Home » Finance » Insurance

Shopping For Life Insurance

Feb 1, 2008
Where do you start when it comes to buying life insurance? What questions do you ask, and what answers do you need? Hopefully by reading on you should have some clue as to how to go about fulfilling your life insurance needs.

One good place to start when looking for any form of financial service is to establish what you need the service for, as well as looking for good value and level of service from your broker. Looking for life insurance can be simplified even further. How much life insurance do you need and for what length of time? Answer these two questions first and you can then go about searching for the right price and policy.

So what coverage is required? To offer up an example, insuring a 150,000 mortgage could mean taking out a 150,000 insurance policy. Your dependents will then be responsible for covering the debt in the event of your death.

If you are looking for life insurance to cover your family in the event of your death then what you need to assess is the amount of money that your family would require after you had passed away or what would make them comfortable.

The easiest way to assess this is to look at what you earn per year. If you earn 35,000 per year then the straightforward calculation would be that your family will lose out on 35,000 per year when you die. You therefore will need to take out 35,000 per annum in protection.

There are two different approaches to this. The first is called family income benefit. The way this life insurance scheme works is that it covers a certain amount of money per year over a specified amount of time. So basically, 30,000 coverage over 30 years would mean that the policy would pay out 30,000 each year over the period of 30 years.

Indexation can also be included in this type of policy. Essentially, the way indexation works is to increase the return on your policy each year in accordance with the average earnings index. In other words, your family will benefit from what your pay rise would have been had you still been alive.

The alternative way is to take out a lump sum life insurance plan. The problem with doing this is you need to work out how much of a lump sum you need in order to generate 25,000 per annum. This can be inherently difficult as you don't really know how the money is going to be invested and as such you will have no idea how much of a return anyone is going to make and therefore how long it will last if 25,000 is taken from it every year. That said it is a rule of thumb to go for a minimum of 10 times required benefit, if you factor this then 25,000 per annum needs a lump sum benefit of 250,000.

Therefore if a set payout per annum is a big requirement you should definitely consider family income benefit. It is created to payout the same every year and takes a pro rata pay rise into account. It removes the fear of investing when you know that is your family's future that is at stake. You can rest easy with the peace of mind that your loved ones are adequately protected.

To sum up the key points when shopping for the policy best for you, get enough cover to adequately meet your needs, it must be for the right length of time, it must cover the sum and be for the timeframe you specify. Internet based companies are a great source of information and answers, so use them well. If in doubt, contact one of them directly by phone and ask for one to one advice.
About the Author
Get the best from your life cover plan use the experts for free online discounted quotes for life insurance cover
Rating:
Please Rate:
(Average: Not rated)
Views: 135
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources