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Life insurance is not as complicated as it seems. Once you understand the basics about life insurance, you're on your way to making the right policy choice based on your needs. The right decision is always according to your knowledge you have of life insurance and how it works. To maximize your chances of obtaining the best value from any life insurance product, you need to ask a few questions.


When should I purchase life insurance?


Ideally, you should purchase life insurance when you are young. Life insurance companies award the best premium prices to younger individuals in the prime of health. As you age, your chances of getting the best rates gradually decline, but it's never too late to purchase an insurance policy.  You should purchase life insurance when you have family members who depend on you for their livelihood.


If you have debts, a mortgage or outstanding personal loans, purchasing a life insurance policy will pay off those debts after your death, leaving your family debt-free.


If you have an estate worth more than $2 million, a life insurance policy would help offset estate taxes that need to be paid after your gone.


How much life insurance coverage do I need?


Your coverage amount will depend on your financial situation. Experts throw a ballpark figure of 15 to 20 times your annual income. However, that's not a hard and fast rule. You can customise your coverage amount to suit your needs. The coverage can be used to pay off your debts, provide income for your family, or as an inheritance for your children. Remember, having too much insurance coverage is just as bad as having too little. Why pay extra premiums for coverage you do not need? That is why it is essential to review your insurance needs annually. You could reduce coverage if you paid off a large portion of your loans, while you can increase coverage with a new addition to the family.


Is term life insurance better than whole life insurance?


Term life insurance is the simplest product, and the premium rates are within the means of most families' budgets. You pay an affordable premium, and in return, your family gets a huge death benefit. The glitch is that you need to die within the stipulated term period! If you should outlive your term policy, your premium is void. Since life insurance needs usually decline with age, term life insurance perfectly suits the general, temporary needs of those seeking life insurance protection.


In contrast, whole life insurance policies are far more expensive. They have a built-in cash component attached to the policy. A part of the premiums you pay is put in an investment vehicle. In the initial years of the policy, most of the interest gained is spent on commissions, administrative expenses and other fees. So, your whole life policy starts earning savings only after several years. Experts say that it takes 20 years for a whole life policy to build a substantial savings component. For more info, be sure to look up your options online. 


Head over to to know about the average cost of life insurance.