Life insurance can shape an important part of your family’s financial stability and welfare. The only challenge most people encounter when trying to acquire life insurance is shopping for the right kind of coverage. Luckily, these simple steps can guide you in the right direction to purchase a suitable coverage.
1. Decide if you really need life insurance.
The majority need life insurance, but not everyone. If you don’t have anyone that solely depends on you financially or you have no debt and would exit an estate with sufficient cash to pay its own taxes and expenses, you possibly do not require life insurance. If you fail to meet these conditions, you perhaps will require individual life insurance.
2. Evaluate how much life insurance you require.
There are two vital questions to ask when evaluating how much life insurance you require:
- What financial resources will be accessible to survivors after your demise? For easiness, reflect on these three categories of resources: (1) Social security and other retirement; (2) group life insurance; and (3) other assets and resources. It is also vital to understand when these resources will be accessible; for instance, social security survivor benefits are payable instantly to a surviving spouse with dependent children, but that is just after age 60 and if they don’t have any children.
- What financial requirements will your survivors need after your demise? For easiness, reflect on these three categories of requirements: (1) final expenses; (2) debts; and (3) income needs.
Then deduct your survivors’ financial resources from their financial requirements in order to decide how big a policy to purchase. Several people are underinsured, due to the fact that they avoid these steps or take a shortcut (for instance simply purchasing a multiple of annual income).
3. Think about other objectives you may have for your life insurance.
A few types of life insurance policies contain a savings feature that can be used for reasons other than paying death benefits.
4. Choose the kind of life insurance that is suitable for you.
Basically, there are three kinds of life insurance policies; term life, whole life and universal life. If you require the insurance for just a certain period of time, or are on a low budget, a term policy, which has lower premiums, may be quite suitable for you. Nevertheless, if you need the insurance on the condition that you live and want to accrue savings, a whole or universal policy may be a suitable choice.
5. Discover if you are required to include any riders to the policy.
There are two that you should take into consideration, waiver of premium and guaranteed insurability. Several policies come with one or both included with the simple contract. However, if they are not included, it is usually ideal to include them. Waiver of premium pays the life insurance policy premium in the event that you are disabled. Guaranteed insurability allows you to include to the death benefit without offering extra proof that you are in satisfactory health.
6. Go shopping when purchasing life insurance.
There are several ways to save money when purchasing life insurance, however they do not always involve paying a lower premium instantly. It is vital to seek a policy that suits your needs before making the purchase. Life insurance is a highly competitive business so therefore quotes can differ notably between companies.
7. Determine if to pay premiums yearly.
Generally, it is ideal to pay premiums yearly than in installments, since there is usually an added charge for paying smaller amounts regularly.
8. Inform your beneficiaries about your life insurance policy.
As soon as the policy is issued, notify your beneficiaries about the company that issued it, and where to discover the paper copy of the policy and any details about what you need them to do with the death benefit. Although it is uncommon for people to be ignorant of the fact that they are the beneficiary of a life insurance policy; it happens and you want to ensure that the benefit will not go unclaimed. Always store your documents in a secure location to enable them be easily retrieved by your beneficiaries.
Conclusion:
Life insurance is vital in order to guarantee your family’s financial stability and welfare. If you carefully follow the steps mentioned above, it is guaranteed to guide you in the right direction for purchasing a suitable coverage. If you are interested in learning more about life insurance, you might be interested in Ways to Save Money on Life Insurance.
