Buying life insurance is an important financial decision. It can not only help protect your loved ones who depend on you but it can also serve as a useful financial tool. To make sure you make the right decision, take the following steps before shopping for a life insurance policy.
Decide how much life insurance you need
How much will be needed in death benefits to cover leftover expenses if something should happen to you? The DIME method is often used to calculate life insurance needs:
- D = Debt (student loan, credit card, car loan, mortgage, etc.)
- I = Income compensation (how long your income will need to be reimbursed to protect your loved ones)
- M = Mortality (your funeral and burial costs)
- E = Education (funds needed for guardian education or childcare)
Decide how long you need life insurance coverage [1
9659003] You can either buy lifelong insurance or permanent (full) life insurance. The forward policy expires after a certain time. An entire life insurance policy continues until your death but costs more than a life insurance policy. If you just want coverage while paying off your mortgage or taking out your children, life insurance may be the best option. On the other hand, if you want coverage for the rest of your life, full life insurance is the best choice.
Think about your other financial goals
The whole life insurance offers benefits in addition to death benefits. It can act as a type of savings account. A permanent life insurance insures cash value that increases over time on a tax-deferred basis, similar to a pension plan. This type of life insurance can play an important role in your long-term financial planning.
Make sure you can give the premiums
In order for a life insurance policy to remain in force, you must continue to pay your premiums. Only buy insurance you can afford. If for any reason you were to stop making your payments, the money invested up to that time would be lost money without benefit.
Name a beneficiary of your insurance
The person named the beneficiary of your life insurance is the person who will receive the income in the event of your death. This is an important decision and our agent will be happy to advise you. Do not name your minor children – minors do not have the legal opportunity to receive money. For tax reasons, you may not want to name your property as the beneficiary.
Talk to a knowledgeable agent
Buying a life insurance policy is a big step that can affect your financial future. It is important that you shop for the coverage you need at the best available prices. It is also important not to delay, because the older you are when buying life insurance, the fewer your options will be and the higher your prices are likely to be. Our experienced agent can advise you on your choices and help you find the best quote for the life insurance you need.