When Should You Purchase Life Insurance

1. Life Insurance

2. When Should You Purchase Life Insurance?

3. Life insurance policies pay off when you die -- but death comes in several forms, and your policy may not cover all of them. Different policies offer different types and duration of coverage, and some offer coverage in addition to death. Be absolutely clear what coverage you're buying before you take out a policy. No one wants to admit that they could die prematurely. But the last thing you want is to not have the proper life insurance policy in place should disaster strike.

4. Ranjith, a special education teacher in a small village of India, knew he needed life insurance shortly after getting married 12 years ago. He and his wife, Sunita, were planning to have children, and they wanted Sunitato be able to stay home for at least a year to raise the child. "Since we would be depending on my teacher's salary alone to get by, we took out an insurance policy for each of us," Ranjithsays.

5. The couple's 10-year life insurance covered them for Rs2,50,000 each, which equated to a Rs1450 monthly fee per person. "It gave us both peace of mind,“ Ranjithsays. "We treated it like having automobile insurance. I never want to have to use it, but it's comforting to have it there." The Ranjith however, had to take out another 10-year life insurance policy this year since the old one expired. Although the length of the original policy wasn't right for their needs, Ranjithwisely opted for a life insurance over whole life insurance. While some life insurance agents aim to guide you toward whole life insurance over life insurance (whole means more commission for them), life coverage is the appropriate coverage for most individuals, as their needs are for a life time while their other assets accumulate, such as retirement savings,“.

6. President of the National Association of Insurance and Financial Advisors, agrees with life insurance is usually the best route. "I've always believed in insuring up to the point that you need insurance," he says. "You can do that with life insurance and it comes out to be far cheaper.“ He recommends guaranteed level premium life insurance, where the premium is set at a fixed rate for a specific period of time. "I match the length of the life period to the anticipated period of need," he says. "For example, with a 2-year-old child and a client purchasing a 20-year guaranteed-level premium term to take care of the child, that would provide coverage until the child is 22."

7. There are a few select circumstances where you might be better off with whole life insurance. For example, if you have children who are handicapped and will be financially dependent on you their whole lives, you may want to consider the permanent coverage. People struggling with their finances in today's downtrodden economy may think they can save money by skimping on life insurance. Approximately 30 percent of population, households have no life insurance coverage, according to a 2010 study conducted , an insurance industry research outfit. And among households with children under 18, 11 million have no coverage.

8. But for parents who still have children living at home, not having a life insurance policy could put their kids at risk if something were to happen to them. In the event the parents die, a life insurance policy can provide a safety net for the children to live off of.

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