Buying life insurance means facing a lot of choices. Your family’s financial future may ride on your decision. How to make the right decision for you, your budget and your family?
You’ll have to calculate how much insurance you need; research insurance companies and the different kinds of insurance policies available; decide on an insurance company and insurance policy that best meet your needs, and then cross-check your research to be sure you’re getting the best value for your money without undermining your core needs.
How much life insurance you need largely depends on how much life-insurance money you’d like your dependents or other loved ones to receive in the event of your death. If you have children who depend upon your income, for example, you may want to purchase a life insurance policy that will help to replace your income after you’re gone. If you don’t have dependents, you may simply want to purchase a policy that can help pay for the cost of your final expenses and outstanding debts.
This is often the longest process because of the different kinds of life insurance policies available. They include term life insurance, whole life insurance, and guaranteed life insurance for seniors.
It’s also important to research any life insurance policy “riders” that may be available for your policy. Riders cover additional situations, such as waiving premium payments due to disability, guaranteeing the right to buy additional insurance despite any changes in health, and accelerating of part of the death benefit payout in the event of a terminal illness.
It’s important to understand not only what kind of coverage you need but also which policy gives you the most value for your money. If you are buying a term life policy, you may want to consider whether you are able to convert this policy into a whole life policy without a health exam or re-applying. If you are buying a whole life insurance policy, you may want to consider whether your policy builds cash value and, if so, what the interest rate is for borrowing against the policy.
Before you sign on the dotted line, make sure to read the fine print. This includes the various clauses attached to the policy contract that define how the policy works.