People buy life insurance to protect their loved ones in the event of their death. If you are single and have no dependents, you might not need life insurance. However, as you have been given responsibilities when your family grows, a life insurance policy will become a need for you. The benefits from this policy will replace the income loss of your family when you die unexpectedly. This benefit can also be used to pay off family expenses and debts as well as estate expenses.
Term or Whole Life Insurance
When you buy life insurance, you can choose between a whole or term life policy. A term policy covers you for a specified period of time while a whole policy combines a cash value component and death benefit. In general, a term policy provides the most security at the smallest price. A lot of term policies can be renewed which means that you can buy them for the same term again, although there can be a raise in the amount of premiums. Moreover, a cash value in a whole policy is advantageous because it provides a lifetime security. But, there are other types of permanent life insurance that serve more as investments wherein their value is dependent upon the performance of the bonds and stocks.
Select the Amount of your Coverage
When you buy life insurance, the amount of your coverage should depend on the amount of income that your dependents will need, your assets and debts as well as the amount of insurance that you can afford.
An easy way to come up with an estimate of the amount of life insurance coverage that you need is to analyze the amount of money that your dependents would have to pay for all their expenses when you are no longer around.
How Much Premiums Can You Afford
The amount of money that you must pay for your life insurance will depend on factors like your health, age, health history of your family and the insurance type that you wish to buy. Remember that with some life insurance types, it is likely for the premiums to change later. This is especially true when you have a policy that does not guarantee you a fixed premium for the rest of your cover period. Thus, it is important that you understand well why and how your premiums are computed and what is guaranteed.
Shop Around
Try to get as many life insurance quotes from different insurers and compare them based on their rates, benefits and the reputation of the company. It makes sense to find out the rating of the company that they got from major rating services like Standard & Poor’s or A. M. Best. The firm that provides you the quote will give you this rating information. When you have chosen your insurer and the type of policy that you want to buy, you are can submit an application.
