UNDERSTAND WHY YOU NEED IT.
While most people need life insurance at some point in their lives, don't buy a policy just because you heard it was a good idea.
Even if you don't have any of these needs immediately, you still may want to consider purchasing a small "starter" policy, if you anticipate you will have them in the future. The reason: The younger you are, the less expensive life insurance will be.
DETERMINE THE AMOUNT OF COVERAGE YOU NEED.
The amount of money your family or heirs will receive after your death is called a death benefit. To determine the proper amount of life insurance, online calculators can be helpful. You can also get a ballpark figure using any number of formulas. The easiest way is to simply take your annual salary and multiply by 8.
As useful as calculators and rough estimates are, there are some things they don't do.
You can use any number of planning tools to get an idea of the amount of coverage you'll need for your policy. Use our online calculator, for example, or use a formula to figure out how much you need. An easy place to start is by multiplying your annual income by the number of years left before your retirement benefits kick in.
FIND THE RIGHT TYPE OF POLICY.
Once you figure out how much coverage you'll need, you can think about the best kind of policy to meet your needs.
You have two main options: term life, for a more affordable premium, or permanent life, for more comprehensive coverage that can add cash value. But you have a lot of options to explore.
LOOK AT THE QUALITY OF THE PROVIDER.
You want to make sure you choose a company you can rely on to be around for as long as you'll need your coverage, and one that invests premiums in a highly prudent manner in order to pay the claims of its policyholders.
A financial professional can help you factor in your financial considerations, your needs, and your family's needs.
Life insurance can be confusing, with terms like "premium," "dividend," "beneficiary," and many more.