Buying life insurance may seem like a simple proposition, but it is not always as easy as it may seem, given the complexity of terms used in the industry. Here are five things to consider when looking into life insurance.
Determine why you need life insurance. You may think of life insurance as providing financial support for your dependents if you are not able to do so. But different people need life insurance for different reasons. Do you need to pay for a child’s college education, for example? Or do you need to pay off your mortgage to help a nonworking spouse?
Determine how much life insurance you need. Understanding why you need life insurance before you begin shopping will help you determine how much of it you need. Conventional wisdom, such as twice your salary, may not apply. How much money does each of your dependents need, and for how long? Remember, your spouse and children will likely have different needs. And if your children are different ages, each of them might have different needs.
Know the difference between permanent and term life insurance. Permanent life insurance provides coverage for life. Term life insurance provides coverage for a limited period of time, such as 10, 15, or 20 years, and it, therefore, may be less expensive. Depending on how long your dependents will rely on you financially, a term or permanent life policy may be the best option.
Research providers. Some life insurance companies are better than others. You will want to choose one on solid financial footing because the lives of your dependents may depend on it.
Find a good agent or advisor. Answering these questions can be challenging. An experienced financial professional (like us) can help you.
Reach out to us today if you would like to explore life insurance.