Low Cost Life Insurance

Why Buy Low Cost Life Insurance

Life insurance is a safe and secure way to establish or add to your estate plan. The main goal is to replace the income you would have provided for your family.

Advantages

• Avoids probate if the estate is not a beneficiary
• No income tax liability
• Relatively liquid asset
• Available immediately after death

Disadvantages

• No control over how the benefits are paid out

Determine Your Needs

Low cost life insurance for your family will only be valuable if you buy the right amount of coverage. To determine your coverage needs, you need to evaluate your family's needs and decide hom much you want to spend on a policy.

The two factors that influence the cost of your life insurance policy are your age and the payout amount. While you have little control over your age, you can control the dollar amount paid out to your beneficiaries after your death. This payout amount can vary greatly depending on your needs. To purchase a low cost life insurance policy, you will need to determine the minimum amount your family will need upon your untimely passing. There is no true fast rule here, but take the time to consider the following:

• The replacement value of the income your family needs to maintain their standard of living
• Potential to fund children’s educations
• Ability to pay off expenses associated from a death – i.e. medical bills, funeral costs, and taxes
• Potential to pay any outstanding debts

Always take the time to analyze your true needs before actually meeting with an insurance agent or salesman. Some insurance representatives have a tendency to encourage you to buy more coverage than you need. When evaluating the previous list there are other varying factors to consider, such as:

• Number of children in your family and their ages
• Spouse’s salary potential
• Retirement funds
• Potential probate and tax costs
• Medical and funeral costs

By answering the questions on these two lists, you can create a worksheet that lays out your exact needs and requirements. Include other sources of death benefits and income such as social security, trusts and investments, and deduct your expenses from these. This will provide a figure to start with while shopping for low cost life insurance. Compare this policy amount with the industry standard of seven to ten times your annual income to give yourself a range.

Remember, even if your income is low or you are currently unemployed, your services still hold value. For example, a stay at home parent provides care for the children that would otherwise be a day care expense.

Many people also choose to purchase low cost life insurance for children or dependents. Even though children normally do not generate income for the family, their death may still result in expenses that the family may not be able to afford without life insurance benefits. As with all life insurance policies, coverage decisions should be based on individual needs.

Shop Around for Low Cost Life Insurance

Young, healthy individuals should be able to easily find low cost life insurance. Before you start your hunt, consider some lifestyle changes that will save you money on your policy. Smoking, diet, exercise, and other medical concerns will cause your insurance rates to climb. Most companies require a physical and a blood test – you will need to be truthful on your application.

Term life insurance is almost always the least expensive coverage option. Term life insurance covers you for a period of time and allows you to lock in a set rate. When analyzing your coverage needs, you should carefully consider the amount of time you will need this policy. Though term insurance can usually be renewed, the premiums will be much higher when you are older.

While a low cost life insurance policy always sounds good, make sure it is backed by a financially strong company. An A rating from two or three major rating companies will ensure you stability.

• A.M. Best
• Standard and Poors
• Moody’s
• Duff and Phelp’s
• Weiss Research

When shopping for quotes, do not hesitate to shop online. The online market is competitive and offers many opportunities with insurance quote services. It is also wise to check with your employer to see if free or reduced policies are included in your current benefits.