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January 16, 2014

Do you want to buy life insurance but are not certain how much you need or if you really need it at all? It can be a tricky problem coming up with the right amount of insurance and the right type of policy. Hopefully, the tips listed below will help clear up some of the confusion you may have regarding the issue of life insurance.

1. Are you single or married?

• If you are a single individual, you will not need the amount of life insurance that will be required if you are married and have children. A single individual may want to carry enough insurance to cover any debt that may exist at the time of death along with the costs of burial and expenses such as a mortgage.
• Even if you are single with no dependents, you still have people in your life that may well be impacted by your death. A small life insurance policy will ensure that these individuals do not have to take full financial responsibility for all of your expenses. You may also want to leave something behind for favorite nieces and nephews, and a life insurance policy is a great way to accomplish this.
• Financial planners often advise carrying insurance that equals four or five times your yearly income, and this may be as high as 10 times your yearly income if you are married with debts and dependents.
• Of course, if you are married with children, this greatly changes the amount of coverage you will want to have. You will need to have life insurance to protect your spouse should anything happen to you, and you will also need coverage to protect your children. This is where 10 times your yearly income comes into play. Your life insurance coverage should be sufficient to take care of your children until they are at least old enough to be on their own, and college tuition should also be a consideration. The USDA has estimated that at the current time it will cost approximately $241,000 to raise a child from infancy until 18 years of age. This figure does not include a college education, and it will certainly go higher with the passage of time.

2. Should you obtain term life or whole life?

• Term life insurance is for a specific period of time. Once that time has passed, the coverage will end. Of course, you may either renew your policy or acquire another type of insurance, if you so desire. Term life insurance policies may also have a clause that allows you to make changes as time goes by. If you are a single person, you will want your term life coverage to be enough to cover your debts and any other financial responsibilities you may have. If you are married and decide on term life insurance, you can keep the policy in force until your children have graduated from college and can then strike out on their own.
• Whole life insurance will be beneficial to those who are seeking coverage that will last throughout their lifetime. It is more expensive than term life but builds up cash value, which term life does not. You, as the policyholder, can borrow against this cash value if the need arises.
• You will want to make the decision as to whether to purchase term life or whole life insurance based on such considerations as your marital status and your financial needs.

3. Where to go for insurance

There are many insurance carriers trying to sell policies, and you can research a number of them to find the one that best fits your financial responsibilities. Compare rates, ask questions, and go with the carrier that can best offer what you need and that makes you feel the most comfortable about your decision. When you speak to various agents, do not allow yourself to be talked into a policy that does not completely satisfy your wishes. Remember that insurance companies make more money on selling whole life policies, so these will be the ones most often touted.

Having life insurance in place can be a blessing, and it is definitely a necessity if you are married with children.

About the Author:

Tips for buying insurance
Kim Morrisseau writes for an insurance comparison website, kanetix.ca/life-insurance, that has more tips about life insurance.
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