AAA Insurance Life Term

Fitch Affirms New York Life's IFS rating at 'AAA'

CHICAGO, Jul 31, 2008 (BUSINESS WIRE) -- Fitch Ratings affirms the ratings of New York Life Insurance Company (NYLIC) and its wholly owned subsidiary, New York Life Insurance and Annuity Corporation (NYLIAC) -- together referred to as New York Life (see complete list of Ratings below). The ratings reflect New York Life's very strong balance sheet, favorable business profile and consistent operating profile. The Rating Outlook is Stable for all ratings.  - Read more.

How do I calculate my needs analysis for term life insurance?

Here are a few simple steps to caculate your needs for term life insurance:

1. Add up your short-term needs.
You can think of them in three categories: final expenses; outstanding debts, and emergency expenses. Don’t forget to include credit card balances, auto loans college loans, and any other outstanding bills. Emergency expenses should include a cash reserve for medical emergencies and home or auto repairs.

2. Add up your long-term debts.
This will include your mortgage and college tuition if you have children. Your mortgage is easy, just use the balance. Calculating the education fund can be a bit tricky since you have no idea where your children will be attending college. One method may be to use the present average college cost in the US and the number of years that your children are from entering college. The average college costs for the 2002-2003 school year 18,273 for a 4 year private institution, which was a 5.8% increase from the previous year, and 4,081 for a four year public institution, which is up 9.6% from the previous year, according to The College Board.

3. Calculate your family expenses.
This will include necessities such as childcare, clothing, food, utility bills, entertainment, travel and transportation. Calculate this figure based on one year’s worth of expenses, and then multiply that times the number of years that you want to provide this income.

At this point, add your short-term and long-term debts and your family maintenance expenses.

4. Add up your resources.
Now that you have determined what your income needs are, figure out what resources you have to meet those needs. In order to do this, you must add up all available savings, stocks, bonds, mutual funds, existing life insurance (don’t forget employer group plans) and Social Security. You can find out how much you will get by visiting the Social Security Administration’s Web Site.

5. The calculation.
Finally, subtract your resources from your total expenses. This figure will represent the amount of life insurance coverage you should consider.

Do I need Term Life Insurance coverage on my spouse and/or children?

It is very important to consider having coverage on your spouse even if they are not employed outside of the home. The financial pressure on a family due to the premature death of a spouse or partner can be significant. Coverage for children is available to cover final expenses. In addition, a Term policy can be used to provide future insurability. For instance, if your child becomes medically uninsurable during the life of their Term insurance policy, the coverage can be converted to a permanent policy (Whole Life Assurance or Universal Life) without having to provide proof of medical insurability. 

Term Life Insurance FAQs

What is Term Life Insurance?
Term Life Insurance has been called the most affordable way to buy maximum insurance protection for your insurance dollar. Term insurance provides a low cost way to get maximum insurance protection for a specified period of time. Many companies offer level term for periods of 10, 15, 20 and 30 years. Term insurance does not build cash value; it pays a death benefit only if you die during the term of the policy. The life insurance benefit will generally pass income tax free to your beneficiaries.

How much Term Life Insurance do I need?
This is a simple calculation: Short Term Needs + Long Term Needs – Resources = How much life insurance you need.

What are the advantages of Term Life Insurance? 
Premiums are generally lower than those for permanent insurance such as Universal or Whole Life. Lower premiums allow you to buy higher levels of coverage for your premium dollar. Term insurance is a good choice when you are looking to cover specific needs that will disappear in time, such as mortgages or family expenses for children. Without a doubt, term insurance is the most cost-effective way to get the maximum coverage at the lowest cost, guaranteed for up to 30 years. 

Term Life Insurance vs Whole Life Assurance

As opposed to Whole Life Assurance, which provides insurance coverage until the day you die, no matter when that happens, Term life insurance or term assurance is life insurance which provides coverage for a limited period of time, the relevant term. After that period, the insured can either drop the policy or pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.

SmartMoney.com has a good review of Term Life Insurance vs Whole Life Insurance:

"FOR MOST PEOPLE, the right type of life insurance can be summed up in a single word: term. But before we explain why, it's important to understand the differences between the most common types of insurance available"

Read SmartMoney's explaination why Term Life Insurance is better here.

Term Life Insurance - Save Money the Smart Way

Term life insurance is the easiest type of life insurance to understand. To put it simply, the insured person pays a minimal premium per thousand dollars of coverage on an annual, semi annual, quarterly or monthly basis. If he or she dies within the term of the policy, the life insurance company will pay the beneficiary the face value of the policy.

Distinctive Features of Term Life Insurance

To better understand some of the distinctive features of term life insurance consider the following points:

First, term life insurance is "pure insurance" because when you purchase a term insurance policy you are only buying a "death benefit". Unlike with other types of "permanent insurance" such as whole life, universal life, and variable universal life, there is no additional cash value built up with this kind of policy. Term insurance only gives you a specific death benefit.

Second, the coverage is for a defined period of time (the "term") such as 1 year, 5 years, 10 years, 15 years, and so on. Once the policy is in force, it only remains in force until the end of the term -- assuming you pay the premiums, of course.

Third, most term insurance policies are renewable at the end of the term. With what is known as "Level Term Life Insurance", the death benefit remains the same throughout the term of the policy, but since the insured person is getting older, the premium will gradually increase. As time goes by the cost of a level term insurance policy may become greater than you are willing to pay for a simple death benefit. An alternative is the "Decreasing Term Life Insurance" policy in which the premium remains the same, but the death benefit goes down as time goes by.

Fourth, most term policies can be converted to permanent policies within a specific number of years. If you decide it is important to retain the insurance coverage, converting may be something you should plan for. You can anticipate the accelerating cost of term insurance premiums and convert your policy before the premiums become prohibitively high. It is true that in the short term the premium will usually be higher than if you stayed with the term policy. But over the long term this difference will decrease because of the rapid acceleration of the term insurance premium as you get older. A permanent policy also accumulates cash value which increases the total death benefit paid to your beneficiary.

Popular Uses of Term Life Insurance

Term life insurance is most appropriate whenever you want to protect your beneficiaries from a sudden financial burden as the result of your death. Here are some of the most common uses of term life insurance.

Personal Costs Due to Death - When a spouse or family member dies there will be immediate costs. Many people purchase a relatively small term life insurance policy to cover these costs.

Mortgage Insurance - Banks and financial institutions often insist that mortgage holders retain a term life insurance policy sufficient to pay out their mortgage. Such policies make the bank the beneficiary of the policy. If the mortgage holder should happen to die before the mortgage is paid off, the insurance policy will pay it out. This is also a great benefit to a spouse whose earning power will likely be decreased due to the death of his or her partner.

Business Partner Insurance - Term insurance is also used by business people to cover outstanding loans with their bank, or to purchase a deceased partner's shares on death, if they had an agreement to do so. Most partnerships have an agreement of this sort, and the policy premiums are paid by the business.

Key Person Insurance - When a company loses key individuals due to death, this can often result in hardship to the company. Key person insurance is purchased by the company for any individual it deems to be "key". The company itself is made the beneficiary of the policy. So when a "key" person dies, the company receives a cash injection to handle the problems associated with replacing that person.

Getting a Term Life Insurance Quote

Here are some things to look for when getting a quote for term life insurance:

1. The cheapest rate today will not be the cheapest rate tomorrow. For instance, the cheapest premium today will likely be for a Yearly Renewable Term policy. This policy is renewed every year at which time your premium is also adjusted upwards. This is fine if you intend to convert to a longer term solution (permanent insurance) in a year or two, or if you have a very short term requirement for insurance. But if you think you will need this insurance for a longer period, you would be better to commit to something like a Ten Year Term Policy. This locks your premium and death benefit in for ten years. Your rates will not increase until you renew.

2. Compare coverage and premium projections for different policies. Think about the long term and get the coverage that saves you money in the long run.

3. Make sure you completely understand the conversion options built into the different policies you are considering. Most policies will let you convert part or all of your term insurance into permanent insurance within a specific period of time, and without the need of a medical examination.

4. For some situations you should consider options such as Decreasing Term Life Insurance in which the death benefit decreases as time goes by. This makes sense if the policy is being used to cover a mortgage or business loan.

Term life insurance is not the answer to all life insurance requirements, but it should be part of a sound plan for every person's financial future.

For online insurance quotes and more information about Term Life Insurance and all other kinds of Life Insurance, visit LifeInsuranceHub.net Rick Hendershot is a writer and publisher of the Linknet Publishing Network. For article writing and distribution services see Linknet Article Program. For another very cost effective way to enhance your search engine rankings, see Power Listings.