Life Insurance is an assurance that, if nothing else, allows you to rest easy knowing that in the worst case scenario, your best are is/are well protected and financially covered.
The most important step while purchasing a life insurance policy is to know how to go about it. Here’s a guide which would give you a head start.
Knowing if you need a policy
It means you have to figure out how many are dependent on your income, and if you were to die a sudden death how that would affect others financially.
If there is nobody dependent on you, then signing up for a life insurance policy would be silly, however the same would be of prime importance if someone actually is dependent on your income.
Knowing the amount of life insurance you need:
This question will not be answered directly. You have to do the math yourself depending on your age. However the average suggestion would be it five to ten times your income per annum.
Knowing which policy you need:
While there are many kinds of policies available, you must know and decide which one is the best suitable for you. There are two main kinds: term policy and life-time policy.
The term life insurance costs you much less, but on the flip side it expires after a certain period of time. The policy dictates that if you do not expire within a specified age, your insurance is gone.
This means that the investor is not guaranteed coverage after he dies. You should go for this only if you are cash strapped, or absolutely sure that you will have enough money if you survive till a certain age. Some experts say you should go for this policy if you find yourself healthy and financially sound at say, the age of 40.
The whole life policy is completely different from term. It is far more expensive, but it assures you that you will be covered for your entire life. Many say that this is the logical policy to go for.
After all people sign up for life insurance only to secure the life and future of the ones they love, and in return they must receive a guarantee of whole life assistance. For those, who can spend a little more, should always opt for the whole life policy.
So as you can see there are a lot of factors which determine which policy you opt for, viz. the amount you can spend, the amount you want left after your demise, what kind of payout you prefer.
There are other options as well, like variable and universal life insurance which you should also look into. Variable policies let you build up a reserve of cash on the basis of your investments in other policies of the insurance firm.
Your earning depends on how well your investments do. The universal policies are however more flexible, and they let you use a part of your income to cover for the premium and also vary the amount of benefit you get after death.
So, educate yourself as much as you can from the internet, and when you are ready, find an insurance agent whom you can trust and start investing on your future!
Writer’s Brief Profile
Jeff Jackson is an insurance agent associated with Farmers Insurance, Madera, CA. He has years of experience and utilizes his knowledgebase for writing articles guiding people choose the best insurance policy. You can contact Jeff at [email protected] for any insurance related information.
