Home Managing Money Looking for life insurance? 3 questions to ask yourself

Looking for life insurance? 3 questions to ask yourself

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Life insurance, like most other forms of insurance, offers financial protection in the worst-case scenario. In this case, that would be the death of the policyholder. 

But unlike car, travel or even pet insurance, life insurance is the most critical to get right. By making sure you have the right type and amount you can guarantee financial security for your loved ones for years after your death.

Consider speaking to a life insurance agent who can help guide you or read on to get more information about this unique financial protection.

3 questions to ask about life insurance

Whether you want to increase your existing life insurance – or need to start from scratch – there are certain questions you’ll need to answer. As you explore your life insurance options, make sure you know the following:

How much do you want to spend?

Before you get into how much life insurance you need or want, or how to shop for a provider, you have to ask yourself a fundamental question: how much do you want to spend?

This may be limited by what you can realistically afford. But that doesn’t mean you can’t still find cost-effective and reliable life insurance. You can. You just may need to shop around a bit to find a budget-friendly option. 

For younger adults, a term life insurance policy may work. It’s relatively inexpensive and can pay out substantial sums in the event of the policyholder’s death. Whole life insurance is more expensive but it comes with a cash option that term life insurance does not.

There are other factors that will determine rates and, accordingly, help narrow down an exact figure. But do a fair evaluation of your finances. What can you realistically afford to pay each month? Once you have that figure you can back into a plan that works for you.

It helps to speak with a life insurance agent who can help you determine the exact amount.

How much life insurance do you need?

There is no one-size-fits-all answer to this question. The answer to how much you need is dependent on a series of factors that only you can accurately determine. 

For example, are you the sole income earner for your family? If so, then you’ll probably want significantly more than if you were splitting the bills with a partner. 

What are your long-term plans? Do you have years (if not decades) left on your mortgage? Are you currently paying for college – or expect to in the foreseeable future? You should have a commensurate life insurance amount to pay these bills in your absence.

What standard of living are you and your family used to? Life insurance can cover the basics or it can help keep your current standard of living going with your beneficiaries. Plan accordingly.

In short: For some, maybe $100,000 to $300,000 will be enough. Others may want (and need) coverage well over $1,000,000. It’s all based on the answers to the above questions.

Which provider do you want to use?

Do you have an insurance company in mind? That’s a good place to start. Get a quote so you know what to expect if you go down that route. Just don’t get tied up right away.

Instead, shop around for providers. You can save significant sums of money by doing your research. Use the table below to shop for life insurance companies now. 

Just make sure you do an apples-to-apples comparison. So, if you’re getting a quote for a $500,000 term life insurance policy for a set amount of years make sure you’re getting a quote from a second and third provider for the same amount, insurance type and policy length. This will help you accurately determine which provider is offering the most value.

The bottom line

Choosing life insurance – in the right amount and cost with the right provider – can be stressful. That’s why it’s so important to do your research. Determine exactly what you want – and how much you can afford – in advance. That will make the process smoother and ensure that you’ve got the protection you and your family deserve. Start today by speaking with a life insurance professional. 

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