Life insurance isn't always a comfortable subject for discussion, but it's a discussion you should be having - at least with your insurance provider. Here are some of the basics that you need to know before you purchase life insurance:
Everyone Should Have Life Insurance
Anyone who expects that there could be expenses after they die should have life insurance. Without life insurance to cover these expenses, you risk burdening your family with the cost of paying for your funeral and any outstanding debts you may have. Life insurance is particularly important if you have a spouse or children who count on your income. By having life insurance, you can provide for them after your death - at least to allow them time to adjust. Unless you have a big bank account, no dependents and no financial obligations, you need to have a life insurance policy in place.
Looking To Save? Buy Term Life Insurance
Many people don't have life insurance because they assume they just can't afford it. Term life insurance is actually quite reasonable, and policies are available that offer payouts as low as $50,000, which is often more than enough to cover final expenses. For a minimal monthly premium you can have the comfort and assurance of knowing that your family won't be financially burdened by your death.
Guaranteed Life Insurance Will Cost You More
Guaranteed life insurance is a type of policy that can be purchased without a medical exam. As a result the premiums are generally much higher. As a healthy individual there is no reason why you shouldn't apply for regular life insurance instead and save on your premiums. However, if you have a medical condition or a poor family history, guaranteed life insurance may be your only option.
Buy What You Need to Save
Most life insurance calculators suggest that you take out life insurance equivalent to five times your gross annual salary. Any more than that and your premiums will be dramatically higher, causing an unnecessary burden.
Combine policies and save
If you have a spouse who also requires life insurance, save by combining your policies, instead of having them issued separately. Some insurance companies offer up to a 15% discount on premiums on joint life insurance policies, so it's an option worth checking out.
Don't pay monthly - if possible
Everything seems easier when it comes as monthly payments, but there is a financing cost for paying in monthly instalments. You can save by paying your insurance premiums annually. Then, set up a savings account and put the monthly amount away for next year's insurance - it will make paying the annual premium easy, and you'll save on the financing charges.
Make sure you review your life insurance needs regularly. Life is constantly changing, and whether you are having kids, getting married, or retiring there are points in your life when you may need to adjust your life insurance coverage. Don't wait until it's time to make a claim to realize that you don't have the right coverage in place.
Don't depend on work life insurance
Even if your employer offers life insurance coverage as part of your group benefits, this amount is usually only approximately one to two times your annual salary - which, for most families is not enough. Consider applying for a separate policy to make up the difference so that your loved ones can be financially secure.
Compare, compare, compare
You will find a wide range of premiums and coverage when it comes to life insurance, so get a few insurance quotes and inspect the policies carefully before you buy. While term life is the cheapest type of life insurance, there are other types that may suit your situation better, so be prepared to do some research.