Securing a life insurance policy is an important decision for you and your family. If you are looking for a life insurance policy for the first time, the process can be very overwhelming. In this journey, you will be encountered with a number of questions that only a professional expert would be able to give you an answer to.
The kind of policy that will work the best for you, the amount of insurance that you need, the company that you should get your insurance from, are all questions that will crop up every now and then when you are a first-time insurance buyer.
Without the help from a professional, you might get too frustrated to continue the journey towards your first life insurance policy. Below is a list of reasons to consider life insurance for the first time.
First and foremost, you should determine why you require a life insurance policy. Really try to understand the state your family would be left in, financially, if you were to pass away unexpectedly.
Generally, life insurance policies are protection against contingencies such as the death of a family member, like a spouse or a parent, who is the primary breadwinner of the family. The financial protection provided by life insurance policies are used to cover mortgages, college funding, retirement expenses, estate planning, and the like. To summarize, if someone depends on you financially, it is recommended that you look at purchasing a life insurance policy.
The Amount Of Coverage
A general rule of thumb is to estimate your annual salary and multiply it 8 times. However, this only provides a ballpark figure. If you want a more accurate figure for your life insurance policy, you should estimate your monthly expenses if the breadwinner in the family were to pass away. This would be inclusive of expenses that are ongoing, such as mortgage payments or college and school bills. Accumulate these expenses and then divided by .07. This would mean that you would require a lump sum of money that earns approximately 7% per annum to cover the ongoing expenses. Following that, add this amount to the money that you would need to pay any one-time dues. This will give you an approximate amount of life insurance that you require.