Not everyone needs life insur✱ance. But if you have a spouse, children, or any other family member who depends on your income, you most likely do. And even if you already have some life insurance, you might need more ofꦜ it than you realize. Use these tips to find the life insurance you need at a price you can afford.

What Type of Life Insurance Do You Need?

𝓰Life insurance comes in two main types: term and whole life. These types differ in price, features, and length of coverage.

Term life insurance

Term life insurance covers you for a specified term, such as 10, 15, 20, or 30 years, as long as you pay the premiums each year. Most term insurance policies have 澳洲幸运5官方开奖结果体彩网:level premiums, meaning that you'll pay the same amount each year for the same amount of coverage.

According to the Insurance Information Institute, the most popular type today is 20-year term. So if you buy a policy at age 35, say, you would be covered until age 55, at which time you'd have to get another policy if you still need life insurance. That would mean passing another health exam to qualify.

Some term life insurance policies allow you to renew and extend after the expiration date, without a medical exam. However, the cost will go up as you're renewing at an older age.

Permanent life insurance

Permanent life insurance does not have a specified term or expiration date. The policy remains remains in effect for as long as you live, again assuming you keep up with the premiums. In exchange, permanent life insurance is more expensive than term life. Many permanent life insurance policies also have an attached savings or investment account, which builds up over time as you pay premiums. That's what's known as the policy's 澳洲幸运5官方开奖结果体彩网:cash value. You can withdraw money from your policy'🍌s cash value or take a loan against it.

There are different versions of permanent life insurance, including 澳洲幸运5官方开奖结果体彩网:whole life insurance, 澳洲幸运5官方开奖结果体彩网:universal life insurance and 澳洲幸运5官方开奖结果体彩网:variable life insurance. They differ in how you pay𒅌 your premiums and how the cash vꦜalue grows.

A whole life insurance policy charges the same premium the entire time whereas a universal life insurance policy lets you adjust up and down each year. Whole life insurance pays a fixed, guaranteed return on your cash value whereas variable life insurance invests the money in mutual funds.

In addition, the money that policyholders put into a whole life policy's savings account can often achieve a greater return elsewhere. For that reason, term advocates frequently suggest that even people who could afford a whole life policy "buy term and invest the rest."

Determining How Much Coverage You'll Need

The major purpose of life insurance is what financial experts often call "income replacement." So the first question to ask yourself is how your dependents would support themselves if the income you're earning now suddenly stopped.

One quick rule of thumb suggests you should have at least ten years of your salary in life insurance. If you earn $70,000 a year, you should have at least $700,000 according to this rule of thumb. H𓂃owever, you could better determine your exact coverage need by looking at your financial situationও.

Calculating Coverage

To estimate how much life insurance you should have, add up all of your current expenses, such as mortgage or rent, car payments, food, clothing, insurance premiums, anꦯd everything else you can think of. Then multiply that figure by the number of years that your family would be likely to need financial support if you died tomorrow.

If you have investments and savings that your family could draw on, you can probably get away with less life insurance than if you don't.

For example, if you estimate that your family will need $1 million to cover them for the next 10 years and you have $250,00 in investments, you could possibly get away with $750,000 in life insurance. However, you might still want to aim for a $1 million policy if you can afford it, so that your heirs don't deplete your assets but have something left over.

Non-working Spouses

It's also important to note that even if you’re not bringing in an income, your loss could have a serious financial impact on your family. If you're a stay-at-home spouse, for example, and basically contributing free labor to your household, your family would most likely have to pay someone for the services you now provide were you to die. For that reason, families with two parents are wise to insure both of them, not simply the so-called bread winner (or winners), although possibly for different amounts.

Choosing Beneficiaries

The beneficiary is the person or organization who receives your life insurance death benefit after you pass away. You can name one or more beneficiaries to receive your policy's proceeds if you die.

If you don't name beneficiaries, the proceeds will go into your estate and be distributed through your state's 澳洲幸运5官方开奖结果体彩网:probate process. This is problematic for two reasons. First, the proceeds may be divided in a way you never intended. Second, probate can be a long, costly, and involved court process, whereas if you name beneficiaries, the money goes directly to them, bypassing probate. For that same reason, it's best not to name your estate as your beneficiary.

Your beneficiaries can be people or organizations, such as favorite charities. You will want to list both primary and 澳洲幸运5官方开奖结果体彩网:contingent beneficiaries in ca๊se your primary beneficiaries die befor🎉e you. The insurer will pay your contingent beneficiaries if the primary is no longer alive.

You can divide the money as you please. For example, if you have a spouse and children, you might want to leave 100% to your spouse as the primary beneficiary if they survive you and name your children as continent beneficiaries. You could split the proceeds equally among them or according to whatever formul💮a makes sense to you. 

When to change beneficiaries

It is worth reviewing your beneficiary designations periodically, especially after major life events, such as a marriage or divorce, deaths, births, and so forth. Beneficiaries inherit the life insurance payout, even if you leave different instructions on your will. For example, if you keep an ex-spouse as the bene🐼ficiary on a life insurance policy, they still receive the death benefit.

With most policies you can change your beneficiaries if you wish to by submitting a form to the insurance company. There is no charge and you can make this switch whenever you want. The exception is if you made the original beneficiary irrevocable, which means you cannot change without their permission.

What to Look🥀 for When Shopping for Life I꧃nsurance

There are more than 700 life insurance companies in the United States, so you have plenty to choose from.

One important factor to consider in picking a company is financial stability. Your policy might be in effect for several decades to come, so you want an insurer that's likely to be around for all that time. At least five independent agencies rate insurers for financial strength—AM Best, Fitch, Kroll Bond Rating Agency, Moody's, and Standard & Poor's—and much of that information is available on their respective websites. Because these organizations sometimes differ in their assessments, it's a good idea to check more than one of them.

Other factors you might want to consider include licensing and customer service. To determine whether an insurance company or agent is properly licensed to do business in your state, you can check with your state insurance department or by going to the 澳洲幸运5官方开奖结果体🍃ꩲ彩网:National Association of Insurance Commissioners' Consumer Insurance Search website. That NAIC publishes a 澳洲幸运5官方开奖结果体彩网:complaint index showing how many complaints an insurance company receives relative to its size.

For insights into a company's customer service, you can check for complaints on your state insurance department website or the Better Business Bureau's website. A number of websites and independent organizations, such as J.D. Power, also rate major insurers in terms of customer satisfaction.

Comparing Life insurance Companies and Quotes

Price is likely to play a major role in your choice of an insurer, on top of financial stability and customer service. Once you've established that an insurer is reputable, you can start to do some price shopping.

First, determine how much insurance you need (see above) and for how many years. Then get price quotes from several insurers based on those specifications. It is free to collect quotes 🐓from insurers.

There are numerous websites where you can get quotes from multiple companies. Among the better known ones are Policygenius and SelectQuote. (Investopedia has not independently evaluated these sites.) You can also get quotes from individual insurers' websites or from a human insurance agent.

Comparing your options is easier with term insurance because what you're buying is simply insurance coverage. With permanent life you'll need to consider both insurance coverage and how the cash value portion of your policy will be invested. It's a more complicated comparison and insurers generally do not give you the information for complex permanent life insurance policies online; you must discuss with an agent.

Besides price, you should also inspect the policy details. While reading an insurance contract may be nobody's idea of fun, ✱it is worth making sure that any policies you're considering will provide the same benefits and protections. So𒆙me points to consider:

• What happens if you accidentally miss a payment? Most policies have a grace period.
• Will you be able to change beneficiaries if you want to? Most, but not all, policies allow this depending on how you set up the original beneficiary.
• What happens when your policy expires? Some policies will let you renew your coverage for a certain period without a medical exam. However, the premium will go up as you are older upon renewal.
  

Where to Get Life Insurance

You can buy life insurance online, either through an insurance company's website or a website that works with multiple insurers.

You can also buy a policy through a local insurance agent. Insurance agents can either be independents, who have relationships with a variety of insurers or so-called 澳洲幸运5官方开奖结果体彩网:captive agents, who work f🧸or a single company. The advantage of an independent agent is that they can shop arou💟nd on your behalf.

You can also buy life insurance through 澳洲幸运5官方开奖结果体彩网:insurance brokers, 澳洲幸运5官方开奖结果体彩网:financial advisors, and others financial professionals. Another potential source of life insurance is any group you belong to, such as an alumni club or a professional association. They often have arrangements with a particular insurance company to offer policies to their 🔯members at a discounted rate. 

Your employer, if you have one, may also offer insurance coverage. Many companies provide a certain amount of 澳洲幸运5官方开奖结果体彩网:group life insurance free of charge as an 澳洲幸运5官方开奖结果体彩网:employee benefit and allow workers to buy additional✤ coverage if they wish to.

If you already have some free life insurance from your employer, you might not need to buy as much on your own. But bear in mind that if you leave your job, you'll often be leaving that insurance behind, as well. That's why buying your own policy for your family can make sense, on top of any work coverage.

The Bottom Line

When sh✱opping for life insurance, plan out both the amount you need and the type of coverage. Term life insurance usually makes the most sense for families as you can buy a large amount of coverage for a lower premium. You can collect quotes from insurance coꦇmpanies for free so you can see which gives the best offer for you. For more support, consider working with a financial advisor or broker who represents multiple insurers. They can help you compare your options and identify the best fit for your family.