Buying a life insurance policy means different things to different persons. When it’s time for you to buy life insurance, the first thing you need to do is to set your goals. Why do you need life insurance coverage’ Do you just want to make it easier for your executor to bury you’ Do you want to leave your family an income’ Many people use whole life policies as a tool for planning for big expenses, such as college, retirement, or just retiring debt in case of death or disability. Think about what you need your coverage to accomplish before you decide which kind of policy is right for you.

Secondly, before you ever buy a policy, take a careful look at how much you can afford to spend. It doesn’t do any good to pay premiums for years only to go into default when economic times get tough. Be absolutely sure you can afford to make the payments on the policy you buy. Know exactly how much you can budget each month on life insurance premiums. Term life policies are usually a bit less expensive than whole life policies. Some people choose whole life as a useful investment tool, and still others opt for careful combination of term life and whole life to meet their unique financial goals. Whichever policy or policies you decide are best for you, always be sure you can make the scheduled payments. Your insurance agent can help you find options to schedule payments in ways that keep your budget in the black.

Thirdly, don’t forget that if you are buying life insurance to provide your loved ones with an income after you die, you have to consider your total earning power. Your total earning power is not just your take-home salary. If your loved ones would have to buy their own health insurance after your death, for instance, or even if you think there is a real possibility your employer would drop their coverage some time in the future, you need to be sure to include this cost in computing the amount of coverage you need. You also need to calculate 3 per cent inflation (at least) into the amount you leave your family. You don’t need just to replace your take-home pay. You need to cover the perks and inflation, too.

Finally, ask yourself this question: what stage are you at in life’ Different people have different needs, depending on where they are in life. You might need a policy to simply provide a death benefit. If you have people dependent upon your income, then you need to think about making sure your income is replaced in the event of your death, devastating illness or accident. If you need more income for retirement, take that into consideration when mapping out what type of life insurance policy is going to help meet your needs.

Take a long, hard look at your goals, at your budget, and at your real earning power. Consider where you are in your life and what you want to accomplish in the years ahead. When you have clear goals in mind, then you can choose the life insurance coverage that is best for you.

Tom Martens is the content syndication coordinator at Lifeinsurance-Southafrica.co.za South Arica?s leading Life Insurance and Life Cover portal.

Life insurance is simply that’an insurance policy on your life. You purchase a life insurance policy from a qualified provider, paying them a premium. The premium is either paid monthly or in a lump sum (usually annually or every six months). The insurance company then agrees to pay an agreed upon amount of money after the insured person dies. The amount of money paid from a life insurance policy goes to the policy’s designated beneficiaries in a lump sum payment. If no beneficiaries are designated, then the payment is made to the estate of the deceased.

There are two kinds of life insurance policies: Term insurance policies, also called protection policies. Term insurance is temporary, for a set term of years, providing your family with coverage for a specific number of years for a set premium (although premiums typically go up as you get older).

Term policies have no cash value. Basically, you buy protection in the event of death and nothing else.

Investment policies: these are commonly called permanent life insurance. The objective with permanent life insurance policies is to grow capital with the payment of either regular or single premiums. Permanent life insurance is also known as whole life insurance. This type of life insurance provides life time coverage as long as the policy premiums are paid. The premiums are fixed, and unlike term insurance, there is guaranteed cash value. The insured can access this cash for emergencies, retirement or other expenses.

The type of coverage you buy generally depends on the goals you want life insurance to accomplish. Many people find that term coverage suits their needs, if they just want to make sure that their bills are paid and that their heirs receive some cash after their deaths. Other people want a reliable source of cash accumulating year after year as they pay their premiums. You can speak with qualified life insurance agent to determine which kind of policy is best for you.

Life insurance policies usually cover death, although they may also cover dismemberment or serious illness, and give extra benefits in the event of accidental death, depending on the policy purchases. Proof of death or injury is always required before payment, regardless of the type of coverage. Remember, to get your coverage, you will have to get a physical examination from a company-approved doctor to give the company an accurate picture of your medical history. And even after you pass your physical, the coverage does not start before premiums are paid. Once premiums are paid, the policy is activated.

A qualified life insurance provider can give you the answers to all your questions. Let them help you customize your life insurance coverage to meet the needs of your family.

Tom Martens is the content syndication coordinator at Lifeinsurance-Southafrica.co.za South Arica?s leading Life Insurance and Life Cover portal.