First, consider the age of your spouse and children. You have to estimate when your children will have developed their own financial security and no longer need support. For example, when you have children ages 11 and 13, you want a policy that lasts through age 22. You will not need a 20 to 30-year term policy. In addition, you will want to cover your spouse's lost income until the age of retirement. If you are 45 years old and have a 30-year term life insurance policy, that coverage should be sufficient to cover you.
What about permanent policies? Permanent policies normally cost more than term insurance, but the permanent coverage premium will remain the same price no matter how old you are. In contrast, term insurance skyrockets each time you go to renew the policy. To determine the length of time for term insurance, look at how long until your dependents will finish college or can support themselves. Also, how many more years until you have paid for your home?
Before buying a term life insurance policy, examine the immediate expenses like loans, food and mortgage. Also, you should consider the less obvious expenses. If you have debt, then you will want to purchase a term policy that covers:
- Auto Loans
- Personal Loans
- Mortgage and Second Mortgage
- Credit Card Debt
When calculating the cost of a policy, do your best to take a realistic view of the price. Shopping online, you will find numerous insurance quotes and calculators to paint a picture for price and determine how much coverage will be needed. While these are helpful, they will not give customers the big picture, and it would be best to speak with a licensed agent to determine the costs. You goal should not just be to receive the best rates but also to receive the right amount of coverage.
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Insurance Information Institute