- Not everyone needs life insurance. It’s not just about leaving behind an inheritance for your loved ones (if that’s your goal, invest in an IRA or 401K instead!). Rather, life insurance is all about your dependents. If you have children, a disabled sibling, or an aging parent, and don’t have a financial plan secure enough to provide them financial support in the event of your death, a life insurance policy is a valuable investment into securing their future.
- There’s no perfect metric to figure out how much to buy. The industry rule of thumb is to take your annual income and multiply it by 10, but a more accurate way to measure would be to figure out how much your dependents will need to maintain their standard of living, as well as plan for any upcoming major future expenses or debts (i.e. college).
- Your health at the time you purchase determines your premium for your entire term, so buying early could save you in the long run. Life insurance applications evaluate your physical health, lifestyle, and medical history, as well as mandate a medical exam. Remember: for insurance companies, younger means healthier. The later in life you start the policy, the more expensive the annual premium will be.
- Stay-at-home spouses should consider life insurance too. According to a study conducted by Salary.com, a stay-at-home parent’s workload amounts to an annual market value of $118,905 if those services were hired out!
If you have dependents that rely on your income to stay afloat, life insurance is likely an unavoidable part of your financial future. Not all life insurance policies are created equal, however. If you place of employment offers a policy, do your research: premiums may seem lower but many employer-sponsored plans carry a low death benefit, and coverage can expire should you change jobs! When it comes to a life insurance provide, shop around and get quotes from several providers. Ultimately, look for ones that have flexible terms, extensive coverage, and from providers with reputations of strong financial stability.
To see Reviews.com’s full research and findings, along with the providers they recommend, take a look at their study here: http://www.reviews.com/life-insurance/