There’s a sad truth — most people spend all their money. We used to save. Now we focus on paying off the loans and credit card debts. If you put two people together, their lifestyle will quickly come to reflect their joint income. If you lose one of those incomes unexpectedly, this can have a very unfortunate effect. That is why Renters Insurance Southern California deliver the possibility of financial security for those who must now cope with one income again.
Who should you buy from?
Wherever possible, buy from the insurance company directly and not through an agent who will add on a fee or commission. Only buy from an insurer you are confident will be around in twenty or thirty years time. Rating companies like Henderson offer a guide to the financial strength of insurance companies.
How much Renters Insurance should you buy?
In the first instance, this is an easy calculation. You add up how much you owe on the mortgage, auto loans, and so on. Then look at the fixed outgoings like the telephone and utilities bills. You aim to pay off all the outstanding loans, leave enough to keep the home running for at least five years, and provide for big items in the future like paying your children through college. But the farther you try to look into the future the fuzzier it gets. So many people take the simple route of buying seven or eight times the annual pay that will be lost.
What is the advantage of term insurance?
This is Renters Insurance at the lowest cost. To protect yourself, it is better to buy convertible term and upgrade to a permanent policy when you can afford it.
Why buy a permanent policy?
These policies almost always have a cash value, i.e. there is an investment return on the money you pay the insurer. Should times get tough, you can borrow this money or sell the policy. If you keep the policy until you die, your beneficiaries get the benefit of this larger cash sum on top of the guaranteed minimum death benefit.
How often do you pay the premium?
There is usually a choice with insurers prepared to take the payments monthly, quarterly, semi-annually or annually. Sometimes, there is a slight discount if you pay an annual premium. It reduces the insurer’s administrative costs.