How to Select Life Insurance

Buying a life insurance policy means different things to different persons. When it’s time for you to buy life insurance, the first thing you need to do is to set your goals. Why do you need life insurance coverage’ Do you just want to make it easier for your executor to bury you’ Do you want to leave your family an income’ Many people use whole life policies as a tool for planning for big expenses, such as college, retirement, or just retiring debt in case of death or disability. Think about what you need your coverage to accomplish before you decide which kind of policy is right for you.

Secondly, before you ever buy a policy, take a careful look at how much you can afford to spend. It doesn’t do any good to pay premiums for years only to go into default when economic times get tough. Be absolutely sure you can afford to make the payments on the policy you buy. Know exactly how much you can budget each month on life insurance premiums. Term life policies are usually a bit less expensive than whole life policies. Some people choose whole life as a useful investment tool, and still others opt for careful combination of term life and whole life to meet their unique financial goals. Whichever policy or policies you decide are best for you, always be sure you can make the scheduled payments. Your insurance agent can help you find options to schedule payments in ways that keep your budget in the black.

Third, don’t forget to calculate your earning power, especially if you need life insurance for income replacement. Most of us assume a three percent annual raise when estimating earning power, and most of us retire when we are 65 years old. However, select the scenario that best suits you and your lifestyle when calculating your future earning power. You want to make sure you are realistic in this calculation so you can accurately select the life insurance product that best suits your needs.

Finally, consider what stage you are in life. It may be that all you need is a death benefit. But if you have people dependent on you for their income, you may need to leave them a great deal more. If you have dependents, make sure your income is replaced in the event of your death or incapacity. And if you need more money for your retirement than your social security checks and pension will provide, consider whole life as an investment tool.

Sit down and make a list of your goals, your budget and your earning power. Think about where you are in life and what you want to accomplish. Once you have these ideas mapped out, then you can decide on what life insurance product is right for you.