Buying Life Insurance: How To Tell If You're Underinsured
For many working families, term life insurance is at the bottom of their priority list
. Yet for the underinsured, enlightenment about how important the right coverage is often comes too late. Bad life insurance can create a world of problems for a struggling family, particularly if they lose their primary source of income. Finance and life planning experts have formulated a variety of recommendations that help all Americans recognize when they are underinsured. This realization will encourage them to select the best plan so that their families will not struggle in the future.
Who Needs Good Coverage?
Many financial advisors fight against the perception that only the primary income earner needs term life insurance. There is a tendency for stay-at-home mothers or fathers to undervalue their contribution to the household. Remember that if the nonworking spouse is suddenly unable to assist with childcare, the remaining spouse may have to hire a babysitter or make other arrangements. Whatever happens, it is almost certainly not as simple as loss of income. No matter what the situation, parents almost always provide more for their children than they realize and indicate on their term life insurance.
Benefits Of Term Life Insurance
There are generally two types of policies: term life insurance and policies that last throughout the lifetime of the purchaser. Many well-intentioned mothers and fathers buy policies they believe will be permanent and lifelong, only to discover that they are spending their money in a less than desirable way. If they continue paying, their beneficiaries will reap the rewards at the end of their life. If they terminate the policy, they receive a cash reward. With term life insurance, lower premiums provide equal coverage without the confusing incentive to cash in the policy early.
Determining The Right Level Of Coverage
The key element of any term life insurance policy is determining what level of coverage is actually appropriate. Experts advise policy seekers not to begin by thinking about what type would be affordable, but rather what type would really help their family. Individuals should consider how much they contribute to the family income, and what significant obstacles their absence would raise. If currently contributing to a college fund, that should be taken into account. If imposing new restrictions upon the family or forcing a lifestyle adjustment are likely consequences, then they should be considered as well. Any deviation from the current lifestyle could be a big problem, and might well justify extra term life insurance coverage.
When And How To Purchase
After making a decision, many families still put off purchasing term life insurance. After determining the amount desired and the best terms, completing the transaction and obtaining the protection is a vital step. In addition, financial advisers urge families not to deviate from their plans. While purchasing a smaller amount of coverage may seem preferable to purchasing nothing at all, in the long run it can make little difference. Some policies are small enough that they would hardly even pay for themselves, let alone help a family in need.
In addition, some may provide major benefits for a marginal cost increase. The only way to know with certainty is to check multiple providers before coming to a decision. Every service will have its own niche market to fill and may offer different plans based upon that particular market. What is offered by one company may be quite separate from what is offered by another.
Finding The Right Provider
In today's world, shoppers have a new resource for finding policies: the internet. There are many services which can help compare different policies, collecting quotes from many major providers in one place. Some of them also help customers fill out applications for the actual plans, making it much easier to complete the filing. The internet also allows customers to check individual providers for reliability in a way that was impossible before the web. Online reviews and histories can reveal deficits that clients would never otherwise have anticipated. Researching a company online is a key step for anyone looking to buy a policy.
What The Underinsured Can Do
The first step any individual should take is to look at their current policy. If they are underinsured, they should consider purchasing a new policy to supplement their current policy or replacing their current policy altogether. Picking up a new policy is generally simple if the individual is in good shape and of a fairly young age. Even if not, a new term life insurance policy at a higher premium for the right amount is far preferable to a cheaper policy that would be inadequate.
Before signing any life insurance contract, make sure these points have been thoroughly considered to ensure that you are not underinsured.
by: Chris Harmen
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