Life insurance policies are offered primarily to provide funds for your family or designated recipient when you pass away. These funds may be used to help cover funeral expenses, pay for ongoing debt obligations or to help maintain the same standard of living enjoyed before your death. Life insurance policies vary in length, options and cost. Successful ownership of life insurance policies requires purchasing policies that match your financial needs, paying ongoing premium costs and updating personal information whenever your contact information changes.
Step 1
Determine the type of life insurance you need. Term life insurance is offered for a period of time such as 10 years and generally is a less expensive form of life insurance coverage. Whole life or universal life insurance provides coverage for your entire life and may offer dividends, the ability to take a loan from the accumulated value of the policy or the option to modify how the dividend payments are distributed.
Step 2
Establish how much insurance coverage is sufficient for your needs. Online insurance calculators, insurance sales professionals and financial planners can provide assistance for determining life insurance coverage levels that are customized to your financial and life circumstances. Opt for one policy or multiple policies that mix types of coverage. For example, select a whole life policy for long-term coverage and supplement the payout total when you have young children with a term life policy.
Step 3
Purchase life insurance. Obtain quotes from local life insurance agents, or look to online price quotation services. These online services provide policy quotes from multiple companies along with comparison metrics. Most of these sites offer reliable information and valid quotes, but review any life insurance company's reliability before finalizing a contract. Sign a contract once you find an account with a reputable company that provides sufficient coverage for your family and personal preferences.
Step 4
Pay your premiums on time. Premium payments for life insurance are often yearly, but can be structured as a monthly settlement or one-time payment. Yearly payments may offer you a lower premium rate over monthly installment rates. For ongoing payments, ensure you pay the full amount before the renewal date of your life insurance policy to avoid a lapse in coverage or potential cancellation.
Step 5
Update your contact information any time you change residences or phone numbers with the company that manages your policy or your life insurance agent. Maintaining updated records ensures timely receipt of notifications and bills. Review your policy whenever you have a change in your family size, financial obligations and job status and at age milestones. Routine reviews can ensure you have the proper coverage to meet your beneficiary's needs.
Step 6
Maintain your life insurance documents and information in a secure location. Consider purchasing a safe deposit box for your home that can protect your life insurance documents in the event of a house fire. Make sure your life insurance beneficiaries can access critical policy information such as the name on the policy, account number and payout amount when it is time to cash in the policy.
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