How To Navigate The World Of Life Insurance
Insurance is important for all of the "what ifs" of your life; what if someone hits your car, what if someone dies unexpectedly, what if you get sick? While certain types of insurance are mandatory, like car insurance, other types are easier to ignore, like life insurance. Even though life insurance is optional, it should be a priority if you have kids, parents, siblings or other people who rely on you financially. Buying life insurance can be an overwhelming process and can be difficult to discuss with family. While an insurance broker can help you navigate the world of life insurance, educating yourself about the business will help you get the coverage you need without breaking the bank.
Getting Enough Insurance
One of the biggest questions you'll be asking yourself before buying life insurance is how much do I need? A great way to figure out how much life insurance you'll need is by determining the expenses your financially dependent loved ones would be responsible for in the case of your death. These expenses could be anything from a mortgage or car loan to credit card debt. Typically, the amount of life insurance people get is five to seven times the amount of their current income.
Choosing the Right Policy
There are so many different comprehensive types of life insurance plans that it can be difficult to choose which type of policy is right for you. There are two main categories of life insurance that all the different types fall under: permanent and term. Permanent life insurance doesn't expire and covers fixed costs, such as funerals. Term life insurance expires after a set number of years and covers flexible costs such as a mortgage or college expenses. Most people have both types of expenses, so a combination of permanent and term insurance works best.
Picking Your Beneficiary
Your beneficiary is the person you choose to receive the money your insurance company pays out. Choosing the right beneficiary for your life insurance policy is important because it trumps any other document, including a will. Even though you can choose anyone to be your beneficiary, choosing a family member has certain benefits. If you choose an immediate family member as your beneficiary, they will be protected against any outstanding creditors you had. Some provinces even require your beneficiary to be a relative.
Once you feel that you have a working knowledge of life insurance, find a broker that can help you put your plans into action. Most life insurance companies have public information available about them, so make sure you do your research before choosing a company. Click here for more information.