Assessing the right type of life insurance is a challenge that many families face. Before making a final decision, several factors should be determined to guarantee the chosen insurance policy is the most beneficial. In addition to finding the right type of insurance, the insured individual needs to find a policy with affordable premiums.
A family that is deciding on how much life insurance to purchase should consider how much they spend annually on housing, clothing, and food. To estimate how much coverage is needed, it is recommended to purchase anywhere between six to ten times the amount of the entire family’s annual income. Deciding on how much coverage should also be determined by how much the family’s assets or investments are worth, the spouse’s part of the annual earnings, and any large expenses that may need to be covered.
There are two basic types of insurance to choose between term life and whole life insurance. Term life is generally the most affordable insurance; however, it only covers the insured for a certain period of time and has no cash value. For example, if the coverage term is for ten years, the only way for the beneficiary to collect any benefits is if the insured dies within that time frame. Whole life, or permanent insurance, is coverage that never ends as long as the premium is paid. It also accumulates a cash value that can be cashed in by the insured after an extended period.
Other types of insurance policies that may be available include disability insurance, long term care insurance, accidental death insurance, final expense insurance, no medical exam insurance, and several other types. Determining which type of coverage to purchase largely depends on each family’s personal and financial circumstances.
Many families consider consulting a knowledgeable and dependable agent to help them calculate their financial needs presently and in the future as well. Reviewing an insurance policy regularly or when a significant life change occurs is recommended to assure that the insured does not become over or under-protected.