Finding high quality term life insurance shouldn’t be a challenge, but you need to know what features to look for. While it may seem that the policy with the lowest premium is always the best deal, the truth is that there are several factors that you need to consider before deciding on a policy.
1. Length of term. While it’s common to hear that you should always opt for the longest term length available, really think about whether or not that advice applies to your situation. For example, a father with young children might see himself needing life insurance for the next twenty or thirty years, but someone with teenagers might only need ten or fifteen years of coverage. Once the children are grown and you have some savings, it might be a better idea to buy a lower cost policy with less coverage.
2. Amount of coverage. Think about what would happen if your income disappeared tomorrow. How much money would your family really need to pay for a funeral and raise children to the point where they could support themselves. It’s usually easiest to figure out your family expenses, including costs for extra daycare and other domestic services (minus any other sources of income) for a year, then multiply this amount by the number of years until all children are capable of supporting themselves. That should give you an idea of how much coverage to buy. Of course, you may also want to consider support payments for elderly relatives who rely on you. Today, there are many options available if you shop around for cheap and affordable term life insurance, so there is no excuse to be under-insured and not make sure those who rely on you are provided for.
3. Restrictions. Read potential policy terms carefully and pay attention to the exclusions. For example, a person in the military probably has little use for a policy that excludes death in a combat zone. Similarly, people with hazardous jobs wouldn’t want a policy that excludes workplace accidents.
Because there are so many factors to consider when buying a life insurance policy, it’s always a good idea to have an open conversation with everyone who would be involved with making decisions if something terrible were to happen. At the very least, make sure that the beneficiary knows the details of the policy and where to find any relevant paperwork.