Unfortunately, having life insurance is one of those necessary, responsible “adult things” that comes with growing up. Although there are many reasons people give for not purchasing life insurance (no money, no time, etc.), the reasons to purchase life insurance are far more important – – your family. If you have not yet “grown up” and purchased life insurance to protect your family, there are a few basics that you may find useful.
Life Insurance Basics
The younger you are the cheaper the rates
This should be incentive for you to purchase life insurance when you are young rather than putting it off until you are older. Life insurance premiums are based on a variety of things including age and general health; therefore, the younger and healthier you are the lower your insurance premiums will be. Using this to your advantage, you can purchase a larger amount of life insurance for the same price as someone who may be twice your age.
Determining the coverage amount
While everyone would love to have a million dollars in life insurance, most of us have to be reasonable because we cannot afford the premium on such high coverage. Therefore, you must determine the amount of coverage you should purchase based on your age and income level. Life insurance is not only necessary to pay for funeral costs, it is necessary to replace your income in the event you die leaving your family without your monetary support. To estimate the amount of life insurance coverage you need, seek the advice of an agent or use a life insurance calculator.
Choosing the type of life insurance policy
There are different types of life insurance policies to chose from – – whole life, term life, universal life and variable life insurance. Whole, universal and variable life insurance polices pay a face value upon death; however, they also accumulate a cash value during the life of the policy that may be drawn upon by loans or withdrawals. These types of insurance policies are more of an investment and the premiums tend to be higher than those charged for term life insurance are. The fees and expenses associated with these permanent types of life insurance policies tend to make them less desirable than other forms of investments or insurance.
Term life insurance has a fixed premium for a fixed number of years – – typically the length of time that you would need to protect your family should you die before they can support themselves. The premiums are typically less for term life insurance and it is easier to qualify for term life insurance than other types of life insurance policies.
Look for a group policy to save money
Many employers offer employees term life insurance through a group policy at work. These premiums on this type of term life insurance are often one of the lowest you will be able to find. My husband and I maxed out the term life insurance offered through his employment for each of us as part of our overall life insurance plan. You do not want to rely only on life insurance purchased through your employer (this is subject to change); however, it is an excellent place to begin and a good piece of the plan.
More from this contributor:
Best lists for managing your home and your life
Fabulous affordable hostess gifts
What makes an employee great? Dependability