When you managed to get your first decent job, you will surely experience euphoria. Finally, there is some money that won’t fly away after paying the rent and eating instant noodles. And then there are tons of papers from the HR department. Among these papers, there is one called “life insurance form”. Frankly speaking, it sounds pretty morbid to think about your death now.
Well, let us go through the unpleasant topic once and for all. If you have no dependents and the most precious thing you have is some Funko Pop toys, you definitely do not need any insurance right now. The only recommendation I can give is that it is incredibly smart to determine the premium when you are young and healthy. Otherwise, the prices go completely crazy at the age of forty or if you have some health issues.
Forget about such things as whole-life and universal-life insurance, as they are really complicated and incredibly expensive. Choose Term Life, as it is cheaper and simpler. As it is said in the name, you choose the term of time (twenty or thirty years) and in case of your death during this term, you beneficiaries will get your compensation.
How much coverage do you need? The general rule suggests you to have ten to twelve times your annual salary. If you earn fifty thousand dollars, a policy for half-a-million dollars will suit you perfectly. You can also cover your debts and funeral costs, and give some money to your future family. The sum of money may sound pretty huge, but you should keep in mind that the prices will increase due to inflation.
Do not settle on the default option offered by your employer. Employer policies are convenient, but they disappear immediately when you quit the company. To get the insurance plan separately, use such resources as Policygenius or NerdWallet. This way, you will be able to compare the prices of MetLife, Haven Life or Banner Life.
Search for “convertible” option. That means your insurance plan will allow you to convert your term insurance into permanent life insurance without further medical examination. Anything can happen in life and really quickly – you can marry, buy a house or have kids within a decade or two. It will not cost you any money now but will save you from a lot of troubles in the future.
The medical examination itself is relatively simple – it involves measuring your height and weight, checking your blood pressure and performing the blood test. Do not try to hide any of your vices or the adventurous episode in your youth when you climbed rocks because the insurers will have access to your medical history databases.
Try to choose the policy with the term of time equal to your greatest financial obligation (e.g. if you have just taken a twenty-year loan, you need a twenty-year term). If you are going to have kids soon, the thirty-year term will cover your children until they finish studying. Just do not think about the details and buy your policy now.