Save yourself money and headaches by figuring out your needs ahead of time. Life insurance is one of the few ways you can pay for peace of mind. If you haven’t looked into it before, it’s time.
But before you pepper some insurance agent with inquiries, you should ask yourself some basic questions first.
By figuring out exactly what you need early in the process, you’ll save yourself a lot of time — and potentially a lot of money, too.
The main purpose of life insurance is to ensure your dependents will be OK when you die and your income disappears.
Have young children? Getting life insurance is an excellent idea, particularly if you’re the primary wage earner.
Have a mortgage or other outstanding loans? You do not want to saddle your partner with debt after you’re gone.
But if you’re debt free, mortgage free and the rest of your family is financially independent, they probably won’t need the death benefit.
Or, if you’re a pro saver and already have enough money to provide for your dependents, life insurance might not be worth the extra expense. Just keep in mind, the amount you need might be very, very high.
Need life insurance? Great, what kind?
There’s an endless variety out there, but the big decision you need to worry about is choosing between the two main types: term and permanent insurance.
Term life insurance: Term life insurance gives you coverage over a specific period of time, normally between 10 and 30 years. If you pass away during that time, the insurance company will pay your beneficiaries.
Permanent life insurance: As the name suggests, “perm” insurance provides lifelong coverage.
Once you’ve settled on the type of policy you want, you can decide how much coverage you need.
You don’t want to waste money by taking on way more coverage than you actually need. Your goal should be to account for your debts (like your mortgage or student loans) and provide for your dependents until they’re able to take care of themselves.
The Government of Canada suggests most people should get coverage worth seven to 10 times their annual salary. It even offers a helpful calculator to help you plan according to your particular situation.
OK, you can’t exactly cheat death. But if you hold a term life insurance policy, you can at least outlive your insurance.
If your term life insurance expires, your coverage simply stops. If by that point you’re free of debt and your children are financially independent, you may not need life insurance anymore.
Most term life policies include a guaranteed renewal or conversion option. That means you can renew your policy or convert it into a permanent policy without taking a new medical exam.
After spending all this time mulling over your policy options, you’ll want to make sure you get the policy you need at a price that fits your budget.
PolicyMe is one of a new generation of online life insurance companies that use automated-underwriting technology, which keeps overhead low, and lets them offer low premiums. A healthy 30-year-old non-smoking male can get a 10-year term policy for $20 a month through PolicyMe.
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