater risk to insure, because according to statistics, you're likely to repeat the action in the future.
When will making a claim put you at risk for cancellation? It depends on the insurance company, but if you show a pattern of accidents that are your fault, you may only get two or three claims before the insurer refuses to continue your cover.
When will making a claim put you at risk for cancellation? It depends on the insurance company, but if you show a pattern of accidents that are your fault, you may only get two or three claims before the insurer refuses to continue your cover.
Why do young drivers pay higher premiums than older drivers
Young male drivers are even more of a risk than young female drivers. Not only do young men have less driving experience, they also have a much greater tendency to speed and to drive impaired than either female drivers of the same age group or older drivers of either gender. A young male driver is the most expensive person to insure on a motor vehicle.
Why do women pay less for car insurance than men?
Because of statistics. Insurance companies use statistics to help determine how much risk is involved in issuing a policy to a person, and the data show that men are more expensive to insure.
It's not that men file more claims than women. Actually both genders file about the same number of claims. The problem is the nature of the accidents involving men are different than those involving women.
Women tend to drive more slowly, so when they are involved in an accident, there is less damage and repairs will cost less. Men tend to drive faster, tend to drink and drive more often, and consequently have accidents that cause more extensive damage and greater injuries. This costs the insurer much more to fix, so the premiums are higher.
It's not that men file more claims than women. Actually both genders file about the same number of claims. The problem is the nature of the accidents involving men are different than those involving women.
Women tend to drive more slowly, so when they are involved in an accident, there is less damage and repairs will cost less. Men tend to drive faster, tend to drink and drive more often, and consequently have accidents that cause more extensive damage and greater injuries. This costs the insurer much more to fix, so the premiums are higher.
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