Under-Insured or Over-Insured, Not Good Choices

When it comes to life insurance, being under-insured or over-insured
isn’t a smart plan. Ask a skilled broker to help you choose wisely.

When about to choose life insurance, most people get stuck when it
comes to how much coverage they need versus what they want. Those two
things may be entirely different. This is one of the reasons you’d want
to talk to an expert life insurance agent who could tell you what you
needed to know by discussing your goals and lifestyle with you.

Being under-insured isn’t a wise idea and being over-insured won’t do
you any good either. The whole key to a perfect balance in buying life
insurance is having “enough” coverage to save you money in the end. Of
course the question is then, “How much is enough?” When figuring that
out, use a balanced blend of coverage and premium factors that both
carry equivalent weight.

Granted there are usually some assertions that insurance agents will
give you, like the suggestion that you consider buying ten times your
annual salary. It’s not a bad idea, but it really doesn’t get you out of
buying life insurance at regular intervals, nor does it prevent over or
under insuring yourself. What would save you money in the short term
would be to only buy what you need at any given time. That however has
the effect of raising your aggregate premiums and lowering your returns.
This is particular true if you are looking at cash value plans.

Here is a good tip when you assess your insurance needs: use your
living expenses and not your income. That will be what your
beneficiaries will need to live on. Your family may not need 100% of the
household income to get on with their lives. So when you do an income
calculation, use a percentage of your income to get a reasonable
coverage figure.

And what do you buy then? Despite your calculations or wishes, you
may find yourself buying insurance you can afford, which isn’t the same
thing as what you may need. This is something you need to discuss with
your life insurance agent, who has access to a wide variety of life
insurance products that may just suit your requirements perfectly. You
don’t want to compromise your overall financial plan by buying too much
when you can least afford it.

Keep in mind that the amount of coverage you need will likely change
over time and the “right” amount of coverage is what is right for “you”
when you need it. The general rule of thumb is that you should
anticipate, as best you can, your future needs (e.g., mortgage, new
baby) without overdoing it. When in doubt, consult with a life insurance
expert.

Evan Tunis is with FloridaHealthcareInsurance.com, the leading
provider of Florida health
insurance quotes. To learn more about Florida health
insurance, visit Floridahealthcareinsurance.com.