Choosing the Right Life Insurance Product: A Primer

shutterstock_59964004Life insurance is one of the best ways to protect the financial security of your loved ones. But with so many options available, selecting the policy you need can be a little daunting. Here are the key things you should focus on:

How Much is Enough?

It’s important to be adequately insured to support your family. A ballpark figure is 8-10 times your current annual income, but there are a variety of factors to consider when coming up with your benefit amount. Life insurance should do more than just replace your annual salary. Other things to cover include funeral expenses, retirement, and any special needs (like tuition or healthcare) for a spouse or child. SelectQuote has an easy-to-use online worksheet to help you determine exactly what you need.

Only Buy What You Need

The primary purpose of term life insurance is to financially provide for your spouse and dependents if you can’t be there. But how long will your children be dependents? How long will your spouse require financial assistance? How close are you to retirement? These are solid questions you should ask yourself, because the longer the term of the policy, the more you’ll pay. If you just had a baby, a 30-year plan might be a good idea, but if your children are older and your spouse is closer to retirement, perhaps a 10-year policy is enough.

Stay Within Your Budget

Not having adequate coverage is a problem…but not being able to make your payments is a bigger one. If your premiums are too high, you’re more likely to allow the policy to lapse—and then you won’t have life insurance at all! Be prudent about what to include with your term life insurance plan to make sure you can comfortably afford it.

Buy Young If You Can

There’s just no way around this one: younger policyholders pay less than older ones for the same benefit amount. Annual costs for a 40-year-old versus a 50-year-old can easily double. So try to lock down your term life insurance policy as early as possible.

Comparison Shop

No one policy is right for every situation—and no single quote will fit every budget. Take a look at a variety of term life insurance products to compare and contrast what they offer, and consider the features that you do and don’t need before making a (potentially expensive) decision.

Reevaluate Periodically

Life throws us curve balls, from all directions. Maybe your spouse acquires a chronic health condition. Perhaps your salary and lifestyle have taken a considerable leap up. Or maybe you had another child late in life. Regardless of the circumstances, you should take a look at your policy periodically to make sure you aren’t underinsured, and possibly arrange for a new one.

Keep the above points in mind when you start the decision-making process, and you’ll find that determining the correct term life insurance policy is more straightforward than you realize. And if you have any questions, you can always talk to a SelectQuote customer representative at 1(800) 670-3213 for assistance.

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