Here’s how to make sure your loved ones won’t suffer financially if something ever happens to you.
Step 1: Decide if you need it Decide if you need life insurance. The main reason to buy it is to provide for anyone who relies on your income, like a spouse or children.
TIP: You may want to take out life insurance well before marriage and kids—it's easier to qualify when you're young and presumably healthy.
Step 2: Figure out how much you need Calculate how much your family will need if you’re gone. Take into account daily expenses as well as big-ticket items, like college tuition and mortgages. If you’re married, factor in your spouse’s earning potential.
TIP: Insuring children is usually not necessary, unless they produce income or you want to guard against the possibility that they won’t qualify for life insurance as an adult because of an illness or other complications.
Step 3: Consider getting a medical exam If you’re healthy, consider getting a medical exam. Not all insurers require it, but if you can present a clean bill of health, you’ll have a better shot at a low premium. Just be aware that if a medical condition is discovered, your rate will be higher.
Step 4: Pick your coverage Choose a type of policy. With term life insurance, you pay premiums for a set period of coverage. Permanent options include whole life, which doesn’t expire and accumulates value that you can cash in, and universal, adjustable, and variable life, which are all attached to interest-accruing accounts.
TIP: If you pick term life insurance, get a renewal guarantee, which allows you to renew the policy without taking a medical test or otherwise proving eligibility.
Step 5: Shop around Get quotes from several agencies on their web sites or through their agents, or use a broker to find your best rate. Some web sites provide comparison quotes from multiple companies. Examples of such websites are: "http://www.prudential.com":http:// and "http://1stinsurancequotes.com":http://. Type 'life insurance rates' and 'compare' into a search engine.
TIP: See if you can get a less expensive group rate with your employer or a trade union.
Step 6: Check their ratings Before buying a policy, check the insurer’s fiscal health by searching online for its financial-strength rating.
Step 7: Close the deal Keep your life insurance documents in a safe place, and make sure your beneficiaries know the location—though hopefully they won’t need it for a long time!
FACT: At 86 years, Japanese women have the longest average life expectancy in the world.