Life insurance is an important part of any financial plan because it helps protect your family if something were to happen to you. Whether you’re considering buying it for the first time or are shopping around for a better rate, it’s essential to know how life insurance works, what you need, and what you can afford. Here are some helpful tips for getting the right life insurance policy for you and your family.
Determine the Kind of Policy that Would Be Best for You
There are two main types: term life insurance, which covers you for a specific period of time (usually 10-30 years), and permanent life insurance, which never expires and is designed as an investment vehicle for your beneficiaries. Term policies are cheaper than permanent ones, but they don’t offer any coverage beyond the term. Permanent policies cost more but give lifelong protection with guaranteed premiums (you’ll never pay more than the initial quote).
Decide how Much Coverage You Want
Use an online calculator to check your total coverage needs based on your income, debts, and other financial obligations like college tuition or a mortgage payment. If you have children or other dependents who rely on your income, you’ll probably want more coverage than if you’re single with no kids.
Look at Your Budget and Lifestyle
What does your current and projected income allow for? You may want to consider a term policy that’s large enough to pay off your mortgage and other debts and help support your family. You may also want to look into whole or universal life policies if you want the potential of building cash value while providing coverage now and in retirement.
Talk with Your Loved Ones
Share your plans with them, including who you’ve chosen as beneficiaries and how much you’ve decided on for a death benefit amount. Make sure they understand how to access the proceeds, should they ever need them, and what they should do when an emergency or untimely death strikes. If possible, put all this information down on paper.
Be Willing to Work with Your Agent
If you’re just getting started, consider working with an experienced agent or broker who can explain what options are available and provide guidance on getting the best policy for your situation. Don’t be afraid to ask questions or learn more about your policy and what it covers. You want to find out as much as possible to make an informed decision.