Why, you may wonder, is this a good time to buy life insurance? You might think that you don't need life insurance if you're both working. The Life and Health Insurance Foundation for Education (LIFE) counters with this question: would the surviving spouse be able to pay off debts like credit-card balances and car loans, let alone cover the monthly rent and utility bills, without their spouse's income?
And if you think life insurance is just for people with kids, LIFE points out that if you're planning to have children, you should buy life insurance immediately. Some companies won't issue a policy to a pregnant woman due to possible health complications. Buying insurance before a baby is on the way helps avoid this potential problem.
Even if you're not yet planning on becoming parents, keep in mind that the younger and healthier you are, the lower life insurance rates are.
The New York State Department of Insurance recommends that the first step to take when buying life insurance is determining how much you need. One way suggested is an income replacement formula between five times and 10 times your annual salary.
Another method is to add up obligations. Start with how much the surviving spouse would immediately need, such as for final expenses. Then add enough to pay off debts, such as credit card bills and loans. Next, deduct any savings you might have. The difference is how much insurance you need.
The California State Insurance Department suggests, "if you have a limited amount to spend you may be able to get more coverage by buying term insurance than by buying cash value insurance.''
Term insurance, as defined by the American Council of Life Insurers, provides protection for a set period of time--from one to 10, 20, or even 30 years--and pays benefits only if you die during that period.
The New York State Department of Insurance explains that with term life insurance the longer the guarantee, the higher the initial premium. So to save some money, get a policy with a shorter term. You can also save by lowering the death benefit.
Shopping around for the best price can help you save money on life insurance premiums. Make sure to get several term life insurance quotes for comparable policies. Then you can select the life insurance you both need, at the best price.
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