Shopping for life insurance can be a daunting task. Terms like "premiums", "term life", "dividend" and "beneficiary" can sound confusing and unrelatable. To make things worse, life insurance makes us think about the possibility of dying unexpectedly, which is something nobody wants to think of.
1. Buy when you're young!
The older you are, you're more prone to develop health issues, which may raise the amount you pay for life insurance or make you uninsurable altogether. The best time to buy life insurance is when you're young - you're more likely to get insured for a longer-term and pay less for a good policy that provides enough coverage. By buying term life insurance at a young age, you can secure a policy for a small monthly fee that you can pay comfortably as you get older and your income increases.
2. Shop around
Buying life insurance is a long-term investment, so you want to make sure you buy insurance from a reliable company that invests your money properly - that way, you know when the time comes, they'll have the money to pay your policy to your beneficiaries. It's also important that you find a solid life insurance company that will be around for a while - do your homework and research the company itself so your investment is secure.
You should not only research the company but the policy you're buying. The most popular options are term life and permanent life - the main differences are that term life is more affordable and permanent life provides some cash value options that term life doesn't. Take your time and don't feel pressured to sign up for a life insurance policy before you've looked at your options.
3. Calculate how much will your family need
Remember, life insurance is meant to help take care of your family after you pass away. Make sure you're leaving enough behind in your life insurance policy for your family to take care of any outstanding debts and their living expenses while they figure things out without you. There are lots of online calculators you can use to see how much your policy should be, but a simple rule of thumb is to buy a policy that is eight to ten times your current annual income.
4. Be mindful of your beneficiaries
The people you leave as beneficiaries will be responsible for using all the money you leave in your life insurance policy. If you list a minor as your main beneficiary, they will not receive your insurance money until they are 18 - and once they receive it, there are no rules on how they have to use it. If you want to make sure your life insurance money really helps your family and lasts long enough, name a responsible, healthy adult as your main beneficiary.
5. Make sure you compare quotes for the same product
Remember, not all life insurance policies are created equal, so becoming familiar with at least the types of life insurance policies available out there is helpful. That way, you can make sure you're getting quotes from different places, but on the same kind of life insurance product, which will allow you to compare which policy is truly best for you.
At the end of the day, life insurance is about protection - making sure you can take care of your loved ones when you're gone, and they can thrive in your absence. Never get an insurance policy just because you feel pressured - do your homework, take your time, and do what's best for your particular family situation.