If you’re purchasing life insurance for the first time, don’t worry if you feel intimidated by what you don’t know. This is a big decision to make and it deserves your time and consideration. That said, you probably don’t want to put off buying coverage any longer, so acting now can save you a lot of money in the long run.
We’ve assembled some tips below that you can use while searching for the policy that makes the most sense for you, your loved ones, and your budget.
Tip 1: Assess Your Financial Situation
One of the first things you should do before looking for life insurance policies is to take stock of your financial situation. If you have dependents that rely on you for financial support, you’ll want to consider any arrangements you’ve already made to ensure their financial security in your absence.
This should not only give you an idea as to what you want your life insurance policy to cover but also how much coverage to purchase. For example, if you want to ensure your spouse can still afford the mortgage and send your children to college in your absence, looking for policies with that in mind can direct you toward the most helpful insurance products.
Tip 2: Determine How Much Coverage You Need
You may already have an idea as to how much life insurance coverage you need, but this isn’t always so simple to assess. You want to be sure your dependents won’t lack the financial resources they need to pay the bills and have happy lives, but a life insurance policy that covers everything might not be realistically affordable.
With that in mind, it might be more helpful to abide by a rule of thumb: Consider policies that have death benefits equal to 10 times your annual salary. This can help you redirect your focus on what matters most to your loved ones and how much coverage is both helpful to them and realistic for you to afford.
Tip 3: Choose Your Preferred Type of Life Insurance
Life insurance policies broadly fall into either term life or whole life insurance. Term life insurance generally comes with more affordable premiums, but these policies only last for a specified term, such as 10, 15, 20, or 30 years. Term life insurance may be useful to have to ensure your loved ones’ financial security when you are paying off a mortgage or paying for your children’s college tuition.
Whole life insurance is one type of permanent life insurance policy that never expires, but it’s much more expensive than term life insurance. It also builds cash value, which can be used to cover emergencies or other important expenses.
Ultimately, selecting the type of life insurance you prefer will come down to your needs and goals for life insurance. Discussing these with an insurance specialist can help you make the right decision for you.
Tip 4: Take Insurance Rates & What Affects Them into Account
The affordability of any life insurance policy is determined by two primary factors: your age and health. You can expect that purchasing life insurance when you’re older or have been diagnosed with one or more health conditions will be more costly than doing it when you’re younger and in better health.
If you’re hesitating on purchasing life insurance now because you’re wary of paying for many more years of coverage than you think you’ll need, consider that premiums can increase substantially due to certain age milestones or pre-existing health conditions.
Tip 5: Don’t Purchase a Policy You Aren’t Sure You Can’t Afford
A life insurance policy is only active for as long as you pay your premium. If you miss a payment, you may trigger a special condition that cancels your policy. While you won’t be responsible for any future payments, you’ll lose your current coverage as well as any advantageous rates you previously secured.
Tip 6: Contact an Insurance Specialist for Help
When you need help purchasing life insurance, Insurance Specialists, Inc. is there to help. After determining your coverage needs and budget, we can match you with life insurance policies that can provide the level of coverage you need.
For more information about how we can help, contact Insurance Specialists, Inc. online today.