Life insurance is a very important thing to have. It protects your loves ones and makes sure that they will be taken care of if/when anything happens to you. Imagine the peace of mine you will feel knowing your family will not have to worry about replacing your income when you are gone.
Here are some tips to make sure that you are on the right track to buying the type of insurance that you need.
All insurance falls into two categories: Term or Whole Life. Term, or straight life insurance, is good for a certain period of time, or a term. It is one of the best ways to get a lot of coverage for less money. Whole life has an investment aspect built in with straight insurance and is based on the cash value not the face value of the policy.
Whole Life Policies are expensive: They cover the person for their entire life, however they have very high premiums. This is to cover the cost of the very high commission that is made off this type of insurance policy. Another reason is to cover the cost of the investment.
Keep your investments and insurances separate: Many people assume that one of the best ways to build wealth is by letting your life insurance also be an investment and/or retirement plan. This is not the case. Many times more money could have been made investing money outside of the insurance policy.
This is because most of the insurance policies that have investment options invest in mutual funds with slow returns. These funds are considered low risk and therefore have slower growth. If you really want your money to grow, have an professional invest your money for you – outside of your insurance policy.
Buy enough coverage for your needs: You will fist need to determine what your needs are. Take a look at your lifestyle, your debt and your loved ones to determine how much coverage you will need.
For instance, do you have dependents who will need to be supported all their lives? Do you want to pay off your mortgage or other debt?
Do you want your loved ones to be able to set up their retirement off of the benefits? If so, calculate how much all of this will cost and make sure you buy a policy that fits your needs.
Match the term: When you buy term life insurance, make sure you get a term that fits your needs as well. You can buy term life insurance that is good for 5 year, 10 years, 20 years, or even 30 years.
Many people who have children like to purchase the 20 year term to make sure their children are taken care of while they are at the age where they would live at home.
If you have a dangerous profession, a shorter term may make more sense, at least until you leave that profession, and fine something a little less dangerous.
Buy and research your policy online. In this day and age there is really no need to go to an insurance company and talk to an agent when all the information you need is right at your fingertips. This saves ones of our most valuable assets, time.