Question: How much life insurance do I need?

Sprague: There is no easy answer to this question, simply because people's needs and goals differ so greatly from one another. As a rule of thumb, industry experts recommend that you have coverage of at least 5 to 8 times your annual income. The most important thing you can do is sit down with your insurance agent to help you plan. Here are some factors to consider:

• What are your annual expenses for life's essentials: mortgage or rent; utilities, car or other transportation, daycare or tuition, groceries, etc? Multiply this by the number of years your family would need to get along before they could replace your income.
• How much do you forecast will be needed to replace a car, pay tuition, or cover the cost of caring for aging parents?
• Does your family depend on two incomes? If so, what would be the impact of losing either one of them?
• How long is your family likely to need protection?
• How much cash would your family need to cover medical bills, funeral expenses and outstanding debts (car loans, credit cards, home equity loans, student loans, etc.)?

Question: How often should I review my life insurance?

Sprague: We recommend reviewing all of your insurances at least every 3-5 years, as part of updating your long-term financial plan. In addition, of course, you should immediately review your insurance after every major life change: loss of a family member, retirement, major change in earnings (either up or down) or expenses, inheritance, end of college expenses, and other events that are likely to have a major impact on the long-term financial well being of your family.

Question: Will my insurance policy earn dividends?

Sprague: Some insurance companies may pay dividends on the permanent life insurance policies they issue. Usually the policy holder can choose whether to receive these as cash payments when they are earned, or whether to allow them to accumulate to offset premiums, purchase additional insurance, or add to the death benefit. In most cases, permanent insurance policies that pay dividends cost more than other policies.

Question: Can I borrow against my life insurance policy?

Sprague: You may be able to borrow against a permanent life insurance policy if it has sufficient cash value to do so. Remember that the amount of the loan will be deducted from the payout in the event you die before repaying the loan.

Question: What is an Accidental Death Benefit, and is it a good type of insurance to have?

Sprague: Some policies offer an optional Accidental Death benefit for an additional premium. Such policies double the death benefit if the policy owner's death is caused by an accident instead of natural causes. The decision as to whether it's worth the extra cost depends on individual circumstances. One of the reasons that would favor this type of policy is that it provides a greater amount of cash immediately, giving the survivor extra time to adjust to the catastrophic change and create an appropriate financial plan.

Question: How can I save money on life insurance?

Sprague: The best way to save money is to review your policies and financial needs regularly and buy only the insurance you feel you need. Our agents can help you understand your options and determine the best policy or combination of policies to meet your needs.

In addition, here are some ways to save:

• Don't smoke, or quit if you do. Most insurance companies have lower rates for non-smokers and higher ones for smokers.
• Maintain a healthy lifestyle. Insurance companies incorporate many factors when formulating their rates. In addition to smoking, some of these include alcohol consumption, weight, and exercise.
• Shop the market. Our agents can help you explore your options and find the best policy at the best rate.
• Take advantage of Group Insurance plans. These plans, offered through employers, unions, alumni groups and other organizations generally offer insurance at lower costs than individual policies.