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Stay in good health
Life insurance premiums can vary and several factors can influence premium rates, including the amount and type of coverage; age, gender, health and lifestyle choices; and family medical history. Premiums may be higher if you are overweight, smoke or have a medical problem, because to an insurance company, these characteristics may make you a greater risk.
Shop around before you make a decision
Before you purchase a policy, ask around for recommendations and research various companies. Look at a company's history of paying claims, customer service standards, and how easy it is to do business with them. Obtain quotes from several companies before making a final decision.
How much insurance should you obtain?
The amount of insurance you need will depend on your personal circumstances. Some factors to consider are whether your spouse works; if there is another family member you provide for; if you have a mortgage; and whether your combined savings (including certificates of deposit and investments) add up to less than two years of household income.
Select an affordable policy
You should select a policy that meets your needs at an affordable and competitive premium. Calculate how much cash and income your dependents will need when you die. A good way to determine the correct amount is to add up all of your current and future obligations and then subtract your assets. A quicker way to get a general idea of your needs is to multiply your salary by five. Using this formula, a person who earns $60,000 annually will need approximately $300,000 in insurance. As this will vary among individuals, an insurance company representative can review your situation to help set the correct policy amount for you.
Update your policy periodically
It is important to update your life insurance policy periodically to reflect the changes that occur at different stages of your life. This should be done with the birth of each child or whenever a new major debt is acquired, such as the purchase of a new home.
Tell your family about your policy
Your family members must be aware of your policy and know where to find important paperwork in order to claim death benefits. Typically, to claim life insurance death benefits, a copy of the death certificate and a statement from the beneficiary is needed; however, the requirements will vary from company to company.
You will enjoy peace-of-mind knowing that you have taken steps to help provide for your new family.
Vikki L. Pryor is president and CEO of SBLI USA Mutual Life Insurance Company, Inc.