A life insurance policy can play an important role in your big-picture financial plan. So what should you consider when shopping for one?
Your first question should be: do I need life insurance? Many don’t consider life insurance, but once they realize what life insurance is intended to do, they decide they need it.
Younger people, for example, often overlook life insurance because they feel they don’t need it at their age. However, if the breadwinner or breadwinners die early – and sadly, it does happen – that loss of income will severely impact their family members’ lives.
Others believe they have sufficient coverage through work. But while many employer plans provide coverage that equates to several times compensation, many people need more to meet their beneficiaries’ needs.
Interestingly, life insurance may not be as expensive as many people believe. According to industry group LIMRA, 80% of people overestimate the cost of insurance, and many overestimate significantly.
In purchasing life insurance, you will need to consider how much and what kind of coverage you’ll need. Consider why you’re buying a policy and what you expect a payout to accomplish. Research different types of coverage; for example, a basic life insurance policy can help replace income, but do you need additional enhancements?
It’s important to select a life insurance company with a strong track record of paying claims. Here you may want to research a number of providers. This may sound like a long and complicated process, but you don’t need to do it alone.
While the internet is a good way to identify your options, a licensed life insurance professional can explain these options to you. He or she is trained to assess your individual financial circumstances and will determine the appropriate type and level of coverage that’s tailored to your needs.
Your family’s security may depend on it.