(ThyBlackMan.com) There are multiple types of insurance, including auto, property, health, key person, and life insurance. With so many different types of policies available, it can be challenging to sort through your insurance options and determine what types of coverage you need.
Once you’ve determined what type of coverage you need, you’ll have more decisions to make. When choosing life insurance, your options include term life insurance. You’ll also need to choose a coverage amount. Choosing coverage can be complex, but using the tips outlined here will help you choose the right life insurance policy for your needs.
1. Evaluate your needs.
Life insurance is an insurance policy that pays death benefits when the policyholder dies. The policy can be nullified if the policyholder didn’t comply with the policy terms. For example, some policies don’t pay benefits if the policyholder dies while engaged in a high-risk activity, such as skydiving.
The purpose of life insurance varies. For some, their policy is a safeguard to cover the costs of a funeral and their debts. Others may acquire a policy to provide for their spouse or dependents who rely on their income. If you have a spouse or dependents, you should consider income replacement and your existing debts to determine how much coverage you require.
Your current needs may be mitigated by savings accounts, trust funds, or work policies. You may not need as much coverage if you have many assets that your dependents can use to cover their needs.
Those who question whether they need a more significant life insurance policy may also consider secondary benefits of a life insurance policy, such as viatical and life settlements. Policyholders can sell their policies and receive more than the face value of the policy. Although it won’t be as much as the policy’s death benefit if you need financial resources, you can opt to sell your policy and receive a lump sum of cash from the buyer. Viatical settlements are limited to people with chronic or terminal illnesses.
2. Review all your options.
You can receive a life insurance quote from a reputable life insurance company after using a life insurance comparison tool. Comparison tools prompt you to enter specific information about yourself, including your gender, age, height, and weight. Once it has that information, it prompts you to enter your zip code and confirm the state where you live. You’ll be asked if you currently have life insurance, how long you need life insurance coverage, and how long you need the coverage.
The tool also asks health questions, such as whether you smoke or engage in high-risk activities, such as bungee jumping, skydiving, rock climbing, or scuba diving. Once you enter information about your family’s health history, you provide your contact information and receive life insurance quotes from life insurance companies with policies suited to your needs.
Term life policies pay death benefits if the policyholder dies during a specific period. They expire, although policyholders can renew them.
3. Reevaluate your coverage when significant life events occur.
The amount of coverage you need today could change significantly within weeks or months. You may change careers and increase your income significantly, which means you’d need more life insurance coverage to compensate for income loss in the event of your death. You may be single and opt to get married or have a child, affecting your needs.
Some forms of life insurance policies enable policyholders to use their insurance as an investment and accrue funds through their policy. This may be an ideal option for you when you initiate your policy, but you may not feel you need a life insurance policy that doubles as an investment and savings plan if you start a new job with stock options.
No matter your status, circumstances can change that significantly affect your insurance needs. Reevaluate your needs regularly to ensure your policy is up to date.
There are multiple types of life insurance policies available, and picking the right insurance policy can be complex. Determining how much coverage you need and evaluating your policy options will ensure you find the best policy. You should also reevaluate your needs and update your coverage when required.
Staff Writer; Lee Parker
