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How to Buy Life Insurance

Source: The American Council of Life Insurers. Web: www.acli.com/public/media/mainframe_med.htm .

Types of Life Insurance

Finding an Agent

Choosing a Policy

Consider Other Provisions

Research the Company

Life insurance is intended to provide for your dependents after you die. There is no federal income tax on life insurance benefits.

Evaluate the Need

To determine how much insurance you need, consider ongoing obligations (mortgage payments, school tuition, monthly bills), costs associated with your death (medical bills, burial fees, estate taxes), and your family's readjustment (moving, job hunting expenses).

Generally, you will need a life insurance policy with a face amount worth from five to seven times your gross annual income. The face amount is what is paid at your death.

The cash value of a policy is what it is worth at any given time, based on how much you have paid in premiums, how long you have had the policy, and your insurance company's financial situation. A policy may have no cash value in its early years.


Information Please® Database, © 2007 Pearson Education, Inc. All rights reserved.

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