Nothing demonstrates the value and power of insurance quite like a crisis. When times are good, it’s easy to underestimate insurance and think of it as a luxury. When times are bad however, having the protection of an insurance policy can mean the difference between survival and catastrophe. Out of everything you could choose to insure, the well-being of your family and loved ones should be at the top of the list. This is where Life Insurance comes in. Life Insurance is a type of insurance which pays out a sum of money to carefully selected beneficiaries upon the death of an insured person. Depending on the kind of policy purchased, the payments from a Life Insurance claim can be substantial enough to cover the living expenses of any chosen beneficiaries. This is what makes Life Insurance a very attractive way to build a safety net for your family. Here are a few tips on what to do if you’re thinking about getting Life Insurance:
I. Evaluate Your Lifestyle:
Before you begin window shopping for an insurer to transact with, sit down and determine whether Life Insurance is right for you in the first place. This all depends on how many beneficiaries you intend to take care of, and how much disposable income you have to devote towards Life Insurance. If you’re a single person with low income and no dependents to designate as beneficiaries, it’s better to invest in other forms of insurance to protect your assets. On the other hand, if you have a spouse/children to provide for, Life Insurance is appropriate assuming you can afford it.
II. Do the Math:
The second thing you should do is to calculate exactly how much to spend on Life Insurance once you commit to it. At a bare minimum, the insurance you purchase needs to cater for routine living expenses within your household after your death. Calculate exactly how much it would cost for your family to live comfortably on an annual basis, and multiply that amount for as long a stretch of time as you want your beneficiaries to be compensated. The bigger your budget, the longer your beneficiaries will receive annuities.
III. Pick a Type of Life Insurance:
If you’ve come to the conclusion that Life Insurance is right for you, then it’s time to figure out exactly what variation of insurance is suitable for your specific situation. Generally speaking, there are three main types of Life Insurance to choose from, these are: Term Life Insurance, Whole Life Insurance, and Universal Life Insurance. If you have a limited budget and you need insurance for short intervals of time, a Term policy would be a good fit because it has low premiums. On the other hand, if you have an unlimited budget and you need insurance to last for extended periods of time, either a Whole or Universal policy would do.
Once you have a good understanding of the kind of financial support you expect your beneficiaries to receive, then it’s time to get in touch with an insurance company which can guide you through the process of acquiring Life Insurance. Don’t forget that Life Insurance is a dynamic investment which should adjust along with your expectations over time. If you purchase Life Insurance at a young age, it’s important to update your policy during milestones and material events in life. Life Insurance can be a very intimidating thing to understand at first, but it all boils down to your preparation. If you take the time to evaluate your needs before investing in Life Insurance, you will have an easier time figuring out exactly what type of a policy to invest in.