Affordable Life Insurance Policy

Perhaps the single most important question one can ask regarding insurance needs is not whether a term or permanent policy – or a combination of both – is needed, but exactly how much insurance should be purchased.

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How Much Insurance

The amount of life insurance needed for a particular individual varies greatly according to circumstances, budget, and even by what insurance professionals recommend. A general consensus is that one should have a total face value of life insurance in force equal to at least seven times their annual income, but that individuals with growing families may need as much as 20 times their annual income.

Even so, these figures are by no means set in stone, or even agreed upon from professional to professional. Ultimately an individual and his or her agent must mutually agree to a correct face value amount, and then review and revise it periodically.

It stands to reason that the younger one purchases life insurance, the less one has to pay. As age is the single most important factor in determining life insurance premium, one should endeavor to buy life insurance for critical needs as soon as possible. This is especially true when considering permanent policies.

Life Insurance For Children

In terms of policy selection, policies for individuals under 18 are somewhat limited. Most life insurance carriers do not offer term policies for minors, however permanent policies are often quite affordable, especially for infants and small children.

These policies can be purchased by parents, grandparents or other individuals. Popular options include a single-premium policy, in which the premium is paid as one large lump sum instead of monthly, or as a “reduced paid up” option, in which the face value is adjusted down to reflect a paid up policy based on premiums already paid.

Both options give children permanent life policies which are in force for life but which require no further premium payments. While these options are generally available at any age, they are most cost-effective when the insured is a minor.

Life Insurance For Young Parents

When determining the correct amount of life insurance coverage, while things such as burial, debt retirement and other final expenses should be considered at any age, it is in young adulthood when people are likely to marry, purchase home and have children that life insurance needs become more pronounced. The trick is to keep an affordable life insurance policy strategy in place.

It is during this time that term life insurance becomes an attractive choice. Term life is ideally suited to cover expenses that one does not expect to be lifelong and permanent, such as for a mortgage or a child’s education. Many insurance professionals will recommend people in this demographic keep a permanent life policy for final expenses, but cover the rest of their needs with term insurance.

For those who can afford it, options such as a return of premium (ROP) rider may be particularly attractive, as ROP can pay benefits whether the insured dies or not, and without the expense of comparable permanent policies.

Life Insurance For Older People

Once kids mortgages are paid and kids move out and graduate from college, life insurance needs for most people tend to diminish once again. If whole life policies were purchased and paid up before, one may be in good shape as is. If not, then filling in the gaps becomes a priority.

While permanent life products are widely available for older people, they are not cheap by any means, even for modest face values. At this stage term policy to cover final expenses may not be an ideal situation, but it is often better than nothing at all.

Life Insurance For Entrepreneurs

Business owners are often have very specialized yet nonetheless important life insurance needs. Individuals in partnerships may want to consider taking life insurance polices out on each other, or perhaps a single joint life insurance policy, in the event the untimely death of one of them throws their business into chaos.

Business owners may also want to consider taking out what’s known as “key person” life insurance on valuable employees, those whose loss would create an undue burden on future business success prospects.

Saving On Premiums

Once a life insurance policy is issued, there’s no way to adjust the premiums. Therefore the best way to maximize savings on life insurance is to be proactive. Take these steps before signing on the bottom line.

Life insurance underwriters often reward those who can demonstrate particularly good health during the underwriting process. From a premium standpoint, almost as important as age is a weight to height ratio. Losing weight before signing up for life insurance may very well mean the difference between a policy issued at standard rates instead of a rated policy, or perhaps may even qualify the insured for preferred rates. The difference can potentially save thousands of dollars.

If one is applying for life insurance close to a birthday, it is always a good idea to ask the agent to inform life insurance underwriters to “save age.” This allows the policy to be issued based on age at application as opposed to age at policy issuance.

It never hurts to shop around. While all life insurance companies are looking at the same life expectancy tables, and consider the same certain medical conditions to be riskier than others, there nonetheless can remain a significant difference in price from company to company on an otherwise identical life insurance proposal. Several life insurance-oriented web sites are designed for this express purpose, allowing the consumer to compare rates among different companies.

In addition, many property and casualty companies offer a discount on their life insurance products to those who have their home and auto policies with them. Property and casualty agents, particularly those working for captive agency companies such as State Farm, Allstate and (in many states) Farmers Insurance, are under a lot of pressure from their respective corporate offices to sell as much life insurance as possible. They are often more than willing to look for the best deals.

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