Things to Consider Before Taking Out Life Insurance

The type, if any, of life insurance that you need depends on the individual circumstances for each person. Before making any decisions on a life insurance policy, it is important you understand exactly what is covered by the policy, and that you seek financial advice to ensure that you and your family are adequately covered.

The first thing you need to decide is what type of policy you want to take out. Life insurance falls into two main categories – Permanent Life Insurance and Term Life Insurance.

A Permanent Life Insurance policy runs from the time you take it out until the time of your death. The premiums remain the same for the life of the policy, and the premium amount is based on many things, including the amount the policy is for, age when you take out the policy, the type of work you do and any health conditions you may have.

A Term Life Insurance policy is in effect for a set period of time. Most insurance companies offer 5, 10, 20 and 30 year terms, depending on your needs. This type of policy is especially useful if you take on a large debt, such as a mortgage, or have children, as you can cover a specific period of time. Most term life insurance policies are renewable, so if you feel that you still never cover after the set period of time, you can renew the policy, though likely at a higher premium.

Often, a combination of both types of insurance are needed to make sure that your family is covered in the event of your death. However, if you have no dependents, a term life insurance policy may be sufficient if you only have a single debt, such as a mortgage.

Once you have decided on the policy or policies that will be suit your situation, you need to decide how much you need to be covered for. This is when the advice of an financial planner or advisor is most helpful. They can help you to determine exactly how much money your family would require to live without financial difficulties in the event of your death.

Things that need to be considered are the amount of debt you have, your children’s education and basic necessity needs, and what sort of impact the loss of your regular income would mean to your family. Once all of these things are considered, you need to decide on an amount that would cover both the debt and future expenses your family would incur after your death.

Also, make sure that if you do take out a policy, it is with an established, reputable insurance company. You do not want to pay out hundreds, or even thousands of dollars in premiums only to have the insurance company go bankrupt.

Before taking out any policy, make sure you understand what the policy covers, and that you meet all the guidelines and requirements. And never lie on the application form. If you don’t meet the guidelines, or have provided false information, the insurance company will not have to pay the policy out to your beneficiary.

Remodeling or Updating
Your Home

It can be quite exciting when you can finally afford to add on the extra room to your home, renovate the bathroom or update the kitchen. Hiring contractors and purchasing materials is exhilarating as you move towards remodeling and updating your home. However, one of the most important steps that homeowners miss when they are going through the process of a renovation is contacting their insurance company and letting them know that the home is being updated. More than 40 per cent of homeowners do not contact their insurance companies after significantly renovating their homes to update their homeowners insurance policies.

Updates To Your Home Can Include:

• Adding on a new deck
• Remodeling the kitchen
• Renovating the bathroom
• Adding on a room
• Finishing off a basement
• And many more.

If you don’t update your homeowners insurance policy and you suffer a loss – your insurance may not provide coverage for the improved conditions in your home. However, by notifying your insurance provider of the renovations and remodeling that you are doing, you can be sure that your renovations will be included if there is a loss in your home.

It is best that you update your homeowners insurance before the contractor even enters your home. You should be telling your insurance company that you’re having work done in your home to make sure that any losses that are due to error or accident by contractors or workers in your home will be covered. Also, this will also mean that the building materials that are inside your home while the work is being done will be covered should there be a loss.

Renovating and remodeling your home can quickly add to the overall value of your home, and many homeowners fail to update their homeowners insurance to reflect the new replacement value of their home. (Replacement value for homeowners insurance is not the real estate market value of your home, but rather the cost of construction for rebuilding your home where it stands, minus the cost of the land.)

Renovating and remodeling your home can also be quite pricey – imagine finding out after a loss in your home that your insurance company will only pay to replace, rebuild or repair your home to the state it was before you did all the work. The monetary difference of an entire room, an updated kitchen or a new deck could be quite considerable – and unless you’ve updated your homeowners insurance policy, this could be your significant loss.