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Affordable Life Insurance Tips and Tricks

Decide How Much Coverage You Need

Before you can start shopping for life insurance, you must first determine how much coverage you need. The amount of coverage you need will obviously affect the price you pay, so it’s important to fix this section.

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Every situation is different, but financial experts usually recommend bringing in between 5 and 10 times your annual salary.

That means someone earning $50,000 per year would need a life insurance policy with a death benefit of between $250,000 and $500,000.

That may seem like a lot of money, but that kind of coverage can be very affordable, especially if you are young and healthy.

Buy Your Policy When You’re Young

Life insurance is generally much cheaper for young people, so buying your policy when you are young makes a lot of sense. If you’ve determined that you need life insurance coverage, buying it while you’re young and healthy can get you a much lower rate.

Term life insurance can be very affordable for young people. In contrast to whole life insurance which has an investment element, term life only provides a death benefit. That simplicity translates to lower monthly premiums, so young people may be able to afford more coverage.

Consider Short Term

Term life insurance is available for various terms from 10 to 30 years. Choosing a shorter term can save you money and allow you to pay more coverage.

It’s a good idea to look at your anticipated life insurance needs and choose a term that provides the coverage you’re looking for while balancing how much you can afford.

If you have young children, a 20-year term can provide coverage while they are in school and throughout their college years. If you have 20 years left on your mortgage, your term life policy can cover your family until the house is paid off. When your existing term expires, you can reevaluate your need for life insurance and act accordingly.

Have a look

Each life insurance company uses a different set of criteria to evaluate applicants and set rates, so it pays to shop around. Sometimes an insurance broker can help you find the affordable coverage you need, but it’s still a good idea to shop around on your own.

It is important to look at the financial health of each insurance company when shopping for coverage.

You want to make sure that the company will stand behind its profits if and when the time comes. There are a number of rating agency assessing the financial health of the company that offers life insurance, and the insurance commission in your state can also help.

Looking for Alternatives for a Lifetime

Some people prefer whole life, which provides an investment element, over term life insurance. The problem is that a lifetime can be very expensive, especially when compared to term life insurance policies with the same death benefit.

If you want lifetime benefits at no extra cost, a universal life or index universal life policy might be a good choice.

Universal life uses overpayment of premiums to build cash value. The cash value is credited every month. The amount of interest credited to the policy is determined by the insurance company and spelled out in terms and conditions.

The universal life insurance index ties investment returns to popular benchmarks, such as the Standard and Poor’s 500.

Buy Life Insurance the Smart Way

There is no one right life insurance for everyone, and it is important to assess your own needs before you shop.
It is also important to check and re-evaluate your life insurance coverage from time to time.

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