How to get coverage that matches your requirements & budget
Life insurance can be a key component of the well-being and financial stability of your family, but like most people, you might believe that the idea of buying suitable coverage is a bit frightening. Luckily, we are here with some smart steps to lead you along your way:
- Find out if you even want a Life Insurance
Many people want it, while some don’t. If your family (or any other relative) is not financially dependent on you or if you don’t owe a debt to someone and can leave your belongings with enough wealth to meet its needs and taxes, then you shouldn’t go for life insurance. But if you can’t fulfill all these criteria, then you should probably go for life insurance.
- Determine how much do you need life insurance:
Generally, two major questions must be considered:
What financial means your loved ones will have once you pass away?
Consider three types of financial means for simplicity’s sake:
(1). Unemployment allowance and social security; (2). Term (or Group) Life Insurance Policy; & (3). Other income means and financial assets. It is useful to acknowledge when these financial resources are available —for instance, a surviving wife with dependent kids receives social security benefits immediately, but for that, she must be 60 or above with no kids.
What basic financial requirements shall your loved ones have after your death?
Consider three different types of financial needs just for simplicity: (1). Last Expenses; (2). Your Dues; & (3). Income Requirements
Then deduct the financial resources of your survivors from their financial requirements to decide how much policy should you buy. A lot of people are underinsured generally because they ignore these stages or use shortcuts (like simply buying different annual revenues)
- Consider additional life insurance goals you may have:
Several life insurance policies include a savings feature, which can be utilized for something besides paying out deceased or death benefits.
- Find out which life insurance is most suitable for your needs.
Mainly life insurance policies have three types — Term (or Group) Life, Whole (or straight) life & Universal (or Permanent) life. If you want insurance for a short duration of time, or if you have limited funds, a Term (or Group) policy, which offers cheaper premiums, is a suitable option for you. However, if you want to have a lifetime of insurance and save your money, a whole policy or a universal policy is a suitable option for you.
- Determine if you want to include any “riders” in your policy
You should consider two riders: guaranteed insurability & waiver of premium. Several policies include one or both as part of the simple contract, and if they don’t then it is wise to include them. Your premium of life insurance will be covered by a waiver of premium if you are handicapped. Guaranteed insurability enables you to grow your death benefit without presenting further proof of good health.
- Look (Shop) around to get good awareness
There are various methods to save your money when you are purchasing life insurance however, none of them always include paying less premium instantly.
- Choose whether to yearly pay premiums
Mostly, paying annually is better as compared to installments because paying lesser amounts more frequently often results in a relatively significant additional charge.