Despite how important life insurance is, many people view it with skepticism. After all, you are paying for something intangible. What’s more, the complexity of life insurance may also overwhelm you. However, the fact remains that if you want to ensure your loved ones are financially protected if something unfortunate were to happen to you, you should buy life insurance.
Here are some things you need to know about life insurance.
Life Insurance Is Usually Not Expensive
Many people mistakenly assume that life insurance is extremely expensive. The thing is, basic life insurance policies are usually quite inexpensive, especially if you don’t have any health complications. Also, buying a policy when you are still young will help you get a lower premium.
There Are Two Main Types Of Life Insurance
The two main types of life insurance policies are term insurance and permanent insurance. Term insurance offers you coverage for a specific period of time. It doesn’t build cash value, and, hence, is comparatively inexpensive. Permanent life insurance policies, however, offer coverage for the remainder of your life. These policies also build cash value, making them more expensive.
Life Insurance Is Meant for Protection, And Not To Serve As An Investment
While certain types of life insurance policies can also serve as an investment tool, you should know that the primary purpose of life insurance is to serve as a risk management tool.
Deciding How Much Coverage You Need Is Important
To ensure you are adequately covered, make sure to opt for the right coverage amount. You can decide the coverage amount by taking your current debts, the lifestyle and financial needs of dependents, and your current income into account. Alternatively, you can also use a life insurance coverage calculator.
Know Your Options Before Canceling Your Policy
If you already have a life insurance policy and are unhappy with the coverage you receive or premium you pay, you may have considered buying a new policy. However, ensure that you only cancel your current policy after you’ve bought a new policy. At the very least, if you’ve developed some health complications due to which you can’t qualify for a new life insurance policy, your current policy’s coverage will continue.
