There are a multitude of different insurance plans that you may purchase throughout your life. Health insurance, homeowner’s insurance, and auto insurance seem to be simple facts of life. However, purchasing a life insurance plan often doesn’t seem as straightforward as these other insurance plans.
When it comes to life insurance you have two basic options. Whole life insurance and term life insurance. Term insurance is often the most affordable option since the plan is purchased only for a set number of years. The term is usually between 10 and 30 years. The plan expires at the end of the term unless you renew. Some plans require a physical exam before acceptance, but guaranteed acceptance term life insurance plans exist. Here are some questions you should think about when looking to purchase term life insurance.
What Term Is Best?
Ideally, your term life insurance policy should cover the years of your life that your family and dependents rely upon you for financial support. Consider when your spouse plans to retire and how long your children might need financial support to determine if a 10, 20, or 30 year term is optimal. While you can renew the plan when it expires, expect premiums to go up since you will be older at the time of renewal and therefore more likely to have the plan payout.
How Much Coverage Is Needed?
More than just covering the cost of funeral expenses, life insurance is meant to replace lost income for your family in the case of your death. It should also help them pay off any major debts, such as a mortgage, to give them time to adapt during the difficult time after your passing. There are various calculators available online to help you determine how much coverage is appropriate for your situation.
Purchasing life insurance is an important decision that doesn’t need to be overwhelming. A little research into insurance plans will allow you to protect your family should the worst happen to you.
