When it comes to picking the appropriate life security, a lot of factors come into play. Some of these factors include selecting the appropriate life security company, picking the appropriate amount, and picking the correct term. So today, we’ll be looking at how you can select the appropriate kind of life security using these key factors. Starting with the first;
Choose The Appropriate Life Security Company
The first factor that comes into play when picking the appropriate life security is to make sure that you’re selecting the appropriate life security company. But, what should you look out for? How do you know if it’s a good company? You’ll want to check the ratings and make sure that they’re a stable company. There are various rating agencies such as A.M. Best, Moody’s, S&P, Weiss. All these different agencies will give the security agencies a report card rating to show how financially stable they are. Typically, if you are looking for a reliable, trustworthy company, you don’t want anything below an A- rating.
Get the Best Quote
The second most important factor when picking life security, which I’m sure is significant to you is making sure you get the best quote, the best rate, the lowest price. How do you know if you’re getting the best price? There are online quote engines that you could use in calculating various security companies quotes, making sure that you are getting you the best independent quote. You want to make sure you are using an independent agent.
Know How Long the Term Is
Another factor that will also have a bearing on your cost is how long you are purchasing the life security for or what’s most commonly known as the term. Typically, you’re going to see 10-year, 20-year, and 30-year term policies. Although, now most companies do have been 25-year or 40-year terms, most typically its best to work in the 10- to 30-year period. Depending on your situation, your age, how long you plan on living for, how much debt you have, will determine how long of a term you get. If you’re a younger individual, 30 years may make a lot of sense for you too.
Now if you’re a little bit older in the 40- to 50-year-old range, maybe a 10- to the 20-year policy will be all that you need. A neat feature with the quote engine on popular quote sites is that you can get all these costs on the 10-year to 30-year plan, so you can see and compare how much it cost to go from a 10- to a 20- to a 30-year term.
Know The Amount of Life Security You Need
The last factor that comes into play, and it’s a question that most people get all the time. How much life security do I need? I wish there were a blanket answer; sadly, there isn’t. However, there are some general rules of thumb, which I will share with you now.
Rule of Thumb in Life Security
The first general rule of thumb about how much life security you need to buy is to take your income, multiply it by ten and that will then determine how much you should buy. Nevertheless, that’s is just a general rule of thumb. If you’re young and you’re not making a lot of money, maybe you don’t want to buy only ten times. Let’s say; you want to buy 20 times because if you plan on getting raises over the next 5-10 years, obviously what you buy today will not be enough, 5-10 years from now.
Another way or you can say the rule of thumb, that you can use in determining how much you need to buy life security is a method a lot of people have used. In this method, all you have to do is work backward. If you want to know how much life security to buy, in case something happened to you, they take your total annual income and divide it by 5%. If you invest the money, you could earn at least 5%, and that should get you that number back.?
As you can see, many factors come into play when picking the appropriate life security for you. From picking the appropriate company, getting the best quote, knowing how long the term is, and figuring out how much you’ll need to buy, will help you make the appropriate and concrete decisions. On the other hand, failure to adhere to these critical principles may lead you to impend doom.
If you still have more questions, feel free to contact us or drop a message in the comment section below. Cheers!