How to Buy Life Insurance
Buying life insurance is an easy way to protect your family after you're gone.
If you know what to look for, you can get coverage at a price you can afford.
Why buy life insurance?
Topping the list of reasons to buy life insurance is the financial protection life
insurance offers.If you're single and just starting out, you may not need life insurance. But as you
take on more responsibilities and your family grows, your need for life insurance increases. The
proceedes from a life insurance policy can replace the income lost to your family upon your death.
You might also want to buy life insurance to pay off debts and expenses, leave money to charity,
and cover final and estate expenses.
Decide how much coverage you'll need
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you are married, both you and your spouse should consider buying life insurance. One of the easiest ways to estimate how much life insurance protection you should buy is to use a life insurance needs calculator.
Choose term or cash value
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time-the term, and cash value(permanent) life insurance, which combines a death benefit with a cash value component. Cash value insurance offers lifetime protection,while term insurance may be the most affordable option if you're buying life insurance mainly for the financial protection it offers, and your need for life insurance is temporary. Some term policies("convertible" ) will permit you to exchange the term life insurance policy for a permanent one at some point.
Term life insurance Periods
Term life insurance is usually offered for periods ranging from one to thirty years. Consider choosing a term that matches your need for life insurance protection. For example, if your child have 7 years and your main reason for buying life insurance is to protect him until he's out of college, you'll want to buy a policy with a term of at least fifteen years.
How much will it cost?
How much you pay for life insurance will depend on a number of risk factors, including your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying. Keep in mind that the premium you're quoted initially will increase later.
For instance, when you buy term life insurance, rates are guaranteed only until the end of the term
(annually for annual renewable term or the at and of specified number of years for level term). While most life insurance policies can be renewed at the end of the term, you'll pay a higher premium for coverage.
Do you have disability insurance you need?
If you work in a high-risk occupation, you probably know how important it is to have disability insurance coverage. But don't rely on government programs such as Social Security and workers' compensation as your main source of protection. In reality, government programs pay only limited benefits under restrictive terms.
Your employer may offer group disability insurance at low or no cost to you. But you may also want to consider purchasing an individual disability insurance policy. Althought you'll pay more for individual coverage than for a group policy, you often get more benefits. And keep in mind that if you leave your job or otherwise terminate your relationship with a group, you can't take your disability policy with you, and you usually can't convert it to an individual disiability policy. This means that you may be left without disability coverage when you need it most.
