Determine your insurance need. Determine how much you will need to ensure a consistent lifestyle for your dependents or loved ones. Consider what assets you already have to provide income in the event of your death, such as savings accounts, investments or real estate. Then figure how much your dependents will need for future living expenses, school, debts and mortgage. Subtracting these two figures will give you a close determinate of need.
Research the different types of policies available. There are many different types of products available to meet different needs. The two most common types of life insurance are Whole Life and Term.
Whole life is permanent coverage designed for people who know their life insurance needs will not change or who want to build an investment for future funds. This type of plan offers level premiums that are based on the policyholder's age when the policy is issued (issue age). Some policies offer a paid-up option after a specified period of time, such as 10, 15 or 20 years, which means premiums cease but coverage continues for life. Whole life insurance also builds cash value.
Term insurance provides coverage for a specific period of time, such as 1, 5 or 10 years. After that period, coverage is terminated unless renewed for another term. Unlike Whole life coverage, term life builds no cash value. However, term insurance generally provides a larger amount of immediate coverage for lower initial premiums. Rate increases occur upon the term renewal. This type of insurance is ideal for those requiring temporary or supplemental coverage or who need large amounts of coverage but have budget restrictions.
Do cost and company comparisons. Just as there are many different types of products available, so there are many different companies selling them for different prices. The cheapest policy is not always the best. Look for a financially sound company with high ratings from industry rating services. Also look at how premiums will change with age or on term renewal periods. A trusted agent can do much of this footwork for you and provide you with personalized comparisons based on your needs and budget, as well as answer any questions you might have.
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