2. Analyze your current finances.
Before determining the type and amount of life insurance you require, you must have a complete picture of your financial situation.
Think about the plans you have in place to support family members who rely on you financially. This would include any life insurance coverage obtained through employment, an emergency fund, and retirement funds.
You might discover that you’re not as ready as you thought to deal with the unexpected.
3. Determine how long you require coverage.
Life insurance is made to either endure forever (called whole life insurance) or for a specific amount of time (including whole life and universal life).
A term life insurance policy will offer protection for a predetermined amount of time, usually 10, 15, 20, or 30 years. Until you hit a certain financial milestone, such as paying off your home or sending your children to college, it may be an economical method to obtain coverage.
Because permanent life insurance offers lifetime protection, it costs more than term life insurance. Because it increases in value over time, it is also more expensive.
You can spend that money anyway you see fit, whether it be to pay for unexpected expenses, supplement retirement income, assist with long-term care costs, or even pay the policy’s premiums.
Consider term insurance if you only require coverage for a short time, such as during your children’s formative years or the duration of your mortgage. Consider permanent coverage, though, if you require life insurance for as long as you live (for things like funeral costs or a spouse’s income replacement).
