Selecting Life Insurance
Purchasing life insurance coverage means different things to different people. When it’s time for you to select your life insurance coverage, the very first thing you should do is to write down your goals. Why do you need life insurance at the time’ Is it just to make it easier for your executor to take care of your final expenses’ Or do you have people you need to care for’ Whole life is a great tool if you are planning for big, once-in-a-lifetime expenses, such as college or retirement. Whole life also helps in retiring debt in case of death or disability, although term life might work for that, too. Consider exactly what you need your life insurance coverage to do before you decide which kind of policy is right one to buy. You may even find you need both whole and term coverage.
Second, before you buy a policy, take a careful look at your budget. Be sure you can afford the policy you buy. Know how much you can spend each month on premiums. Term policies tend to be less expensive than whole life policies. Some people buy whole life as an investment tool, but others opt for a combination of term life and whole life to meet their unique financial needs. Whichever kind of policy or policies you decide are best, always be sure you can make the payments. A qualified life insurance agent can help you find options to schedule payments in ways that work for your budget.
Third, don’t forget to calculate your earning power, especially if you need life insurance for income replacement. Most of us assume a three percent annual raise when estimating earning power, and most of us retire when we are 65 years old. However, select the scenario that best suits you and your lifestyle when calculating your future earning power. You want to make sure you are realistic in this calculation so you can accurately select the life insurance product that best suits your needs.
Finally, ask yourself this question: what stage are you at in life’ Different people have different needs, depending on where they are in life. You might need a policy to simply provide a death benefit. If you have people dependent upon your income, then you need to think about making sure your income is replaced in the event of your death, devastating illness or accident. If you need more income for retirement, take that into consideration when mapping out what type of life insurance policy is going to help meet your needs.
Look long and hard at your goals, your budget, and the needs of those you love. Consider where you are in your life and what you want to do with the years ahead. When you have clear goals you can share with your agent, then he or she can help you find the exact coverage that is best for you.
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