So, how much life insurance do you need? Well, the answer isn’t really how much life insurance you need… it’s how much investment capital your family will need at the time of your death. Their need for capital — on a gross basis — is really a function of two variables:

1. How much will be needed at death to meet immediate obligations?

2. How much future income is needed to sustain the household?

The first category is fairly easy to estimate. It’s the sum of final expenses (including uncovered medical costs, funeral expenses and final estate-settlement costs) and other lump-sum obligations (such as outstanding debts, mortgage balance, and college costs). The second variable is a bit trickier. It involves calculating the “present value” of future needed cash-flow streams. By answering a few simple questions, you can get a rough sense of the needs for capital that might exist at your death.

Click here to access the Life Insurance Needs Calculator.

Term Insurance-

Term insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value. You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase. You may be able to trade many term insurance policies for a cash value policy during a conversion period–even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.

Cash Value Life Insurance-

Cash value life insurance is a type of insurance where the premiums charged are higher at the beginning than they would be for the same amount of term insurance. The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy’s cash value by taking a policy loan. If you don’t pay back the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value. You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums. You can also use the cash value to increase your income in retirement or to help pay for needs such as a child’s tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy. Cash value life insurance may be one of several types: whole life, universal life, and variable life are all types of cash value insurance.

Every auto insurer has its own package of special discounts to attract particular types of customers. Most insurance companies provide discounts for at least some of the following: accident-free drivers discount; a package discount for insuring your home and auto with the same company; multiple auto discount; good student discount; nonsmokers discount; and passive restraint discount (for vehicles with air bags or automatic seat belts). You may also consider higher deductibles for your comprehensive and collision coverages.

The personal auto policy provides coverage to the named insured, spouse and other relatives living in the home as well as anyone to whom the named insured has given permission to operate the vehicle.

Travel insurance can be relatively inexpensive, especially when you consider how much you could lose if something goes wrong before or during your trip. Accidents, medical emergencies, illness — even lost baggage, all can quickly add up and turn the vacation of your dreams into a nightmare.

Travel insurance could potentially save you thousands of dollars and is typically well worth the investment. AAA Travel Agency’s travel insurance partner, Access America, has been protecting vacation investments for over 20 years with an award-winning reputation for service. Your AAA Travel Agent can help you select a travel protection plan that is comprehensive, yet affordable and will protect your travel investment.

Anybody who rents his or her residence, whether it is an apartment, house, manufactured house or condominium may want to consider purchasing renter’ s insurance. Renter’s insurance provides protection for your personal property, such as furniture, electronic equipment and clothing. It also provides liability protection for you should you injure someone or damage that person’s property. Your landlord or the owner of the property is responsible for insuring the building and for his/her own liability coverage.

It depends. Some possessions such as jewelry, furs, coins, computers, antiques, artwork, silverware and other items that may exceed your standard renter’s policy are often subject to a theft limit. When shopping for renter’s insurance, ask about the various property limits and how they apply to expensive items you may own. You might be able to purchase an endorsement, providing additional coverage for specific items not included in your basic policy.

The insurance your landlord carries covers the building structure, but does not cover your personal belongings—your furniture, wardrobe, appliances, television—anything that you’ve moved into the building. You need a renter’s policy to cover your personal possessions. These policies are very afforadble and more often than now, will lower your auto insurance premium via a multi-product-discount if insured with the same carrier.

When determining the amount of insurance to purchase, there are several different limits to consider. The policy limit that is generally selected first is the amount of insurance on your house. This amount should equal the cost of rebuilding your home in the event that it was destroyed, and may be less than the market value of your home, since the market value includes the value of the land. Because land values are not insurable under a homeowner’s policy, the policy limits should not be included in the value of the land. Your agent will be able to help you determine the amount of insurance that is appropriate for your home.

The limits of insurance on other structures and on the contents of your home are generally expressed as a percentage of the limit on your house. You should check with your agent as to what those amounts are. The other significant policy limit to consider is the liability limit. This limit should be high enough to protect you from lawsuits resulting from your negligence.

An insurance company totals a car if repairs would cost more than it is worth. An insurance company will use various sources to value your car, including, but not limited to the National Automobile Dealers Association Used Car Guide (“Blue Book”) or the CCC Information Services, Inc., guide. The company’s offer, therefore, might not recognize your car’s condition, special features or value on the local market. A company is more likely to raise its offer if you can show that your car would sell for a higher price in your area. Keep the lines of communication open. Get several used car dealers’ to write price quotes for a similar automobile. Newspaper used-car ads also can build your case. Remember these quotes and ads provide asking prices and the actual value or sales price could be lower.