03 March 2010

4 Useful Information to Help You when Choosing a Life Insurance

Here are four useful information to help you in choosing a life insurance: define first if you have the need for a life insurance; figure out the amount of insurance you need; distinguish the type of policy you need to purchase; and, find out how much it will cost you.

Every life insurance plan is designed to meet every individual's pressing need for protection. The key here is to choose the one that answers your needs. Before making any purchase of a life insurance plan, it is helpful that you fully understand the basic concepts of life insurance. Here are some useful information:

Define first if you have the need for a life insurance

Primarily, you need to identify if there is a need for one. If you believe you don't need a life insurance, then just don't buy. If your income is essential in your family budget, in paying for the bills, in sending your children to school, or in paying for a particular mortgage, then buying a life insurance is highly recommended. In the event of your death, your life insurance will cover for your existing financial obligations.

Figure out the amount of insurance you need

The amount of life insurance depends on several factors such as your income sources, your debts, the number of your dependents, and even your present lifestyle. Generally, the amount of insurance coverage should be about ten times your current annual salary.

Distinguish the type of policy you need to purchase

A life insurance have different types and they are as follows:

  • whole life - is offering a death benefit and a cash value altogether. Although, it is considered to be more expensive than a term life insurance.
  • term life - is the basic type of life insurance. The coverage of the insurance is for a specified period of time only. This is good for those who are still below 40 years old and who happen not to have illnesses that are life-threatening.
  • variable life - is a policy type that is capable of building up cash reserves which you can invest later on depending on the choices set before you by your insurance company.
  • universal life - the amount of your premium in a universal life insurance may vary. You have the option of using a portion of your accumulated earnings in paying a part of your premium.

Find out how much it will cost you

The cost of a life insurance would vary. A group life insurance from your employer is the least inexpensive. Your insurance coverage is limited to the term of your employment. The usual costs of other insurance plans would differ depending on the following: the company's commission to your agent, practices of the underwriters, etc. Smokers or overweight individuals are rated as high risks. In this case, they need to pay for higher premium costs.

It is best to remember that a life insurance is not only for those in their younger years. In fact, a life insurance for seniors is one aspect of financial planning that should not be neglected. Seniors basically have more financial responsibilities to face for an even longer period of time prompting the need for the purchase of an insurance.

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