start by thinking about how long you’ll need protection
If you’re getting income replacement life insurance to protect your family’s finances, you should consider a term long enough to see your children leave home and attend college. the longer your term, the more you’ll typically pay each month. however, you may want to err on the side of a longer term. this is why.
let’s say a 10 year policy is $600/year and a 20 year policy for the same amount is $900/year. you might be tempted to get the cheapest 10-year policy now, and then another 10-year policy if you need it later. But if you think your family needs protection for 20 years, how likely is it that in 10 years you will decide that protection is not needed? you may end up paying more if you get two policies in a row.
The older you are, the more you’ll typically pay for life insurance. in 10 years, you will be an older applicant who may have been diagnosed with a health problem, such as high blood pressure. Even if it’s under control, your premiums for a new policy could go up. This type of scenario is quite common, and over 20 years, you typically end up paying more by opting for two 10-year policies.
estimate the amount of your coverage
It’s always a good idea to talk to a financial professional who can not only help you estimate your need, but also guide you to the right coverage solution for your situation. but if you’re looking for a starting point, here are some rules of thumb to determine your need for coverage:
- Consider 10 times your salary: This is one of the simplest rules of thumb and can help provide a useful cushion for your family, but it does not cover all of your real needs. into account.
- Consider 10 times your salary, plus college expenses – , that can help ensure they can get the education you want for them.
- Consider the dime formula: tell me means debt, income, mortgage, and education. total of your debts, mortgage, and college expenses, plus your salary for the number of years your family needs protection (for example, until the kids are out of the house).
- financial strength: you want to be sure that the company will be there when your family needs a payment in a few years. therefore, look for insurers with strong financial strength ratings, such as guardian8.
value of human life
Some financial representatives calculate the amount you need using the philosophy of the value of human life, which is your lifetime earning potential: what you are earning now and what you expect to earn in the future. In its simplest form, the philosophy suggests that you multiply your income by a variable based on factors such as age, occupation, projected years of employment, and current benefits.
As with everyone, the amount of recommended insurance you purchase depends on many factors. however, an easy way to get that number is to multiply your salary by 30 if you are between the ages of 18 and 40. the calculation changes depending on your age group, so check the table:
Start by seeing if you can get coverage at workRegardless of how much coverage you decide to get, you’ll be pleasantly surprised at how affordable life insurance can be. People often overestimate the cost, but a healthy 30-year-old can get a $1,000,000 guardian-level term policy for 20 years, for a monthly premium of just $61.
Many employers offer group life insurance, either as a mandatory (employer-paid) or voluntary (employee-paid) benefit. Either way, it can be a way to start getting protection, since group premiums are typically lower than individual ones. You can also get a group policy through a member association. however, the total amount of coverage available may be limited, for example, up to 3 times your salary. and if you leave the company, you could lose your coverage unless it’s portable.
complete your protection with an individual policy
Even if you have some coverage through work, it may not be enough for your needs, but level term life insurance can be easy to buy and obtain. Many companies, including Guardian, make it easy to compare rates by giving you an instant online quote. Before choosing a company, look for two things:
get quotes from many types of providers
Some insurance companies, like Guardian, write their own policies. other companies sell policies from other insurance companies. Make sure you understand how the company you’re considering is structured.
a final note
Although level term is one of the simplest forms of life insurance coverage, it helps to talk to an experienced professional before you buy. If you don’t know that person, Guardian can connect you with a financial representative who will listen to your needs, find solutions within your budget, and help you decide. Whichever way you shop, consider doing so soon. Remember: The longer you wait to get life insurance, the more likely you are to pay.