How to Buy Life Insurance
All adults, especially those with dependents or children, need to have some form of life insurance. The life insurance offered in company benefit packages is often a token gesture, but almost never enough to provide for your family satisfactorily after your death. You need to plan ahead, and you need to know how to buy life insurance.
Determine Your Need For Insurance
Life insurance in Canada, the United States and most developed nations comes with essentially the same terms and is offered in similar formats. There is term life insurance, which is essentially rented for a set amount of time, or there is whole life insurance which is a policy purchased over time which may be considered a form of investment.
To buy life insurance, you must determine what sort of policy you need. Is it likely your dependents will be off and successful on their own in a matter of twenty years or less? Or do you like the security of knowing you have life insurance right up to the end? Term life insurance is less expensive than whole life and it is most often purchased to last through your child rearing years or while you are the primary breadwinner. A smaller (less expensive) policy may be purchased after that if necessary. Whole life is more expensive, but you are able to show a purchased policy at the end of the payments which will be with you for good.
Determine the Amount of Insurance
The amount of your life insurance should be enough to:
- Fully cover your funeral, burial and maintenance expenses
- Settle all outstanding debts including credit cards, loans, medical payments, and liens.
- Pay off your home is your dependents will still be living there.
- Provide adequate living expenses for your spouse and dependents for an appropriate amount of time.
- Possibly pay for your children’s higher education.
There is a difference between buying life insurance with children and without. If your spouse works and you have no children, your policy need only cover what would be required to clear your accounts after your death and possibly pay off half or all of your major expenses to keep your spouse from going under from trying to keep up with all the bills.
If you have children, however, your spouse may not be working out of the home. You must plan for what your spouse will do in the event of your death. Will you need to pay for childcare if she is working? What sort of job is she qualified for? It is always best to leave as much as possible to cover your children’s living expenses until they are legal adults to make the strain of your absence bearable.
Buy the Life Insurance Policy
Discuss your options and selections with a life insurance broker. Compare plans from competing companies either through representatives or online. When you’ve found the plan that is right for you and your family, purchase it and then never lag on payments. Life insurance isn’t about you – it’s about keeping your family safe and comfortable when you are gone.
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Posted in Business & Finance, Insurance
