Sunday, May 26, 2013

What Do Flying Risks Mean? (part 2)

When losses occur in airline travel, they tend to be catastrophic. Even if the loss results from pilot error or mechanical failure (instead of terrorist attack), the end is usually the same: few, if any, survive. In these cases, health insurance or disability insurance—both worthwhile concerns when it comes to car risks—aren’t important.

There are many formulas for calculating how much life insurance a person needs. But, from the income-replacement perspective, there are two calculations that work for most people:
  • replace five years of the insured person’s earned income; or
  • pay off mortgages, car loans, consumer debt and other debtsrelated to daily living.

Basic term life insurance will usually cover these needs. Term is the least expensive form of life insurance in most situations.

Some people are tempted to increase their life insurance coverage or buy special insurance if they know they are going to be flying a lot—for business or pleasure—during a given period of time. However, travel life insurance (often marketed through airport kiosks or some on-line travel services) is usually not a very good bargain.

Travel life insurance is different than trip insurance (sometimes called “travel insurance”) offered by some travel agents. Trip insurance protects the cost of your travel and accommodations against illness, disability, mechanical problems or other interferences. If you are mugged in a foreign country while on vacation, travel insurance will help cover your loss.

Also read: What Do Flying Risks Mean? (part 1)

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