Buying life insurance can be a pretty confusing affair, what with all the different options and plans available. Finance blog Get Rich Slowly helps sort it all out and explains what to look for in a policy.
Photo by Amanda Govaert.
Certified Financial Planner Sanford Ellowitz says that the key is determining the kind of cashflow your family would need in order to pay the bills and reach other goals in your absense. Start by figuring out how much you're worth, and how much money you have flowing in and out each month. Next, consider what your future obligations will be, like paying for your kid's college and seeding a retirement fund.
After that, you can decide what type of life insurance is best. Term life insurance is the cheapest, but it's exactly what it says it is. If you get a term policy for 20 years and find that you need coverage after that, you're out of luck. You'll have to apply again, when you're older and maybe not as healthy. Also, if you outlive the term of your policy, you don't get anything back. Betting against your own longevity to save money may seem like a good idea now, but you might end up kicking yourself - or worse - down the line.
Hit up the post to learn about other types of life insurance and get pointers on what to look for while shopping around. Once you've got an estimate of how much life insurance you'll need, check out the previously mentioned life insurance calculator to see how your figures compare.
We'd love to know what tips our readers picked up while researching and buying life insurance, so let us know in the comments.
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