Many people don’t want to think about life insurance. However, the most important reason to consider it is to prevent financial hardship for your loved ones if you are no longer around. If no one depends on you financially, you have no debt and your estate has enough cash to pay its own taxes and expenses, you probably don’t need life insurance. Otherwise, it may be time to investigate it. The best rates are what you can get today, and not in the future, as life insurance is based on your age and health status.
You will have to calculate how much life insurance you need. When you die, there are three possible resources: social security and other retirement-related survivor benefits, group life insurance and your other assets and resources. Once you know how much is available through these sources, then look at the expenses you will leave behind, including burial costs, loans and debts and continued income needs. Next, consider your survivors’ financial resources to help you determine how much coverage you should buy.
There are three types of life insurance policies: term life, whole life and universal life. If you need the insurance for a specific period or are on a limited budget, a term policy, which has lower premiums, may be a good fit. However, if you need the insurance for as long as you live and want to accumulate savings, a whole or universal policy may be a better choice.
“Riders” are available on most policies for waiver of premium and guaranteed insurability. Waiver of premium would pay the life insurance policy premium for you if you became disabled. Guaranteed insurability permits you to add to the death benefit without providing evidence that you are in acceptable health.
When buying life insurance, you should shop around. There are many ways to save money, but they don’t always entail paying a lower premium immediately. Life insurance is a very competitive business, so quotes can vary significantly among companies. You can save if you pay annually rather than in installments because there is often a relatively large additional charge for paying smaller amounts more frequently.
Tell your beneficiaries about your life insurance policy so they know where to find a paper copy and are aware of any specifics regarding what you want them to do with the death benefit. Make sure to store your documents somewhere where your beneficiaries can access them easily.
