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  1. Understand why you need it
    Life insurance is designed to provide families with financial security in the event of the death of a spouse or parent. Life insurance protection can help pay for mortgages, a college education, help to fund retirement, provide charitable bequests, and, of course, is a key element in estate planning. In short, if others depend on your income for support, you should strongly consider life insurance.Even if you don’t have any of these needs immediately, you still may want to consider purchasing a small “starter” policy, if you anticipate you will have them in the future. The reason: the younger you are the less expensive life insurance will be.
  2. Determine the amount of coverage you need
    A more detailed method is to add up the monthly expense your family will incur after your death. Remember to include the one-time expenses at death and the ongoing expenses such as a mortgage or school bills. Take the ongoing expenses and divide by .07. That indicates you’ll want a lump sum of money earning approximately 7% each year to pay those ongoing expenses. Add to that amount any money you’ll need to cover one-time expenses, and you’ll have a rough estimate of the amount of life insurance you need.
    You can use any number of planning tools to get an idea of the amount of coverage you’ll need for your policy. Use our online calculator, for example, or use a formula to figure out how much you need. An easy place to start is by multiplying your annual income by the number of years left before your retirement benefits kick in.
  3. Find the right policy
    You have two main options: term life, for a more affordable premium, or permanent life, for more comprehensive coverage that can add cash value. But you have a lot of options to explore.
  4. Look at the quality of the provider
    You want to make sure you to choose a company you can rely on to be around for as long as you’ll need your coverage, and which invests your premium in a highly prudent manner in order to pay the claims of its policyholders.
  5. Consult a financial professional
    A financial professional can help you factor in financial considerations, your needs, and your family’s needs.
  6. Increase your vocabulary
    Life insurance can be confusing, with terms like “premium,” “dividend,” “beneficiary,” and many more.  New York Life has put together a glossary of these terms for you, to help you better understand them.

*All info provided by New York Life

*Picture provided by Google Images