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Monday, April 07, 2008

It's time to think about life insurance.



My life has emerged into a lot of changes since I've got a child to take care of. I've become more commited to my family, I spend a lot of time at home helping my wife changing diapers. When think about my son, I think about financial security. After all this time, I have no insurance that acts as the safety net when disaster happens. As my son opened his eyes to a new world, I know that it is time to think about insurance.

Choosing the right life insurance.
A wise decision has to be made when it comes to choosing the right insurance. I need help from someone professional to choose what the types of life insurance that can really suitable with my family needs and protect against all debts, life expenses and school fees, and other expenses. A lot of question playing in my mind such as Can my wife and son survive without me? Can she pay all the debt that I've done?

Understanding the basic terms and types of insurance can help me to make my decision. Deep knowledge about life insurance can gives you the ability to manage your finance wisely and easily and you'll be able to know what types can fulfill your beneficiary needs.

+Major types of insurance.

1.Term insurance
2.Whole life
3.Universal life
4.Variable life

For further and detail explanation, read life insurance on wikipedia.org

The article of how to choose life insurance from wikihow gave me some good point that I have to consult with financial advisor or expert. Searching guide online will not help me much and it will make me blur and uncertain. When consult with financial advisor, you can discuss more details about current situation, financial asset, current risk, liabilities, and others.

How to find the right amount of insurance.
I was having a hard time to calculate the right figures to adequate my family needs in future. Too small amount can distort my family's financial in future, too large will burden myself to pay monthly premium and can hurt my current finance.
After reading How to Determine the Amount of Life Insurance You Need at freemoneyfinance.com, my understandings became clear as I can calculate easily. The amount of the insurance should be:-

"The formula is Future Financial Needs minus Current Assets
equals Your Current Risk. How much you want to provide for your loved ones should you predecease them (A) minus how much you have that could be used to provide for the survivors (B) equals your surplus or shortage (C)."

The article also mention about the six items that are accountable when calculate futute financial needs;

1.debts,
2.mortgage,
3.education,
4.final expenses, and
5.family income.

What matters the most among the six items is debt, you must free all the debts, let them fly away because you don't want them haunt your family when you're gone. The ability to liquidate all the debts is big relief to your family.

Choosing the right life insurance and the right amount has to be made by wise decision, it is neither simple nor easy. I guess I need to get a consultation with financial expert that can be found around my local area. There is a lot of things I need to discuss and get advice about my financial matters.

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Tabuxander is a personal blog. It is a journal about my three white pearls:

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