Written by Catherine Rein (last updated April 21, 2009)
While many employers offer life insurance as one of the benefits they offer, you should consider carefully if you need supplemental insurance beyond that offered at work. If you have no dependents and you have enough assets to cover the cost of the funeral and estate fees, then insurance is an unnecessary cost for you.
Life insurance can help pay for many expenses, including medical costs, funeral expenses, taxes and other obligations such as outstanding debts and mortgage balances. It can also help cover future expenses such as college tuition or childcare costs. Here are the steps for determining how much life insurance you should get:
After you've determined the amount of coverage you need, you'll next need to look into the type of policy you require. Term insurance is the most likely fit for most people. Term insurance offers just as much coverage and is cheaper than cash-value policies. Term insurance pays a set amount in the event of your death. If you don't die, the policy does not pay out. You should watch out for cash-value policies. These can be extremely popular with insurance sales professionals since they often pay a large commission.
You should look for term insurance policies with a renewable clause. The renewable clause means you'll be able to renew your policy at a set rate without undergoing a medical exam. This way if you are diagnosed with a severe illness just before the term runs out, you'll be able to renew at a competitive rate even though the insurance company will have to pay out.
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