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this is a question for my money class and i have no idea please help!!!

2007-01-30 16:04:10 · 5 answers · asked by Anonymous in Business & Finance Insurance

5 answers

Good basic question. You should insure your property to the limit it takes to replace it. The basic principle of insurance is to make you "whole" no losss or gain.

Life insurance limits should reflect the total cost it would take for you survivors to replace all the income you would have earned if you did not die: Mortgage, college etc. Keep in mind the time value of money. If you had a $500,000. death benefit and your spouse put it in the bank at 5% it would earn $25,000. per year!

Disability max limits are actually fixed by the insurance company to about 2/3rds of your normal salary. Make sure you pay for it with after tax dollars because you will receive it tax free.

Liability insurance limits should reflect your peace of mind. For personal insurance the personal Umbrela can add an additional $1 million over the HO and auto liability limits for only $200 a year. If you have considerable assets just increase the umbrella to $2 or 5million!

2007-01-30 16:24:04 · answer #1 · answered by california bill 2 · 0 0

1

2016-10-07 21:20:17 · answer #2 · answered by ? 3 · 0 0

It has to be calculated on a case by case basis.

If you have $5,000,000 in the bank, then IMO you only need liability insurance. Buy at least $1,000,000, but with those assets, get a $4,000,000 umbrella. Insure yourself for what you are worth.

Most people insure their property for the cost to replace it, insure their lives for the cost to replace their lost income until minor children are adults, and insure their future income (disability) until they are 65 (of retirement age).

2007-01-31 00:16:03 · answer #3 · answered by Anonymous 7 · 0 0

Life insurance: Make sure you have enough to pay all of your debt, finance education for children, pay your final expenses (roughly $10-20K), and replace your income for your family members for as long as they need it (spouse until retirement, kids until they are out of your care). The bulk of this should normally be term for the duration that the kids are home, but there is almost always a need for a certain amount of permanent insurance. Have your agent do a needs analysis.

Disability: Simple. Get as much as the carrier will approve, as most won't underwrite more than about 70% of your income. Many companies, such as MassMutual, will offer a rider that will fund your qualified retirement plans in addition to ensuring your income, thus bringing your coverage a little closer to your actual income and ensuring that you are continuing to prepare for retirement.

2007-01-30 18:19:09 · answer #4 · answered by Rob D 5 · 0 0

The others gave good answers.

I will add, consider your financial position should a bad event happen, fire to your house destroying everything, death of you or your spouse, injury that prevents you from work AND requires ongoing medical or rehabilitation expenses. Insurance is designed to get you back (close) to where you were before the event.

Insurance needs also change over a person's life.

The best thing to do is talk with and work with a licensed agent.

Good Luck

2007-01-31 02:08:54 · answer #5 · answered by insuranceguytx 5 · 0 0

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