Written by Sean Pollock

Monday, 16 June 2008 21:56

So you looked at your financial goals and developed a plan to get there. But what if something happens to you and your family is no longer able to stick to the plan? Meeting those goals will now depend on the right life insurance plan. Life insurance comes with different face values, from different companies and in different blends and flavors. To find out what is the right one for you, follow our Three-Step Life Insurance Guide.

Step one: Determine the amount of protection you need. Remember that the only objective of life insurance is to give your survivors the ability to maintain their lifestyle without your income, not to make them super-rich. The right amount of protection depends on how much you earn and what liabilities you have. Generally it includes mortgage less home equity, remaining loans, credit cards, and all other liabilities. In most cases the face value of life insurance falls somewhere between 5-15 times your annual income from work. If you want to get the best estimate, you should consult with your financial plan or try our Personal Financial Analyzer online and for FREE!

Step two: Determine the type and length of insurance. If you are on the path to building financial independence you must already have a financial plan, and you must know when your family is scheduled for financial independence. We always recommend buying term insurance coverage right up until that moment. If you plan to achieve financial independence in 5 years, then protect your income with a 5-year term life, if it's 20 years, go for a 20-year term. Only if you do not expect to gain sound financial standing until your retirement should you opt for permanent insurance, which will cover you during your entire life.

Term insurance is cheaper, requires less commitment, and gives you more control of your money. With term life your premium will be completely spent away, but you will spend it to buy time until financial independence. And after you've achieved it, there is no point in paying any company for a commitment you are prepared to make yourself. Read more on this on our website.

Step three: Shop for the best rates with the best companies. As you know, life insurance is not the type of the product that offers a trial period before purchasing. By purchasing it, you are seeking the peace of mind that your loved ones are protected. To attain this you need to trust the company where you purchase it. There are several agencies that rate reliability of insurance vendors: Standard & Poor's, Moody's, Fitch, and others. Choose companies that are rated from AAA to A+ in order to have full confidence in your coverage. The rest is really easy. Compare their quotes and choose the best one!

As you can see getting a life insurance plan is has a lot to do with knowing your financial goals. After analyzing and understanding your financial situation, shopping for life insurance is not much different than shopping for milk in the supermarket. Try our FREE Financial Analyzer online to jumpstart your way to financial independence!