Authored by Douglas Mefford in Insurance
Published on 03-13-2009
Since none of us are guaranteed our next heartbeat, life insurance is a very important part of our society. Long-term financial commitments as well as the lack of personal self-sufficiency requires we provide for those we are responsible for in the event of our untimely deaths. It is necessary to figure out just what type of life insurance policy you will need to fulfil the requirements on your life. Begin your investigation by questioning just what you need from the policy. There are two basic forms of life insurance of which you can personalize to find the best mix between cost and payout.
If you are only needing to have a policy covering your death while a large financial situation is ongoing, such as a home mortgage or child’s college payments, then a term-life policy may be best. Term life will only be in effect for a stated number of years. These policies are easier to get and are generally less expensive, however, if you out-live the policy you will get no return of your monies paid. Full or permanent life insurance is set up for the duration of your life and has a specific payout amount for your benefactors to collect on. It is usually more expensive and will require a medical examination but provides a return on investment in the end.
You will need to ask yourself just how much coverage you need. If you are the primary or sole breadwinner of a household, your family will need a while to adjust and find ways to produce a new income source. The best average is that your life insurance policy provides them with at least three times your annual salary. Burial costs and taxes will also need to be added to this amount. If you are purchasing life insurance to cover a major loan obligation, you will need to determine how much will fulfil that as well.
Next you must question where you will obtain this insurance. Many employers provide group term-life policies as part of the benefit packages for those who work for them. While this can be easy to obtain and less expensive than some forms of insurance, you must keep in mind the possibility that by leaving that company you will have to obtain a whole new policy. An individual life insurance policy direct from an insurance agency offers the advantage of not being cut off in the event of a job change. The individual life insurance policy provides a greater range of customization as well.
If you decide that a term-life policy will provide your needs and you find that your situation changes at a later time, you must be aware of how, when or if you are allowed to upgrade the policy to a longer term or a permanent life insurance policy. You must find out how great a rise in your premium payments you will be expected to pay if you out-live the original terms of the policy and need to extend it. Question your insurance agent carefully as it may be in your best interests to let the original policy expire and take up a new one.
You should also determine where you wish to obtain your life insurance policy. This question pertains not only to which company you ultimately choose but also to the method. Insurance can increasingly be found online. In this manner you may obtain a standardized life insurance policy without ever having to personally deal with another human. There are, however, great advantages to finding a professional agent and discussing your personal needs with them.