How to Buy Life Insurance

Buying life insurance is an easy way to protect your family after you're gone. If you know what to look for, you can get great coverage at a price you can afford.

Why buy life insurance?

Topping the list of reasons to buy life insurance is the financial protection life insurance offers. If you're single and just starting out, you may not need life insurance. But as you take on more responsibilities and your family grows, your need for life insurance increases. The proceeds from a life insurance policy can replace the income lost to your family upon your death. You might also want to buy life insurance to pay off debts and expenses, leave money to charity, and cover final and estate expenses.

Choose term or cash value
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time (the term), and cash value (permanent) life insurance, which combines a death benefit with a cash value component. Cash value insurance offers lifetime protection, while term insurance may be the most affordable option if you're buying life insurance mainly for the financial protection it offers, and your need for life insurance is temporary (until your children leave the nest, for instance). Some term policies (called "convertible") will permit you to exchange the term life insurance policy for a permanent one at some point.

Decide how much coverage you'll need
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you're married, both you and your spouse should consider buying life insurance. One of the easiest ways to estimate how much life insurance protection you should buy is to use a life insurance needs calculator.

Pick a number between 1 and 30
Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing a term that matches your need for life insurance protection. For instance, if your main reason for buying life insurance is to protect your 7-year-old twins until they're out of college, you'll want to buy a policy with a term of at least 15 years.

How much will it cost?
How much you pay for life insurance will depend on a number of risk factors, including your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying. Keep in mind that the premium you're quoted initially will increase later. For instance, when you buy term life insurance, rates are guaranteed only until the end of the term (annually for annual renewable term or at the end of a specified number of years for level term). While most life insurance policies can be renewed at the end of the term, you'll pay a higher premium for coverage.

Shop around
When comparing quotes for life insurance, make sure that the insurance coverage you're comparing is similar. And remember, any policy that you buy is only as good as the company that issues it. Find out what rating the company has received from major ratings services, such as A. M. Best or Standard & Poor's. These companies evaluate an insurer's financial condition and claims-paying ability. The company giving you a quote should provide you with this information. You can also contact your state's department of insurance to find out more about an insurer's record.

Submit an application
Once you're ready to purchase a life insurance policy, you'll fill out a life insurance application that contains questions about your current and past health history and lifestyle. You'll generally be required to take a medical exam, arranged and paid for by the insurance company. The answers you give on your application, along with the results from the medical exam and your past health history, will help the insurance company determine whether to offer you a policy, and if so, at what price.

Learn the lingo
Maybe a life insurance contract isn't as exciting as a best-selling novel, but read it anyway. Policy provisions, the amount of benefits, the premium, and other charges you'll pay will be listed along with other important information such as the beneficiaries you've named and the premium guarantee period. Make sure you understand everything in the policy. Under the laws of your state, you may have a "free look" period (typically at least 10 days) during which time you can cancel the policy without penalty.

Top 10 Ways to Cut Your Medical Bills

Shop around for health insurance

If you don't have employer-sponsored health insurance, you may be looking to obtain coverage on your own. To get good coverage at an affordable price, shop around. Because premiums vary widely, you'll probably save money if you get quotes from several companies. Evaluate each plan's coverage and features, taking into account exclusions, limitations, and the freedom to choose health-care providers, among other things. Also find out how much you'll end up paying out of pocket in the form of co-payments, coinsurance, and deductibles, because even relatively small amounts of money can really add up if you make frequent visits to your doctor.

Cut the cost of prescription drugs

Prescription costs can eat up a large portion of your budget if you take prescription drugs regularly. Fortunately, it's not hard to find ways to save money. For example, try ordering your prescriptions through the mail, using a traditional or online pharmacy. If you belong to a prescription drug plan (e.g. through your health insurance), you may be able to get a three-month supply of your prescription drug through the mail for the same price you would pay for a one-month supply at your neighborhood pharmacy. You can also ask your pharmacist or doctor to recommend a less-expensive generic drug whenever possible.

Top 10 Ways to Cut Your Medical Bills

With health-care costs on the rise, you may be looking for ways to lower your medical expenses. Here are 10 ideas:

1. Practice prevention
2. Shop around for health insurance
3. Cut the cost of prescription drugs
4. Check your medical bills
5. Join your spouse's health plan
6. Keep track of your medical expenses
7. Negotiate a discount with your health-care provider
8. Contribute to a flexible spending account
9. Take advantage of free health screenings
10. Get to know your health insurance

Practice prevention
As basic as it sounds, one of the most effective ways to lower your medical expenses over time is to maintain a healthy lifestyle. For example, you can:

• Take advantage of wellness programs
• Maintain a healthy weight
• Exercise regularly
• Kick unhealthy habits (e.g. smoking)
• Have regular checkups

Check your medical bills

Medical bills are often confusing to read. However, taking a few minutes to go over the charges may save you money in the long run. Check to make sure that the bill accurately reflects the procedures you have undergone and takes into account any applicable insurance coverage you may have. Some errors, such as wrong computer codes, are common, and you may be billed for health care you never received. Contact the appropriate billing office if you think you've found a mistake. If you've received an explanation of benefits from your insurance company that you believe is wrong, ask the company to review your claim.

Join your spouse's health plan

Many married couples maintain separate health insurance coverage even though it may not be cost effective to do so. Examine both your coverage and your spouse's coverage to see if it makes sense for either of you to join the other's plan. Keep in mind that most plans allow you to add a spouse to your plan within a certain time period after you get married (e.g. 30 days). Otherwise, you may have to wait for the plans' annual open enrollment period.

Keep track of your medical expenses

Come tax time, you may be able to deduct certain medical expenses if you itemize, and your total medical expenses exceed 7.5 percent of your adjusted gross income. Allowable medical expenses include everything from health-care services to medical aids (e.g. eyeglasses, hearing aids). Keep track of these expenses if there's a chance you'll be able to deduct them on your income tax return.

Negotiate a discount with your health-care provider

Many people don't realize that you can sometimes negotiate to lower your medical bills. While it may not always work, it doesn't hurt to ask your doctor, hospital, or pharmacy if they're willing to come down in price. Before you begin to negotiate, do a little research to find out what other health-care providers in your area are charging. You can also ask your health-care provider if they'll lower their price if you pay in cash up front.

Contribute to a flexible spending account

Your employer may offer a flexible spending plan that allows you to put pretax dollars in an account. You are then reimbursed for your out-of-pocket medical expenses, such as prescription drugs, dental care, and co-payments. Because flexible spending contributions are taken out of your pay before federal and state taxes are calculated, you get to use pretax dollars to pay your medical bills.

Take advantage of free health screenings

If your health insurance doesn't provide adequate coverage in some areas, or if you don't have any health insurance coverage at all, you may want to look into free health screenings. Local clinics and hospitals often provide a variety of screenings, such as blood pressure, cholesterol, and mammograms.

Get to know your health insurance

Your health insurance may cover more than you think. Nowadays, insurance companies often provide benefits designed to help you stay safe and healthy. For example, you may receive discounts on vitamins, alternative medicines, health club memberships, or bike helmets. You may also be surprised at the range of coverage your health plan offers. For instance, it may cover dental care for young children, chiropractic care, and acupuncture. Read your plan membership materials to find out what products and services are available through your health plan before you pay for them on your own.

Do You Know the Auto Insurance Basics?

If you drive, you know how crazy it gets out there. Accidents happen, fenders get bent, people get hurt. Or you're innocently parked in your driveway and a tree limb crashes through your windshield. When disaster strikes, auto insurance is there to protect you.

Why buy auto insurance?

1.) Auto insurance protects you against the financial risk associated with personal injuries and property damage caused by auto accidents, theft, vandalism, or natural disasters.

2.) All states require you to purchase at least a minimum amount of liability coverage. Other types of auto insurance coverage may be optional or required, depending on state regulations.

3.) If you have a car loan outstanding, you'll generally be required by the lender to purchase at least a minimum amount of auto insurance.

Liability coverage
You'll be required by state law to purchase a minimum amount of some or all of the following types of liability coverage:

• Bodily injury liability: Protects your assets if you are held liable for an auto accident in which other people are injured or killed.
• Property damage liability: Covers repairing or replacing the autos or other property of other people.
• Uninsured/underinsured motorist coverage: Unless you live in a "no-fault" state (where your own insurance will cover your losses), this coverage insures you against losses caused by other drivers with little (underinsured) or no (uninsured) auto insurance.

To adequately protect yourself, you may want to purchase much more than the minimum amount of coverage required in your state.

Collision, other-than-collision, and medical payments coverages

Although these types of coverage are optional in most states, it often makes sense to purchase them, unless you can afford to pay for damages yourself.

• Collision: Pays to repair or replace your car if it's damaged in an accident.
• Comprehensive: Insures your car against damage caused by something other than an auto accident (e.g., theft, fire, flood, vandalism).
• Medical payments or personal injury protection: Covers various medical expenses not covered by your health insurance or your passengers'.

And then the insurance company pays for everything, right?

Wouldn't that be nice? But it's not always true. Here are some things you'll always need to cover yourself:

• Deductibles: The amount of money that you've agreed to pay out of your own pocket before your insurance coverage kicks in.
• Exclusions: Events or situations your policy specifically omits from coverage, such as property damage or personal injury you intentionally cause to others, or damage to your own car due to mechanical failure.
• Costs above limitations: Any expenses for which you're responsible that exceed the caps on the dollar amounts of coverage you're entitled to receive under your policy.

Driving a good bargain

Many factors affect your auto insurance premium, including your age, the state in which you live, the make and model of your car, where your car is garaged, and your driving record. Although you can't do much about some of these factors, here are some things you can do to help lower your premiums:

• Increase your insurance deductible.
• Eliminate optional coverages (e.g., towing and labor, rental insurance) from your auto insurance.
• Eliminate collision and comprehensive coverage if you drive an older car valued at less than $1,000 and could afford to pay for repairs if necessary.
• Ask about available discounts (e.g., low-mileage discounts, discounts for safety or antitheft devices) for your auto insurance.
• Avoid buying a vehicle that is prone to theft or expensive to repair.
• Keep your car in a garage.
• Drive safely to establish a good driving record.

Shop around

It's important to shop around for auto insurance coverage. Insurance premiums for the same coverage on the same car can vary widely among different insurers, even in states that regulate auto insurance rates. A particularly good time to investigate your alternatives is when your current insurance policy is up for renewal, but you can shop and change policies at any time. Get quotes from several reputable companies, but don't let price be your only consideration. Make sure the coverage offered by each insurer meets your needs, and find out whether the insurer has a good track record in the industry (contact your state's department of insurance for more information).