Death is one of things that no one likes to talk about. Yet, protecting loved ones from the financial consequences of death is one step you can take to gain peace of mind for you and your loved ones. This, of course, is where life insurance enters the picture. Life insurance is an important component of a sound financial plan. Buying insurance involves asking a variety of personal lifestyle and financial questions.
If you have a spouse or family who depend on you for financial support (or if you work at home providing your family with such services as child care, cooking and cleaning), then you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple’s retirement savings being depleted by unexpected medical expenses. Individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.
Before working with an insurance professional, you may want to consider the advice of a fee-only financial planner who can offer you an objective review of your insurance needs and options. Determining an appropriate amount of coverage requires an assessment of your needs, while deciding what type of insurance to purchase depends on your goals.
Once you determine how much insurance you need and what type of policy you want to buy, there are many insurance companies from which to choose. Do some research at the library or online to find companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor’s and Moody’s. You can also ask your financial planner or other trusted advisor for referrals to an independent insurance professional who can help you select a company and make your purchase.