An Introduction To Life Insurance - Make Your Policy Work For You
If you're new to life insurance, the process of shopping around for a premium may seem overwhelming at face value
. After all, you're making a life altering decision. How do you know how much coverage you need? How can you find a policy that will fit within your monthly budget?To make the process of buying life insurance easy to understand, start with these helpful tips:
1.Understand the purpose of life insurance. While the majority of people will need life insurance within their lifespan, many people enter into the process blindly. However, when you begin to understand that a life insurance policy will help to pay for a college education, mortgage, retirement, and even charitable donations, it makes it even more beneficial to plan for the future.
2.Decide what type of coverage you need. The monetary amount that your family will receive in the event of your death is what is known as a death benefit. To determine how much coverage you need in a policy, multiply your annual salary by 8. While there are more detailed methods that can be used to tally up monthly expenses per household, using this simple formula will give you a better idea of the right amount of coverage for your family.
3.Choose a term life policy. According to MSNBC, the best option for most Americans from ages 20 to 50 is a term life policy. For people over the age of 60 with significant assets, cash-value life insurance may provide more benefits, but for the majority of families out there, term insurance is an excellent starting point.
4.Research in advance. Before making a final decision on a life insurance policy, do your homework by requesting quotes from several providers. In addition to that, read as much information as you can about specific life insurance policies. The more informed that you are about life insurance, the more confident that you will be in your decision.
5.Think twice about investing. The purpose of life insurance is to provide protection. It doesn't have to serve as an investment - that's what your retirement fund is for. If you are interested in a term insurance, it will offer protection in the case of death only, without an additional option for savings. However, universal life and whole life policies will include a savings component and will cost much more as a result. To keep costs low, start with term life insurance and invest your savings elsewhere.
Last but not least, if you want to make your life insurance policy work for you, take care of your health. Although it may seem like a no-brainer, staying in shape will greatly improve your risk class.
Taking simple measures like losing weight, reducing your cholesterol, and quitting smoking will help you to become eligible for an even cheaper life insurance premium. Many people are surprised to find that making changes to improve their health can help them to save tens of thousands of dollars over the course of a term life policy!
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