Q. How much life insurance do I need? A. "As a general rule, the amount of life insurance should equal 6 to 8 times annual earnings. However, when considering the right amount of life insurance for you and your family, many factors should be taken into account.
Important factors include: • Income sources (and amounts) other than salary/earnings
• Marital status and, if applicable, spouse's earning capacity
• Number of dependents
• Death benefits payable from Social Security and from an employer-sponsored life insurance plan
• Existing special life insurance needs (e.g., mortgage repayment, education fund, estate planning need, etc.)
Calculating the correct amount of life insurance to buy is not that simple. We recommend contacting us for help determining the right amount of coverage. As an independent agency, Ford Insurance Agency has unbiased advisors that will help you avoid buying too much, show you appropriate optional coverage's for your need and recommend a company that will best serve your interests.
 Q. Should I purchase life insurance on a spouse and on children? A. The income-earning capacity of the primary breadwinner should be fully protected, if possible, through the purchase of the required amount of life insurance. When both spouses are contributing to the household income, it is important to protect the income earning capacity of both. This should be done before contemplating the purchase of life insurance on children or on a non-wage-earning spouse. Life insurance on a non-wage-earning spouse is often recommended for the purpose of paying for household services lost due to this individual's death.
In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s).
Q. Should I purchase term insurance or cash value life insurance? A. The answer to this question will vary depending on your personal circumstances.
In any life insurance purchasing decision, two questions must be answered:
1. "How much life insurance should I buy?"
2. "What type of life insurance policy should I buy?"
First, Ford Insurance advisors can help you determine the amount of life insurance you need. For example, this amount may be so large that the only way you can afford it is through the purchase of term insurance, since term insurance has a lower premium. In this case, you've already answered the second question.
If your situation is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the second question—what type of policy to buy. Important factors affecting this decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.
Q. What makes mortgage protection term insurance different from other types of term life insurance? A. The coverage amount under mortgage protection term insurance decreases over time, consistent with the projected annual decreases in the outstanding balance of a mortgage loan. Mortgage protection policies generally cover a range of mortgage repayment periods, e.g., 15, 20, 25 or 30 years. Although the face amount decreases over time, the premium usually remains the same. Further, the premium payment period often is shorter than the maximum period of insurance coverage—for example, a 20-year mortgage protection policy might require that level premiums be paid over the first 17 years.
Q.. If I have an outstanding mortgage loan, can I use an existing life insurance policy to provide for its repayment? A. Yes. An existing term or cash-value life insurance policy can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of the insured's death. Although a lender may offer a mortgage protection term policy to you, the lender rarely requires it.
When purchasing expensive appliances or a new car, or when consolidating debt, credit life insurance is frequently recommended if an installment loan is used in the purchase. Credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.
