A Guide to Buying Life Insurance

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Do you need life insurance?

There’s little point in paying a monthly premium for a life insurance policy you don’t need.

Conversely, if you don’t have one in place, but you do have some dependents, it could cause a serious issue should the worst happen.

Consider if you need one first of all.

Are you a single person living alone, without ownership of property? In this case, there is zero need to take out an insurance policy. No one will benefit.

If you have a family, however, or if you own property, it makes sense to have something in place, should the unthinkable happen.


What’s your families living expenses

Are you responsible for some or all of your family’s living expenses?

If so you will have to do the responsible thing and take out an appropriate life insurance policy. If something were to happen to you and you were no longer around your family would receive the equivalent income after your passing.

To calculate your life insurance premium, total-up the amount of take-home pay you receive annually and multiply by the number of years you would expect to cover.

Remember to keep this realistic, your family won’t need that kind of support forever, and less cover will mean lower rates.


What’s your debt balance

If you unexpectedly pass away your family will not only need an income that has disappeared with you, they will also be burdened by any debts that are left behind.

These debts might include a home loan, credit card bills, car payments, Funeral Supplies, and unsecured personal loans. These amounts must also be included in your calculation.

First, determine how much money would be required to cover all your debt payments if you were to suddenly pass away. You want your family to be able to continue living comfortably in the way they have been.

Losing you will be enough stress to handle. Even if it means paying a higher premium, covering your debts is advisable.


What’s your families education costs

When calculating your life insurance premium you want to get the best value possible but also cover all the necessary living expenses.

To do this you need to take a long view and consider what future financial obligations might be required. Even if you pass away you can still contribute to your children’s future with an education fund.

It can be expensive to pursue higher education. There are books to buy, fees to pay, and living expenses to cover. Consider your children’s future and determine an amount of cover that would help them achieve their goals.

Remember to keep your projections generous but also realistic.


Calculate your insurance needs

Before you contact life insurance companies for quotes it’s worth calculating the premium you want to pay first.

This will give you a good overview of what you expect to pay and put you in a stronger negotiating position. Add up everything you want to cover, that is a house, debt, children’s education, retirement savings, and income cover.

Subtract your total expenses from your financial resources to calculate your premium.

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