How to Buy Life Insurance
It is easy to buy life insurance when you know it will financially protect your family after you are gone. If you know what you should look for, in terms of life insurance, you can get great insurance coverage at an affordable price.
Why should I buy Life Insurance?
The most important reason to buy life insurance is to protect your family financially. If you are single and starting out in life buying life insurance may not be the best option. However when you have more responsibilities and your family gets bigger the more you will need life insurance. The money that comes from a life insurance policy can take the place of the income you would have earned that your family will not have after you pass away. You also may want to by life insurance in order to pay off debts and expenses, leave money to charity, and take care of expenses stemming from real estate.
Choosing Term or Cash Value
There are a couple types of basic life insurance. Term life insurance provides you with coverage for a specific amount of time, referred to as the term. There is also cash value, permanent, life insurance that combines a death benefit with a component of cash value. Cash value life insurance can give you protection for a lifetime and term life insurance can be the less expensive option, if you are purchasing life insurance for the main reason of financial protection, and you only need temporary life insurance. There are some life insurance term policies, referred to as convertible, which will allow you to exchange term policies for a permanent policy at some time.
Determining the amount of Coverage you Need
Depending on the income that your survivors will need, how much money you are in debt, and other types of life insurance you can get will determine how much life insurance you should buy. If you have a spouse the both of you should look into buying life insurance. An easy way to estimate how much life insurance protection you should by is by using a calculator for life insurance needs.
Choose a Number Between 1 and 30
Generally term life insurance is offered for time periods in the range from 1 to 30 years. You may want to look into picking a term that will match your financial protection needs for life insurance. For example, if your primary reason for purchasing life insurance is to protect your 10-year-old twins until they graduate college you will want to buy a life insurance policy having a term of at least 12 years.
How much will Life Insurance cost?
There are few risk factors that will determine how much you pay for life insurance. These risk factors are your age, your health, if you are a tobacco user, history of family health, and the type and amount of the life insurance you are going to buy. You should know that the insurance premium you are quoted will go up later in time. For example, when you buy term life insurance the rates are only guaranteed until the end of the life insurance policy term. This is the case yearly for an annual renewal term or at the end of a number of years, specified beforehand, for level term. Even though most policies for life insurance can be renewed at the end of their term, you will pay a higher premium in order to receive the coverage.
You Should Compare Insurance Companies
When you compare life insurance quotes you should make sure that there is similar coverage. Know that any insurance policy you buy will only be as good as the insurance company that will be issuing the policy. You should find the rating of the insurance company that can be found from the major rating services. Two such rating services are A.M. Best and Standard & Poor's. These rating service companies will evaluate the condition of the insurer financially, as well as their ability to pay their claims. You should also get this information from the insurance company that gives you the policy quote. If you want to find out more information on the record of your insurer you can contact the department of insurance in the state that the insurance company is located.
Submitting your Life Insurance Application
When you are ready to buy a life insurance policy you will fill out an application. The life insurance application will have questions about both your past heath and current health and well as your lifestyle. Usually you are required to have a medical exam performed that will be set up and paid for by the insurance company you are looking to buy a policy from. The results of your medical exam, the answers you give on your application, and your history of health will determine if the insurance company will offer you a policy, and if they do so how much you will pay for the policy.
Learn the Language
Life insurance policies are not exciting but you should still read it over carefully. Listed in the policy will be important information such as policy provisions, benefit amounts, the policy"s premium, your named beneficiaries, and the premium guarantee period. You should be sure that you understand everything in the policy and if you do not ask the insurance company to explain it to you. You may have a "free look" period depending on the laws of the state you reside in, where you are allowed to cancel the insurance policy without incurring any penalty. Generally the "free look" period is 10 days.
