Between work and family, life can get super busy – and change fast. Planning ahead in case of death doesn’t make something bad happen sooner. It simply provides you with the peace of mind of knowing that you’ve got everything in place for your family to be financially secure if you die. When it comes to financial preparedness for your dependents, term life insurance is a sound choice for most people.
Term life insurance is one of the simplest and most affordable types of life insurance and is characterized by its determined length (term) of coverage.
If you’re considering purchasing a policy, here are some positive first steps to help you make an informed decision:
1. Get a grip on the basics
Term policies are one of the simplest and least expensive types of life insurance. They can help you gain peace of mind at a minimal hassle and cost. Because it is effective for a particular term, such as 10, 20 or 30 years, this policy protects your family financially throughout the duration of the chosen term length.
2. Start as early as possible
Term life insurance suits a variety of ages, but, once you’re in need of a policy, it’s more cost effective to obtain it while you’re young. Fixed monthly insurance payments (premiums) will be higher if you apply for term life insurance when you’re older, as age and health are factors that most affect your monthly premium. The younger you apply, the lower your costs will be.
3. Assess your situation
Since the purpose of life insurance is to ensure your loved ones have the resources they need to replace your income and maintain living standards if you’re gone, then you need to start by assessing your financial situation. Consider your ongoing financial needs and obligations. For example, if you’re married and earn much more than your spouse, or if you have kids, then you’re in a much greater position of financial responsibility. Estimate the value of your assets and income versus any ongoing debt and mortgage payments so that you can select a policy that will fully cover your family’s financial obligations. Keep in mind that dependents’ financial needs may evolve over time and that their cost of living will rise with inflation.
4. Know what factors count
There are factors that affect your insurance premium, such as your age, family history and lifestyle habits. Maintaining a healthy lifestyle – such as not smoking, avoiding excessive drinking, and exercising – will help lower your premiums. It’s important to tell the truth in your insurance application as incorrect information could put your policy at risk.
5. Explore your options
Research insurance providers, keeping your coverage needs and budget in mind. It’s worth using an online platform that enables you to compare term policies. If you’re shopping for life insurance for the first time, the simpler and more straightforward a policy is (without complicated add-ons or features), the easier it will be to understand. Additionally, make sure an established, financially strong insurer backs it.
Getting over the hurdle of selecting a term life insurance policy and checking it off your to-do list helps free you to focus on the now, knowing you’ve taken action to protect your loved ones for the long-term. While there are numerous factors to consider when selecting a term life insurance policy, if you use the steps above as a framework to walk you through the process, you’ll be prepared to make an informed decision that you can feel confident about.