Choosing your life insurance policy.

              Oklahoma Insurance Department - Life
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Choosing your Life Insurance Policy
Life insurance is a form of insurance that pays a beneficiary in the event of the death of the insured
person. When a policy is purchased, a specific death benefit is chosen.
Life insurance is a contract between the policy owner and the insurance company:
the policy owner (or policy payer) agrees to pay a defined amount called a premium.
the insurance company agrees to pay a sum of money upon the death of the insured person.
the beneficiary – the person or persons named by the policy owner – will receive policy proceeds
(benefit) upon the death of the insured person.
Having young children is a common reason to purchase life insurance.
Do you need Life Insurance?
If you provide financial support, or provide such services as child care, cooking, and cleaning for your family, life insurance can help replace those
contributions to the family if you should die. Older couples also may consider life insurance to protect a surviving spouse against the possibility of the
couple's retirement savings being depleted by unexpected medical costs.
If there are people who depend on you financially (including children, a spouse, a business partner, disabled or elderly relatives), having a life
insurance policy will protect them when they can no longer count on your earnings.
If you have a mortgage or other financial obligations, a life insurance policy can help pay off debts and provide living expenses to the people you name
as beneficiaries.
A key question to ask yourself is:
Are there people who depend on me financially? If so, life insurance can provide for their needs if you should die.For most people, the need for life
insurance will be highest after starting a family and will decrease over time as children grow up and become independent. Life insurance can help make
sure future needs are met and that your family maintains its standard of living, no matter what life brings.
How much Life Insurance is enough?
Multiply your family’s annual expenses, allowing for inflation, using the number of years in the future you believe your dependents would need your
support. Remember to include the future costs of items you want to pay for such as a mortgage or educational expenses. Some options to consider:
How long will any children remain at home and be supported?
What are possible education costs for dependents, whether a child or an adult who might need to enter the workforce after the death of the primary
provider?
Do you want to cover mortgage or vehicle payoff costs?
Some advisors recommend an amount of life insurance that equals or exceeds two to six times the annual income of the policyholder. However, this
figure should be
Consumers Licensing and Education Regulated Entities Businesses Public Information
Insurance
Commissioner
JOHN D. DOAK
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