Purchasing life insurance is an easy way to protect your loved ones and is an important part of any financial plan. Sometimes it may seem that purchasing the right life insurance isn’t so easy. There are countless things to consider, from how much coverage you need to how long you want the insurance for.
If you know what to look for in a plan, you can get the type of coverage to fit your specific needs. First, consider why you need to purchase life insurance. If anyone depends on you for financial support, whether it be children or a spouse, life insurance is a way of protecting them in the event of your death. Your beneficiaries can help you determine what kind of plan will work best for you.
Next, map out how much coverage you will need. This means considering how much money your beneficiaries will need to live on for a given amount of time. You can base this amount off of income replacement. Income replacement is usually based off a figure that is five to 10 times your annual salary depending on how long you want to provide for your beneficiaries. Consider factoring in expenses that will come up like college tuition, loans and debt, as well as other forms of income that your beneficiaries will collect. Having a general number for your income replacement gives you a good idea of what kind of coverage you need.
Finally, think about what type of plan you want to purchase. The two most common policies are term and universal. Term life insurance is like a pay-as-you-go plan where the premium is fixed and your coverage stops once you stop paying. Universal life insurance is a more permanent policy that lasts a lifetime and has a flexible premium and death benefit.
Don’t put it off any longer. Get life insurance to protect your loved ones – today and in the future.