The basic aim of getting a life insurance policy is to protect your loved ones if something happens to you. You need to calculate the amount needed to clear your debts and support your family and ensure that all your financial responsibilities are taken care of.
Once you have your priorities in place you can calculate the amount of coverage you would need for your life insurance.
What Type of Life Insurance:
First of all you have to figure out which insurance cover is capable of matching all your requirements? You also need to consider the logistics of paying the premium amount.
Term Insurance Benefits:
Term insurance is not very costly as you are simply renting the insurance. You get the cover benefits only if any unfortunate incident takes place during the term. You cannot cash the value or avail the benefits of the company dividends.
In fact this is the most affordable protection. As time passes, term life insurance is evolving to offer more options. You can also avail a return-of-premiums policy. Here you need to pay a larger amount during the life of the policy; however the premium amount is refunded when the term ends.
Some term policies also have the provision of allowing you to lock in your age & health for the rest of your life. Thus you can avail the cover and the premiums you have locked in for your whole life. This is a wonderful and affordable means to get permanent insurance.
Ideal Duration to Lock In Your Premiums:
The longer is the lock in period, the more beneficial it is. The insurance company considers the mortality risk at the level period of the term. At the age of 35 you can enjoy a level 20 term policy and these rates do not change until you are 55 years old. As you would be locking in at a young age, the average rate and risk is lower than in case you were to lock in the premium at the age of 55.
Insurance is a lifelong need. If you can afford to permanently lock a segment of your earnings at an early age then you will save a lot of amount on the subsequent premiums. Often people need to apply for a fresh coverage once the fixed rate on the present policy has expired. But as they have grown old they will have to shell out extra money in the form of higher premium.