Try to imagine you’re dead. You can think up various scenarios like dying after saving a couple of kids from drowning or you died after going skydiving. Whatever the reason for your death, heroic or otherwise, you’re gone. Now that you’re dead, think about simple questions like: Are there bills that need to be paid? Is somebody going to suffer financially after your death? Is there somebody you want to leave a legacy? If you’ve answered yes to any of these questions then you need a life insurance policy. It is the most inexpensive way to pay for the above mentioned expenditures. How? Life insurance dollars can go to your beneficiaries at a low cost to you. For example, you pay $500 per year for $100,000 life insurance. You buy it 25 years before you buy. $500 x 25 years is only $12,500 but the policy pays your beneficiaries $100,000. This means you only spent 12.5 cents for every dollar of benefit money. Here are some things you need to know when looking for life insurance.
1. Buy Only if You Need It
Remember those questions above? Truth is all of us need life insurance to make our exit less strenuous on the ones we leave behind. Life insurance can make your death easier for family that need to arrange your funeral and organize your estate. With the right kind of policy you can you can build cash for your loved ones at a low cost to you.
2. Do You Have Enough?
How do you know that the insurance you purchased is enough to cover your bills and leave some money behind to loved ones? The best way to know if you have enough is to take stock of your financial responsibilities like debt and liabilities. You can gradually purchase life insurance as you go along so that you can cover any increase in your financial liabilities. Talk with a qualified life insurance broker to assess your risks so that you have enough to cover everything with some to leave behind to your loved ones.
3. End-of-Life Issues
Think of the end-of-life issues that need to be tackled. For example, do you have a will? If you are an entrepreneur, do you have succession plan and a strong leadership structure? Thinking about possible scenarios to what will happen when you’re gone will sharpen your focus to let you think of things that need to be done and give you a clear strategy on how to accomplish them.
4. Type of Life Insurance
Generally speaking, there are 2 types of life insurance: permanent and term. Term insurance is more affordable and promises to pay the beneficiary the premium when the insured dies within a specified term; 10, 20 or 30 years for example.
Permanent is for the “whole life”. It is referred to as “cash value” and is designed to help the policy exist in perpetuity. They are like bonds or CDs but backed by the insurance company. They tend to be more complex and expensive.
5. Where To Buy
You need to buy life insurance through a licensed broker that you trust. An insurance agent is the first step to buying an insurance policy. They can advise you on what type of insurance you need or the amount of coverage. You need to be able to trust the agent because he or she could represent different companies.
To get a feel of the process, ask questions and ask for a quote for a specific premium. You can also do research on the internet and ask companies for online quotes.
6. What Are Your Specific Needs?
Entrepreneurs need a little bit more than the salaried man. This is because their death could also affect their business or company. This is why they need life insurance policies that can also cover specific needs of their business. For example, there are policies that protect leaders through the Key Man Insurance. This is for the family of the individual, the company so that they can find somebody to replace him and it also gives the opportunity to the company to buy back any shares from the dependents of the deceased.
7. Options When Canceling
Know your options when canceling life insurance, even if you’re still shopping. If you have insurance that you no longer need or is not working for you, you need to know the options for canceling so that you don’t leave money or coverage on the table.