Let’s face it: when it comes to money, many (if not most) of us are pretty bad with handling it. Why else would the economy be in shambles? (Ok, not entirely our fault). However, there are a few pivotal steps that need be taken in order to ensure that you are getting the best bang for your buck. And this extends into the arena of life insurance.
Take a moment to identify you and your family’s financial needs and concerns, and consider the importance of life insurance. Below is a step-by-step guide on how to most effectively go about purchasing life insurance for those of us who are not so money savvy!
Recognize That It Is Part of Your Financial Plan.
Sometimes, we all too easily dismiss life insurance because it is not a financial requirement like paying taxes. However, life insurance is a luxury that really should not be overlooked for its merits and value. Subsequently, it ought to be considered part of your own family’s financial strategy. Recognizing the essential nature of life insurance is the first step in ultimately choosing the right plan for you.
Calculate an Amount of Coverage Needed.
In order to purchase the most appropriate form of life insurance to meet your family’s needs, you need to calculate the amount of coverage that is necessary (assuming that the life insurance might actually have to be utilized). Oftentimes, insurance agents recommend coverage that account for 15 times your annual income. Your coverage might not need to be quite that high; however, it should be substantive.
Decide What Form to Buy.
In layman’s terms, it usually boils down to choosing between two different types of coverage: term or permanent. Term life insurance is the most popular. It provides coverage for a set number of years and usually has a fixed premium that is paid on a monthly time frame, for example. Permanent life insurance is more complicated and usually involves a cash-accumulation component. Permanent life insurance is normally in place for life and is more expensive than term coverage. In most cases, you should be purchasing term life insurance.
Determine Your Time Frame.
After having determined what type of coverage to buy, it is necessary to determine for how long that coverage should be in effect. If you have young children, for example, you might want to invest in a 20 or 30-year term so as to ensure that they are financially safe until they are able to provide for themselves.
Consider From Whom You Are Buying.
Like any other financial instrument, it is critical that you do your homework beforehand. Take some time to compare sites and shop around for the right agent. There are some really great tools available on LifeInsure.com that provide financial strength ratings of insurance companies, such as A.M. Best, Standard and Poors, Moody’s or Fitch. Do your research, and you’ll undoubtedly be volumes ahead of the game when it comes time to determine which company and which agent will best suit your needs and address your concerns.
Buying life insurance does not have to be rocket science. Whether you are a civil attorney that deals with car accidents in Edmonton or a physical therapist that handles sports injuries in East Rochester, purchasing life insurance is something even the biggest “idiot” can—and should—consider.
Annie Babbitt is a freelance writer whose interests include current events, political science and philosophy. Annie loves helping promote change and being an advocate for those in need. She especially loves writing about legal topics, and draws inspiration for her writing from companies such as Braithwaite & Boyle.