Life insurance gives you peace of mind because it can provide for the financial needs of your dependents after your death.
A matured policy can also support a charity or fund a scholarship account at your alma mater. For a clear starting point on coverage and policy types, see Life Insurance: Overview.
Maximize your life insurance
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Choose a Term Policy
Whole life policies build cash value, and you can use the money for future living expenses or as investments. However, you'll pay higher premiums for this type of policy.
If you're on a budget, choose a term policy. It usually costs less and is a way to care for your dependents while sticking to your budget.
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Buy Young
As you age, your health declines and your chances of dying increase. Your life insurance premiums increase, too.
Purchase life insurance when you're young and healthy. This way, you have enough coverage to meet your dependents' needs, and if you choose whole life, you maximize the cash value you receive later.
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Reduce Coverage
Professional financial advisors often recommend a death benefit equal to about ten times your annual salary, but life insurance costs more as the death benefit increases.
Carefully consider how much coverage you really need. If you don't have children or debt, you may be better off with a lower death benefit; compare policy costs at different levels and adjust as your income and obligations change.
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Skip the Joint Policy
You and your spouse may consider a joint life insurance policy, but many joint policies pay only once.
Purchase two separate policies to ensure beneficiaries receive a death benefit for each insured person and to allow customization for income differences.
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Stop Smoking
Smoking increases your life insurance premiums because it reduces overall health and life expectancy.
When you quit smoking, ask your provider about smoking cessation resources and, after about 12 months of being tobacco-free, request a reclassification to non-smoker status so you may qualify for lower premiums.
If you want a straightforward explanation of coverage types and common terms, see What is Life Insurance?
Life insurance is a wise investment. To maximize your coverage, follow these five tips. You'll also want to talk to your agent today as you purchase the policy you need.
Frequently Asked Questions
How much life insurance do I need?
Needs vary, but common guidance is to consider your debts, future income replacement, and any planned expenses for dependents when choosing a death benefit.
Is term or whole life better for most people?
Term life is generally more affordable and suits those who need coverage for a specific period, while whole life builds cash value and is more expensive.
Will quitting smoking lower my premiums immediately?
Premiums usually drop only after you have been smoke-free for a period (often around 12 months) and the insurer reclassifies your risk.
Should married couples buy joint or separate policies?
Separate policies are often preferable because they provide individual payouts and allow different coverage amounts for each spouse.