4 Tips on how to Buy Life Insurance

If you are in the market to buy life insurance there are many factors that you need to consider. If you don't know what you're doing it could be a very confusing process. Life insurance is something that is necessary to protect your family in the case of your death. Without it, they could be riddled with debt and problems.

1. Figure Out How Much You Need

Determining your need for life insurance is the first step in the process. How much money would it take to provide for your family if you died? In order to come up with the figure, add up all of your debts. Add to that number a figure that your family could live off of for a few years.

For example, if you debts total $250,000 (including mortgage) and your family requires $50,000 per year, add those figures together. Then, add a couple of years of reserves. The addition would be $250,000 + $50,000 + $50,000 + $50,000, giving you approximately $400,000 necessary coverage. Buy a policy between $400,000 to $500,000 to properly cover your family.

2. Talk to an Agent

A life insurance agent can help answer all of your questions associated with the product. When you are shopping around, you need to talk to an agent that you feel comfortable with. Ask them how the policy works. Ask them about any rules or regulations surrounding your policy. They can help you understand your needs and what they have to meet those needs.

3. Which Type?

Once you start talking to agents, one big decision you have to make is on which type of life insurance you want to have. While there are several kinds of insurance, there are two main ones: whole and term. Whole life insurance is designed to be a life-long policy. It builds cash value as you go that you can recover or borrow against if you need it. The premium for whole insurance is guaranteed, but it is typically more expensive than other types of insurance.

Term life insurance is designed to last for a specified period of time. It is less expensive than whole life insurance and it does not build cash value. Proponents of term life insurance say that you can take the difference that you save on term and invest it. You will then make more money on your investments and actually be able to use the money when you're done.

Another type of life insurance that is growing in popularity is variable life insurance. This type of insurance is similar to whole, except that you actually get to see where all your money is going. There are several things for you to pick from for your investments. This means you actually have a say over what your money is invested in. The performance of your investments can actually determine how big your premium is.

4. Learn the Rules

Once you settle on a policy, make sure that you understand how it works before you get it. You'll want to ask questions about what will happen when you die. Ask whether your family needs to file anything special for settlement procedures and if so, find out what they are so that you can take care of them ahead of time.

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