Summer is here! It’s time to put a shine on our bodies and look trim and healthy when we walk around on the beach. This could be a good time to give up smoking for good.
Apart from the positive health benefits, saying no to cigarettes also has a fantastic financial incentive. Of course, smoking is expensive. The savings you make by quitting can mount up very quickly. But did you know that non-smokers spend far less on their life insurance?

The price you pay for your life insurance premiums is linked to the risk of a claim being made. If your insurer decides the risk is low, you'll enjoy cheaper cover. But if you're a smoker, the risk of making a claim is greater. To balance that out, the insurer will charge you higher premiums for the same policy. And the difference between the two sets of rates can be staggering!

Here’s an example of the difference in the insurance rates from one insurance company: Men who smoke would pay £12.75 a month for £100,000 cover. Men who don't smoke would pay just £7.55. Over a 20-year term, non-smokers would actually spend £1,248 less on their life insurance policy than smokers. It's a similar story for women. Female smokers would pay £9.35 a month while non-smokers would spend just £6.20.

Most insurers will class you as a non-smoker once you haven't smoked any cigarettes (or used nicotine replacement products) for just one year. This means, if you quit when the smoking ban came in, there's just a few short weeks left until you'll qualify for non-smoker rates.

We've already looked at how much cheaper life cover is for non-smokers, so it makes sense to apply for a replacement policy based on non-smoker rates. If you can get cheaper premiums, why not set-up a new, lower cost policy, and cancel your outdated one? You can do this quickly and easily by comparing quotes on the internet.

But there's an important factor you should think about before you change your cover: If your health has deteriorate, or you are significantly older since you took out the original policy, the cost of a new plan could be a whole lot more expensive. If this happens, it's better to stick with your old policy, even if that means being stuck on smoker rates.

You should benefit from lower cost life insurance as a non-smoker. And the money you save on your new policy can be put to far better use enjoying yourself this summer!

Before you rush downtown to get some quotes, make sure to check that you aren't getting at least some life insurance cover already, perhaps in a policy that your employer pays for you. Check your benefits package at your place of employment or ask at the manpower or personnel department - you may just find you have a good proportion of what you need already.

Remember that you should insure both partners. Don't fall into the trap of insuring the main breadwinner and ignoring a non-working partner - after all, could you manage to take care of the kids while working, too? You are buying the policy at the beginning of your married life when everything is looking great. You are both working; you are both well and healthy. But things change. Jobs come to an end and as one ages, health issues rear up. Your policy is meant to last all your life, or at least until your children become independent, so treat everything seriously.

Remember that there are alternatives to the life insurance route. Family Income benefit, for example will pay your dependents an income, should you die before reaching pensionable age, rather than a lump sum which can be preferable.

Watch out also for joint policies for couples as they can often pay out after the first death only, leaving the surviving partner uninsured. Separate policies for each partner can be a far better and not more expensive option. And putting that policy in trust can keep it separate from your estate should you die, which may protect it from the dreaded inheritance tax.

Finally, when you have a good idea of what you want, it's time to get some quotes. You can either do this by calling up providers individually, or save yourself some time by plugging your details into a comparison tool such as one of the many to be found on the internet. It's a good idea, and a good system, of applying for a number of quotes from different providers at the same time.

Life insurance is clearly never going to be the most riveting of subjects, the very notion is quite depressing, so I'm not surprised my friends aren't keen to discuss it when more pleasant topics come to mind. But as insurance goes, this could be one that'll help you sleep a little better at night.

Put very simply, life insurance provides money for your family when you die. It has other uses as well: it can be used to pay off a mortgage or other debts and can be used to provide a regular income.

Here is a simple explanation: the whole purpose of life insurance is to pay off your debts and provide support to your dependants by replacing some or all of your income if you die. You pay premiums to an insurance company, usually monthly or annually. In return, the insurance company will pay an agreed amount - the 'sum assured' - if you die during the life of the policy.

Your life insurance premiums vary according to a number of factors, including the sum assured and the length or 'term' of the policy, plus individual lifestyle factors such as your age, occupation, gender, state of health and whether you smoke. Smoking has become a major factor all on its own and you can save a great deal on premiums by giving up smoking. Most insurers will quote lower premiums once you've quit for a year or more.

When you buy a life insurance plan you are essentially gambling on the question of your longevity. Neither you nor your insurer wants you to die while you're covered, but your premiums are priced to reflect the risk of this happening. Of course, if you outlive your life insurance policy, it brings you nothing but peace of mind. Usually, you only stand to gain financially if you die, which is a high price to pay!

Mortgage lenders encourage all borrowers to take out a life insurance policy, but it's only necessary if you have a partner and/or children. After all, if you're young, free and single, who stands to lose out if you suddenly die? In a worst case scenario, your mortgage lender will sell your house to pay off your home loan, which is no big deal. Why not consider income protection insurance instead, which pays you an income if you can't work because of sickness, injury or disability.

But the least you can do to pay off your debts and leave your wife and kids with something to live on if you've passed away. Amazingly, a quarter of homeowners don't even have enough life cover to pay off their mortgage if a breadwinner dies, which is just madness.

Estate planning is an important part of building your economic and financial future and you can not have a complete estate planned unless you also include life insurance in the planning of your estate.

There are many ways that life insurance can be used in estate planning. One good way is for maintaining the lifestyle of your family after your death. In this case the life insurance is used to pay off debt and to provide a lump sum of cash, which can then be drawn on in the event of your death.

Another use of life insurance in an estate plan is for dividing and distribution of your estate equitably. You could, for example, have one person who is the heir to your business that may be valued at a couple million dollars and still provide another heir with a couple of million in life insurance proceeds.

Life insurance in an estate plan can also be used to reduce or eliminate gift and estate taxes. You could, for example, have an older individual who transfers his residence to a Qualified Personal Residence Trust (QPRT). The residence will then eventually pass to the younger family members without any additional gift tax - assuming that the grantor survives the required retained term and the younger family member buys a life insurance policy to insure the older member against the risk that the residence may be returned to the grantor's estate in the event that the grantor dies during the mandated retained term. There are similar programs that can be established using life insurance for Family Limited Partnerships (FLPs), Grantor Retained Annuity Trusts (GRATs), Private Annuities and others.

Life insurance is often used in estate planning as a means for solving future liquidity needs. In this way the benefit of the life insurance policy is used to pay administrative costs, gift and estate taxes. Many times an estate may be made up of non-liquid property or possessions including artwork collectibles, jewelry and family heirlooms that heirs would rather not sell to pay off estate expenses. In a case such as this, life insurance can be used to provide for the needed liquidity in order to pay the expenses associated with the estate.

The above are several examples of how life insurance serves to help in the planning of estates. These examples are only the very tip of the iceberg. There are numerous other ways by which life insurance can be employed in order to solve those issues that are often associated with estate and gift taxes. However, only a licensed professional can best help you determine those planning techniques that are most appropriate to your situation. Therefore it is good sense to closely work with a Life Insurance Professional and CPA.

Great question this! I always thought I needed about half the amount that the agent was trying to sell me. Over the years I wished at times that I had listened to him and at other times I was pleased I hadn’t. My needs changed as I went through life. When we were busy establishing a family and 2 of the 3 had arrived, I thought I needed much more. I was worried about being wiped out in a car accident and leaving my wife with babies. At the other end of the time-scale, by time the children had grown older and left the nest, I thought I had too much and resented paying the high premiums. Looking back, perhaps I should have studied the ramifications of buying term insurance.

As the word "term" suggests, these policies are in effect for a pre-established period of time - one year or until you reach a certain age are common. Term life insurance policies are the least costly. They pay death benefits but have no cash value if you decide to stop making payments.

Whole life, universal life, and other cash value policies combine a long-term savings and investment product with life insurance. Canceling these policies after only a few years can more than double your life insurance costs. I learned early on that the most expensive mistake one can make with insurance is to cancel a policy.

Then there is the question of disability insurance. What if you aren’t killed in a road accident, but are left in a wheelchair and unable to earn a living? Disability can be more disastrous financially than death. If you are disabled, you lose your earning power, but you still have living expenses plus maybe huge expenses for medical care.

Disability insurance is ‘special’. Ask these questions:
o How is disability defined? Some policies consider you disabled if you are unable to perform the duties of any job. Better plans pay benefits if you are unable to do the usual duties of your own occupation.
o When do benefits begin? Most plans have a waiting period after an illness before payments begin.
o How long do benefits last? After the waiting period, payments are usually available till you reach age 65, though shorter or longer terms are also available.
o What is the expected dollar amount? Will benefits be reduced by Social Security disability and workers' compensation payments?

Life insurance is pretty easy to understand. You purchase a life insurance policy and it does exactly what it sounds like, it insures your life right to the end. There are few if’s and but’s. In most policies if you end your own life within the first few years of the policies they will not pay. Otherwise you die and your estate or family collects the proceeds of your life insurance policy. Easy.

What if you don’t die – you are left disabled after a car accident, an accident in your home workshop, a fall down the stairs at home, a stroke, or some other disaster. What if you are disabled and unable to work? What would you and your family do for income? And this is not such an uncommon occurrence. Ever notice all the wheelchair-bound in the shopping malls?

Disability income insurance, which complements health insurance, can replace lost income. Forty-three percent of all people age 40 will have a long-term, meaning 90 days or more disability event by age 65.

These are the 3 basic ways to replace income:
Employer-paid disability insurance
This is required in most states. Most employers provide some short-term sick leave. Many larger employers provide long-term disability coverage as well, typically with benefits of up to 60 percent of salary lasting from five years to age 65, and in some cases extended for life.

Social Security disability benefits
This can be paid to a worker whose disability is expected to last at least 12 months and is so severe that no gainful employment can be performed.

Individual disability income insurance policies
Other limited replacement income is available for workers under some circumstances from workers compensation (if the injury or illness is job-related), auto insurance (if disability results from an auto accident) and the Department of Veterans Affairs.

For most people who work, even those with some employer-paid coverage, an individual disability income policy is the best way to ensure adequate income in the event of disability. When you buy a private disability income policy, you can expect to replace from 50% to 70% of income. Insurers won’t replace all your income because they want you to have an incentive to return to work. Remember that benefits from employer-paid policies are subject to income tax. If you have paid or are still paying paying the premiums yourself, disability benefits are not taxed.