Life Insurance – How to Choose
When looking at life insurance options, the choices available can seem bewildering and hard to understand. Most people have a problem determining where they should be starting. When you start looking at life insurance, you need to start by asking yourself a deceptively easy question: Do you need to have it?
Providing a detailed answer to this question will help you determine the type of insurance that you should get, if you are going to get any. The second thing you’ll need to understand is, how does senior life insurance work. If you determine that you are going to get it, the next step will be to learn about the different types available. This will help ensure that you are buying the right policy for your needs.
Do You Actually Need Life Insurance?
Your needs will vary from other people depending on your personal circumstances and the people who depend on you. If you do not have anyone dependent on your, you may not need to have life insurance. Additionally, if you do not provide a significant portion of your family’s income, you may not need to get life insurance.
However, if your salary is vital to supporting your family and paying recurring bills, you should consider life insurance. This is important because the insurance will ensure that the financial needs of your family are covered in the event of your death.
How Much Life Insurance Do You Need?
There is no rule of thumb when it comes to the amount of insurance you need because this depends on personal factors. The factors that you need to consider include your other sources of income, your debts, the dependents you have and your lifestyles. While there is no rule of thumb, there is a general guideline that you may find useful.
Consider getting a policy that is worth 5 to 10 times your annual salary in the event of your death. When looking beyond this guideline, it’s recommended that you speak with a financial planning professional. They will be able to better determine the level of coverage that you need.
The Types Of Life Insurance Policies
There are many different types of policies out there. This will include whole, term, variable and universal life insurance. It is important that you understand what each has to offer you.
‘Whole life’ will be a death benefit as well as a cash value insurance. The problem with this insurance is that it will cost more than the other types of insurance. With traditional whole life policies, your premium will remain the same until you have paid off the policy. The policy will be in effect up to your death, even once you have paid all of the premiums.
The reason why this insurance is so expensive it the large commissions and fees which limit the cash value of the policy in the early years. These fees are usually built into a rather complex insurance investment formula which leaves most people unaware of how much of their premium is going into their agent’s pocket.
‘Variable life’ is a form of permanent life insurance and builds up a cash reserve that can be invested in the options provided by the insurance company. The value of the cash reserve will vary depending on the success of the investments that are made.
When looking at universal life insurance, it is important to note that you can vary the amount of your premium. These policies will allow you to use part of the accumulated earnings from the policy to pay part of the premium costs. With these policies, you can also vary the amount of the death benefit. As you are getting a lot of flexibility with these policies, you are going to have to pay a higher administration fee.
There are some experts who state that if you are under 40 and do not have any family history of life-threatening illness, you should look at term life. This type of insurance will offer a death benefit, but does not include any cash value.
The Costs Of Life Insurance
When looking for the least expensive coverage, you should look at the group coverage offered by your employer. These policies will generally be term policies and will only offer you cover for as long as you are working for that particular employer. Upon termination, you could convert some of these policies.
When looking at the cost of other kinds of life insurance, you will note that the costs vary greatly. The costs will be affected by the type of policy you choose, how much you buy, the commission paid to the agent and the underwriter’s practices. The underlying costs of this insurance are based on actuarial tables that determine your potential life expectancy. High-risk people like those who have a dangerous hobby, are overweight or smoke will have to pay a lot higher premiums.
There are also generally large hidden costs in these policies. These hidden costs will include large commissions and fees. The problem is that you will only find out about these costs after you have bought the policy.
There are many different types of life insurance and a lot of companies that offer this.
It is recommended that you use a fee-only insurance agency, such as Senior Services, who will research the different policies for you for a fixed fee.
Your agent should not be affiliated with any one insurance company and should not receive a commission for any policy.