subject: Evaluating Life Insurance Needs – What Mistakes to Avoid [print this page] Evaluating Life Insurance Needs What Mistakes to Avoid
If you are interested in getting a life insurance policy, you have already avoided the first big mistake in regards to life insurance, which is the failure to consider it as a worthwhile option. Life insurance brings the truth of mortality into the forefront of your thoughts, but pretending that you will live forever is not a realistic way to view your life. You need to protect your family from financial devastation if something should happen to you. That is why these tips for evaluating your life insurance needs will help you avoid costly mistakes.
The rule of thumb is that you should obtain a life insurance policy that will pay five to ten times the amount of your annual salary. However, one mistake that people make is assuming this rule of thumb will apply to their situation when it may not. Your circumstancessuch as the number of dependents you have, mortgage payments and college loansshould be fully considered when figuring out the amount of money you need from your life insurance policy. A great way to do this is to figure out the amount of money your family needs to live comfortably per year and how many years they will be in need of the funds provided by the policy.
Next, do not base your life insurance policy decision solely on the cost of the premium. Look at the coverage options first, then the premiums. While you will of course need to be able to afford the premiums, you would be stunned to see the difference than $10 more in your premium could mean for the coverage you receive. Also, do not forget to reassess your situation and consider obtaining a new policy if your family's circumstances change. If you are exploring the possibility of replacing your current policy with a new one, make sure you evaluate both closely to get the best deal possible on your policy.
Finally, choose the appropriate beneficiaries. Think about estate and tax implications when considering who to include as beneficiaries on your life insurance policy. For example, listing your estate on your policy may cause it to become subject to estate taxes. Also, if your spouse owns the policy and your children are listed as beneficiaries, the funds may be viewed as a gift and become taxable. All of these points must be considered as you evaluate your life insurance needs.
If you would like more information on life insurance at prices half off the usual cost normally offered in the marketplace, visit our web site for a discounted rate quote on lifeinsurance.
welcome to Insurances.net (https://www.insurances.net)
