Few people want to face their own mortality when they are in the prime of their lives. However, thinking ahead and making advanced plans can save family members considerable heartache.
Life insurance policies can help men and women make things easier for their spouses, children or siblings. Life insurance provides financial security in the event of a person's death. Such insurance is a key element of estate planning and something all adults must consider.
It's smart to purchase life insurance at a relatively young age because the cost can be lower. Some people put off the process because it can be overwhelming. But Forbes magazine advises that once a person does a little research and learns the terminology associated with life insurance, choosing a policy is not so difficult.
· Determine the amount of insurance you will need. Make a list of expected expenses after you pass away. These may include any residual mortgage payments, school tuitions, automotive payments, or funeral expenses. In addition, approximate how much your family will need to live comfortably in your absence. Online calculators can help determine life insurance coverage needs. The New York Life Insurance Company says a quick way to figure out how much coverage you may need is to take your annual salary and multiply it by eight.
· Decide on the type of policy. Life insurance policies come in two broad categories: term and whole life. Term life insurance may be less expensive upfront, as it only provides coverage for a set number of years. It will only pay out if the policy holder dies during this "term." Whole life insurance, also called "cash value," usually costs more, but accumulates a cash value that can be borrowed against, and it pays out whenever a person passes away.
· Choose among reputable companies. You want to ensure the life insurance company you pick will be around for years and has a strong reputation, so give ample consideration to each company you explore before making a final decision.
· Know the waiting period. Many policies establish a period of time on policies wherein there is very little cash-out value and the company will not pay out the full death benefit. This may be a year or two after opening the policy. Discuss this information with the insurance agent.
Life insurance can be a smart financial choice, helping men and women rest easy that their families will want for nothing in the wake of their deaths.