Most of us buy life insurance to make sure that our loved ones are protected in case of our death. Others of us use whole life policies to finance life’s passages, such as college, marriage, or retirement. Whole life policies can also be used to help you handle those unexpected and expensive moments we all encounter. Defining your financial goals to determine exactly why you need life insurance will help you make the most of your life insurance policy. You need, and most of us do need, some coverage to provide a death benefit. That’s especially true if you have people dependent on your for their living expenses. You will want to make sure they are covered in case of your death, or a devastating illness, or an accident. And if you need more income for retirement, consider that, too, when you choose the type of coverage to meet your life insurance needs.
Once you decide why you want to purchase life insurance, you need to determine what type of policy best meets your needs. Knowing what you want life insurance to do for you allows you to get the most out of your life insurance policy, maximizing the policy?s benefits for both you and your family.
There are two major types of life insurance policies. Term policies, as their name suggests, cover a set term, usually a set number of years. These policies are less expensive, but they do not accumulate cash value and they only provide a death benefit. This cash, of course, can be accessed to cover funeral expenses. Many people combine term coverage with whole life, and a qualified insurance agent can help you determine the best mix for your needs.
Once you know what you want your life insurance policy to do for you, it’s a must to ascertain that you can make the payments. Every policy requires payment of premiums. Term policies typically are less of a drain on the budget than whole life, but, remember, they do not build cash value. Make sure your policy meets your needs, but also be sure it fits your budget. A policy that lapses because you could not pay the premiums does you no good at all.
Be realistic about your life insurance needs. Be sure your death benefits can replace your actual earning power and your family’s inflation-adjusted spending needs. If you are buying whole life, take a keen look at your financial goals for retirement. And don’t forget that funerals are expensive and are getting more expensive every year. Make sure your loved ones are covered for all those costs.
Think about where you are and where you want to go with the rest of your life. Then you will be able to choose the policy that is right for you. Your licensed life insurance broker can answer all your questions and help you choose exactly the best policy for your family’s future financial security.
Tom Martens is the content syndication coordinator at Lifeinsurance-Southafrica.co.za South Arica?s leading Life Insurance and Life Cover portal.
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