Life Insurance Basics

While most people agree that life insurance is a necessary purchase, selecting a policy is something that they’ll “get around to buying.” More often than not, other shopping decisions and expenses take precedent.

Although purchasing life insurance may be on the back burner, you are encouraged to begin the process of selecting a policy that offers adequate and affordable coverage, based on your current situation. Here are some helpful tips.

• Determine whether you and/or your spouse have coverage available through your employer. Companies often purchase basic policies for the employees and, in some cases, will allow you to purchase additional coverage on yourself and your spouse.
• Ask your parents if they have a policy on you. Sometimes parents take out a small policy during your childhood and fail to transfer it over once you’ve entered into adulthood.
• If on a budget, stick with term insurance. Term insurance is the most basic and cost-effective plan available. As your income grows, talk to an expert regarding the different types of life insurance vehicles.
• Be leery of too many bells and whistles. There will always be extra riders you can purchase, but don’t get caught up in pizzazz and overspend. Understand the various riders, and make your decision based on current health risks, age, income protection, and affordability.
• Verify a carrier’s rating. Not all carriers are financially positioned the same. Research the company’s claims process, beliefs, number of years in business, and customer satisfaction.
• Insure the primary breadwinner. If you are not in the position to take out policies on both you and your spouse, then start with the main income provider.

Understand your goals and priorities, and be aware of your income replacement needs. Take your time in comparing policies, just so long as you keep the process a priority!