Life insurance is designed to pay out an amount of money to the policy holder, often who depends on you financially, if you pass away. It could also cover you if you develop a terminal illness or critical illness.
Thinking about those costs and the people you might leave behind can be hard, but taking out life insurance is a key part of your financial planning, especially for people with dependents. While you help to pay for everything your family needs in life, life insurance makes you continue to pay after death. But how to purchase life insurance?
Figure out how much life insurance you need
Before you buy a life insurance, you need to think about how much expenses you have. For example, if you’re married, you have to make sure he or she can continue to pay off the loans. And if you have kids, you will want to account for expenses in the future, like the college tuition. You have to leave enough behind for your spouse and your kids.
Add up all the costs, and your death benefit should at least encompass this entire amount minus your current assets.
Pick a life insurance
Most people will pick the cheapest policy, but it’s important to compare. In fact, it is important to compare various life insurance options side by side.
Collect the documents and complete the purchase
You need to prepare the following documents:
- Proof of identity, citizenship and age, like a driving license or a passport.
- Proof of income.
- Proof of residency.
Then you can complete your application. After you submit your application, the insurance company will estimate your information. You will be asked to have a medical examination. It is free for you. If you are young and healthy, you can get some simplified term life insurances which don’t require a medical exam. After all the estimation you will receive the approval and after signing the documents and paying for the policy, the purchase will be completed.