How do you find coverage that suits your budget and meets your needs
Although life insurance is crucial to your family’s financial stability, it can also be a great way to protect your loved ones’ well-being. However, finding the right coverage may seem daunting if this is you. These eight steps will help you get started.
1. Assess whether life insurance is essential
While most people have life insurance, not all do. You don’t need insurance if no one is dependent on you financially. If you have no debt, and your estate has enough money to pay its taxes and expenses, then you are probably not eligible for life insurance. Individual life insurance is required if you don’t meet these requirements.
2. Calculate the amount of life insurance you require
Two critical questions are to be asked:
How much financial support will your survivors have after your death? Consider three types of resources for simplicity: (1) Social Security and other retirement-related survivor benefits; (2) Group life insurance; (3) Other assets and resources. You should also know when these resources will be available. For example, social security survivor benefits are payable immediately to a spouse with dependent children. If there are no children, they are expected only after 60.
How much money will your survivors need after your death? Consider three types of financial needs: (1) final expenses, (2) debts, and (3) income requirements.
To determine the policy size, you should buy and subtract your survivors’ financial resources from their financial needs (step #2). Many people are not insured enough. This is often due to skipping these steps or buying a multi-year income.
3. You might also consider other goals for your life insurance.
Specific life insurance policies have a savings option that can be used to pay benefits other than death benefits.
4. Find the correct type of life insurance to meet your needs.
There are three primary life insurance policies: universal life, whole life, and term life. A term policy with lower premiums may be the best option if you only need the insurance for a short time or have a tight budget. However, a universal or whole policy may be better if you are looking to save money and need insurance for the rest of your life.
5. Learn if there are any “riders” that you should add to your policy
You should also consider waiving premiums and guaranteeing insurability. You may find one or both of these options in some policies. If not, it’s a good idea for you to add them. If you become disabled, the waiver of premium will pay your life insurance premium. You can add to the death benefit with guaranteed insurability without proving that you are in good health.
6. Take a look around
There are many ways you can save money on life insurance. However, they don’t necessarily mean you will pay a lower premium immediately. However, life insurance can be very competitive, so prices can differ significantly between companies.
7. Decide whether you want to pay annual premiums.
It is usually better to pay in one lump sum rather than monthly. There is often an additional fee for paying smaller amounts less frequently.
8. Inform your beneficiaries about your life insurance policy
After the policy has been issued, notify your beneficiaries about the company that issued it. Also, tell them where you can find the policy’s paper copy. And give details regarding what you would like them to do with the death benefits. Although it is uncommon for beneficiaries not to be aware they have life insurance policies, it can happen. Your documents should be stored so your heirs can easily access them.