by D. Victor

Created on: November 23, 2008   Last Updated: November 24, 2008

As a beginner, you may hear the following bits of advice:

i) Everyone should have life insurance

ii) Life insurance is a waste of money

You may be confused with conflicting bits of information about insurance. To reduce the confusion, it is important to be in a position to judge for yourself instead of relying on the opinions and views of so-called experts.

As a beginner, you need to grasp the concept of life insurance plans before examining individual plans offered by insurers. However, you do not need to intimately study life insurance for months. It is important to have a working knowledge of why you need insurance, how much coverage you need and what types of life plans are available to you.

Why you need life insurance

There exists the belief that everyone needs life insurance. This is not always the case. However, because of uncertainty about the future, life insurance is generally a useful financial product to have.

Life insurance is a protection product that is critical in estate planning, mortgage protection and family income protection. Sometimes, the need for life insurance as collateral or for business purposes is often overlooked. The utility of a life insurance outside of family income protection is what makes it a must-have product for many people.

How much coverage you need

Once you decide that life insurance is necessary, it is important that you acquire sufficient coverage. Balance is the key. You must remember that you have other protection and accumulation products to cover. At the same time, purchasing an inadequate amount of insurance is risky. This is because you may not be able to purchase more coverage later when it is required.

Getting the right amount of coverage now is important. How much do you need though? Five or ten times your annual income? If you are buying life insurance for a specific need, like mortgage protection- this is hardly an issue. You just need to buy the amount that will cover the mortgage or loan.

Once you are using life insurance for family income protection, estimating coverage is a bit tricky. It is a half-truth that you must use your income in determining your life insurance coverage need. It is better to use an estimation of living expenses in determining life insurance needs.

More complex life insurance calculations will factor both income and expenses using proportional ratios. The good news is that you need not be adept at mathematics to estimate your life insurance coverage amount. There are several online life insurance

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