How much is your life worth?
Anyone who has dependents should consider this question and the need to safeguard your loved ones financially against an uncertain future. Anyone purchasing a life policy will have to consider this question. In terms of hard cash the answer is pretty easy to assess.
Assessing the Right Amount of Life Insurence Coverage
How can you determine the right insurence coverage for your family? Start by determining what your objectives are for purchasing a life policy. If you are just beginning a family, or if you've got young kids, you may want to consider the kind of financial needs they would experience if you were not there to provide for them. If you are in the more mature stage of your life, other factors may drive you to need life insurence coverage. Some factors you might want to consider are:
- Mortgage
- Loans/Debts
- College funds for your children
- Financial support to sustain your family multiplied by the number of years you think they might need
- this kind of financial support after your demise
- Estate taxes
- Funeral expenses
- Financial support for an aged surviving spouse
- Protect your spouse's retirement funds
Considering such factors will help you determine the amount of life coverage your family would need. Make use of online life insurence calculators which can help you assess an accurate coverage incorporating inflation and interest rates into your calculations.
The rule of thumb for assessing life coverage is usually calculated by multiplying your annual income by five to ten times, depending on your family's needs.
Assessing the Right Amount of Premiums
Now consider your earnings. After deducting all your expenses consider the amount of premium you would be comfortable paying.
Such an exercise will quickly help you determine which type of life insurence policy you can afford at this stage in your life.
Choosing the Right Policy
If you can afford to purchase a whole life policy, and anticipate needing life coverage your entire life, there are many types of permanent life insurence policies to choose from. Some of them offer you the opportunity for investments in such a way that the interest accrued pays for future premium payments. Universal or Variable Universal Life Policies can help you do this. Generally, premiums for a standard whole life policy remain stable throughout your life and accrue cash value over the years. You can withdraw cash from this type of policy, as needs arise.
If financial constraints prevent you from purchasing whole life policies, then look for options within term life policies which allow you to convert to a whole life policy at a later stage in your life and career. Such options will help you convert to a whole life policy without having to prove insurability.
However, most people don't anticipate the need for life coverage after the age of sixty when retirement benefits may begin to kick in. The more popular choice is term life policies as they offer cheap premiums with high death benefits.
AccuQuote is a leader in providing term life quotes to people across the United States. In 1986 it began operating with a single goal: to make the process of buying term life insurence as easy as possible for its customers. Their experienced professionals consistently deliver the most affordable term life insurence rates by comparing thousands of life insurence policies from dozens of top-rated carriers.
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