The purpose of life insurance is to make life easier for your relatives once you leave this world. All people who have financial dependents, if they have small children, if they are paying a mortgage, if they have a partner in a business, if they are saving for retirement with their husband or wife or if they take care of their parents should have life insurance .

How much coverage should it have?

There is no exact number, because each case is different depending on the debts that the person has, if he has children and if the children plan to go to university, many financial advisors recommend that the person look for a life insurance that covers at least 10 times your annual salary. Someone who has many debts will need more.

But let’s take the following example as a reference. If a person is 45 years old and earns $ 50,000 a year and plans to work until age 65, then this person has the potential to earn $ 1,000,000 in the next 20 years. The goal of life insurance is to replace that money or a significant part of it.

Term Coverage vs. Permanent Coverage

Term life insurance is the most basic form of life insurance and also the most economical. This policy covers only for a specific period of time generally 5, 10, 20 or 30 years. At the end of that period the insurance protection can continue but the costs will be much higher. Families with small children, usually select these policies only for the number of years that their children will be dependent. Also, people who save for retirement take out term policies that end on the date they decide to retire. A young person in good health will probably be able to buy a term policy of $ 1,000,000 for 30 years worth $ 50 per month.

On the contrary, a permanent coverage policy provides life insurance coverage. Because it offers a longer temporary coverage, the premiums of a permanent policy are greater than those of a term policy. Unlike the term policy, the permanent coverage policy includes a savings component, which allows you to have a money saved for an intermediate goal such as retirement or education for your young children. One of the advantages of the permanent policy is that you can receive a refund of the premiums you have paid after a certain period of time. For example, you can structure your policy in such a way that if nothing has happened to you in 20 years, you can receive the equivalent of what you have paid in premiums up to that point.

New accelerated coverage in life

Due to the rising costs of health in the United States, today the greatest financial risk a family can face is perhaps not death but a catastrophic illness or accident. Not only does the person stop generating income because they can not work, but medical expenses increase exponentially. For this reason some companies are beginning to pay life insurance policies to their insured not only in case of death but also in case of a chronic or critical illness. These benefits are known as “Living Benefits” or “Accelerated Benefits.”

Because these benefits are very new in the market, it is recommended that all people who already have life insurance review it and change it to one that offers these accelerated benefits. In most cases you could buy a similar policy with accelerated benefits without seeing a change in the premiums you currently pay.

Buy Life Insurance

The process of acquiring life insurance requires the verification of your medical history. Generally, life insurance providers require a medical examination as a requirement for the approval of the policy. The test usually includes blood samples, urine samples and sometimes tests such as EKGs and X-rays. This medical staff wants to know if there are factors that can reduce their lifespan, such as smoking and the use of illicit drugs.

How to choose an insurance company?

There are many insurance companies that offer different percentages of coverage at different prices. Each company has its own risk criteria and also each company specializes and is more competitive in a certain segment of the market. For example, there are companies that offer very good rates to people under 50, there are others that specialize in people with health problems, there are others that offer the best rates to women than men, etc. For this reason, it is important that you consult with an insurance broker that represents several companies and not with the agent that works for only one company.

Also, you have to make sure that the company you have selected is a reliable company, because the policy will not have value if the company leaves the market and closes its doors to the public. For this you must ask what is the risk rating given by the AMBest or the S & P. A grade of A or higher is advisable.

Life insurance is one of the best options for any individual, as this helps your finances are in order and that your death does not cause financial problems to your family. Remember that life insurance comes in different forms and costs. Select your coverage according to your debts and the amount of money you
your family may need