Figuring out life insurance and what exactly you need to purchase can seem confusing, but it’s important to understand the details before you commit.
Here are the things you’ll need to know as you shop for life insurance online.
Who Needs Life Insurance?
Whether or not you need life insurance boils down to a simple question, though it’s not always simple to determine the answer.
Will someone suffer financially from your death? If so, you should have some life insurance to prevent that. One situation that comes to mind for many people is becoming a parent.
When you have children, buying life insurance can help replace your income in the event of your death, allowing your family to continue living as they have all along.
Even if your spouse is employed, that might not provide enough income if yours is lost.
Another time you might need life insurance is if paying for your funeral expenses and cemetery plot would be a financial burden to your survivors.
You can easily find life insurance online, so be sure to have at least a small policy to cover these expenses.
Types of Life Insurance
When you’re shopping for life insurance online, you’ll see that there are multiple types of insurance to choose from. Each has advantages and disadvantages, so knowing how they work can help you decide what’s best for you and your situation.
Two common types of life insurance that people talk about are term and whole.
Term life insurance is very straightforward. You decide what amount of insurance you need and for how long you would like to be insured.
If you buy a 20-year term policy, the insurance company will pay the amount of your policy to your survivors if you die within that 20-year period. If you live past 20 years, no benefits will be paid.
If you purchase life insurance online when you have young children, you may not need to keep your policy in place once they’re grown and you’re not financially responsible for them.
This makes term life insurance a great choice. It’s also typically more affordable than other types.
Whole life insurance is typically something that you commit to once, then pay for until your death. Your monthly or annual premiums will stay the same over your entire life.
If you live a long life and prefer to be insured no matter what age you die, this can end up costing less money over time than purchasing multiple term life policies, as term life insurance becomes more expensive as you get older.
Some whole life policies also pay dividends, so be sure to get details from your online insurance broker about exactly what your policy offers.
Amount of Life Insurance
When you’re purchasing life insurance online, a common recommendation is to buy a policy in an amount that is approximately 10-15 times your annual salary.
You can do more in-depth calculations, though, to determine a reasonable amount for your specific situation. When considering life insurance amounts, think about any debt you have.
Your life insurance should cover any debt, including your home mortgage. If you have children, do you need your insurance to pay for their college?
You’ll also want to consider the cost of childcare for as long as your surviving spouse would require it.
Most online insurance brokers will offer you tools to help you determine the amount of life insurance you need, so take advantage of their expertise and help in this area.
With the relative ease of purchasing life insurance online, there’s no reason not to be fully insured if you’re in a stage of life that warrants it.
Work with your online insurance broker to determine your needs, then rest easy knowing that your loved ones are protected.