What’s, Whys, and When’s, of Purchasing a Life Insurance Policy

Many people regard Life Insurance as too expensive, and even though they might have considered purchasing a Life Insurance Policy, decided against it, because of this.  The fact is that 80% of consumers have misconceptions about life insurance costs.

Because of these misconceptions they put other priorities ahead of purchasing life insurance.  Due to the concerns people have on the high cost of life insurance, they would rather use their money on more immediate financial needs.

A study found that people rather spend their money on the following 3 things:

  1. 29% opted for saving for a vacation as a better option than purchasing life insurance.
  2. 23% rather paid for recreational activities like movies or shopping and going out to eat, than paying monthly for life insurance.
  3. 49% of 65-year-olds and older, rather paid for expenses such as cable, cell phones, and the Internet before they paid for life insurance.

The argument follows that if you invest your money wisely, the money you would have paid for monthly premiums on your life insurance, you would be worth more upon death.  But you do not know if you have a lot of time to invest the money.  A Life Insurance Policy will financially safeguard your loved ones and prevent financial hardship.

When purchasing life insurance, remember these 3 things:

  1. Shop around for the right policy and the right provider: Do your research and speak to a licensed agent.  You should fully understand all the options and the kind of policy you are going to purchase.
  2. With age, your premiums might increase: In some cases, the premiums go up as you age.  This is mostly due to the fact that the older you get, the more health problems may occur.  It is definitely more cost-effective if you start paying life insurance when you are still in your 20’s or 30’s.
  3. Remember that your needs can change: On a yearly basis, and when major life events happen, make sure to review your policy.  A milestone, like getting married, having children or buying a house, are all factors that will determine the amount of coverage your policy need to deliver.

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Life Insurance can be beneficial towards protecting your family.  You might enjoy a better night’s sleep, knowing that your family has an extra source of protection and income, if you should die.

The X, Y, Z, of Personal Financial Know-how

You might have been taught mathematics or even bookkeeping at school, but lots of people reach adulthood without learning the basic skills of money management.  Some of these skills are; creating a budget, how credit cards work and investing money for the future.

When managing your finances you might feel like it’s just a lot of numbers and paperwork.  Where you earn X amount of pounds or dollars, you usually spend Y amount of pounds or dollars, and in the end, you have to try to ensure that Y stays less than X, might reach Z, where you have managed it all.

However, your finances are also a matter of psychology, your habits, and your lifestyle choices.  This only means that your mindset is just as important as the math.

Always remember these Golden Rules when thinking about Finance:

  1. Always spend less than you earn: When spending more than you earn every month, you will end up indebted which will create a spiral that is very difficult to get free of.  If you spend exactly the amount of money that you earn, you would not be able to put away savings or prepare for emergencies.
  2. Always have a plan for the future: This does not mean, only, retirement.  But, having a retirement plan will give you the security of an income when you cannot work anymore.  Your finances should be planned forward, always.  When you have established an emergency fund you will be able to deal with unexpected expenses, for instance, medical bills or car repairs.
  3. Always find a way where your money can make you more money: Properly invested money will earn you more over time.  Invest your money where it can make you some more money.  When properly invested, your money will grow while you are asleep.

These rules always stay the same.  You may find better technology to help you manage your money or newer tools to help you, but the basic rules of; do not overspend, plan for the future and invest to grow your money, will always stay the same.