People are mortal beings, and so, death is as certain as paying taxes! But, sometimes it comes unexpectedly or much earlier than any of us wants to believe. A death of a family member could result not only in emotional problems but also financial problems due to unpaid debts of the person, funeral expenses and the like. And to avoid leaving behind such problems for family to deal with, you should consider purchasing a good life insurance product.
Life insurance, from the name itself means insuring lives. It gives your beneficiaries ample time to recover financially after your death. Life insurance policies are often applied for by breadwinners in the family due to the fact that these people are concerned for the loved ones they'll leave behind. But even individuals who do not earn money or have a family to provide for should have some life insurance to help cover inevitable expenses.
Planning ahead - Before venturing in anything, you must always start by having a plan. If your health is in good condition, now is the best time to purchase life insurance, because if you have any serious medical conditions later, insurance becomes much more expensive or you may not even qualify in some cases.
Shop Wisely - There are two basic kinds of life insurance products to choose from; term life insurance and whole life insurance, also commonly known as cash value or permanent insurance. Generally, term life insurance is more affordable and provides financial support in a fixed amount. Term life insurance will generally be renewable for a specified number of years at a guaranteed rate.
Common terms are 1, 5, 10 or 20 years. On the other hand, whole life insurance is a flexible investment vehicle. If you are young, whole life insurance can be a great way to discipline yourself to put money away every month since you must pay the premiums. If, as expected, you live to retirement, you can cash the policy in, taking a lump sum or annuity payments from the policy!
Think wisely in choosing what type of life insurance to get and which will benefit you and your loved ones the most. If you change your mind, don't worry, there are companies that offer renewable term life insurance and convertible life insurance that will allow you to switch choices if needed.
Understanding Life Insurance Costs - Of course, the thing that will never be avoidable when talking about insurance is money. The cost of your insurance premiums will depend on certain concerns depending on what type of life insurance you'll apply for and your background; family background, age, health conditions, financial background, etc.
The other obvious cost factor will be the amount of coverage you purchase. Plan ahead and consider how much money your loved ones would need in the event you were no longer alive to work and earn money for housing, food, education, etc.
One rule of thumb is to purchase life insurance with a death benefit that is from 5 to 10 years your annual income. However, a thorough examination of your personal finances and situations is in order before you determine how much coverage will be needed. Also, avoid over-purchasing life insurance; you can always add another policy later as your financial situation changes.
Do Your Research - Before choosing where to apply for a life insurance, you should always compare life insurance quotes from competing companies. This will be beneficial for you in terms of budgeting and choosing the most convenient and at the same time most affordable life insurance quote for your case. There are a many web sites that will help you obtain and compare quotes whether you want a whole or term life insurance quote.
Getting Started - Once you choose the quote that best fits your needs, apply for life insurance with the company that you have chosen. Submit all necessary requirements and be honest in answering questionnaires so that everything will be okay.
Underwriting will examine the application and may come back with additional questions or adjustments to the terms. If you are rejected for some reason, first inquire as to what the specific reason(s) for the rejection were. Then, apply to another company; underwriting procedures and guide lines vary widely, so don't give up!
Once approved, always remember to pay premiums on a timely basis so that your life insurance policy does not lapse, or you will have to begin the process all over and will likely pay higher rates since you will be that much older the next time around.