A question that comes up very often and is usually kept unanswered by many people is this: Do I need life insurance? Answering the questions can be a bit daunting at first, because there are so many different policies on offer today. No matter what type of insurance you are eventually consider, it will be wise to do some research before you leap into a contract without having enough information to make a sensible decision.
If you do no have dependents then it is not really necessary for you to take out life cover at this stage. If you are not contributing a large portion of income to take care of the monthly bills then you also don’t really need to be looking at this option at present. Where it is a serious factor is when you are the sole provider in supporting a family and having to pay for your mortgage, contributing to your children’s college funds and taking care of recurring bills. These financial obligations will have to be met even if you are not alive.
It is of course your choice how much you want to spend on a policy, but the deciding factor is usually dependent on your lifestyle, debts, number of dependents you have and whether you have any other source of income. As a rule of thumb: Many people are happy with a cover of between five and ten times the amount of their annual salary.
Once you have analyzed your own needs, you can proceed to consider what type of policy to take out:
There are term policies and there are full life insurance policies and most experts are still debating which is really the most suitable for the majority of individuals. One thing they do agree on, however, is that a term policy will be fine for your needs if you have no children and do not have a life threatening medical condition. You get a benefit paid out to your chosen beneficiary but remember that this one does not have a cash value attached to it if you decide to terminate the policy for whatever reason.
The more expensive policies are those which offer a death benefit and are also linked to a cash value. This kind of policy is known as “whole life insurance” and is the more traditional type of policy. The premiums will stay the same and will not fluctuate during the life-span of your policy and will stay in effect until your death.
Of course, provided you have a job, then most likely you will have a life insurance policy from your employer’s “group life” plan. They are term policies which mean you have life cover for as long as you are an employee of that firm. It is possible, however, to convert your policy to another group life plan, depending on how your firm is structured.
It is always good to talk with an expert before making a difficult decision. An insurance expert would know how to guide you to the right type of life insurance policy for your particular requirements. It is peace of mind that you really want, knowing that your family will be taken care of in case of your death.
Looking for top tips and hints on how to choose life insurance cover that suits your needs and budget? Get the inside scoop on important life insurance considerations in our online insurance guide!