Purchasing life insurance is not something to be done lightly. It requires researching various policies to find what works best for you, your family, and your budget. Here are a series of questions that can help you as you shop for the best policy.
It’s easy to say everybody needs insurance, but what will you use it for? Take a moment to consider the lives of your loved ones in the event of your passing. You may want to purchase life insurance to:
It may take some calculations to determine the actual amount of coverage you need. First, consider any immediate costs if you were to pass—such as funeral or medical expenses. Then, consider the debts and obligations you have outstanding. Lastly, consider how much income your loved ones would need to live a comfortable life, free from financial stresses, for a specified period. Add these subtotals to any other expenses and round up to calculate the amount of coverage you need.
Insurance can be purchased for a specific term, for example, 10, 20, 30, 40 years, or a lifetime. Shorter periods of coverage are less expensive. Term life insurance policies offer a low-cost option to cover your main period in the workforce, but once they expire, so does your coverage, although some policies can be converted to whole life at specific times. Whole life insurance policies are more expensive but do not expire, and the policy’s value is an asset that can be borrowed against in time.
Whole life insurance offers a cash value component that could be useful. After your premiums have covered the policy costs, they accumulate in a separate account. Do you think you will need to withdraw or borrow from the stored cash value in the future? Can you afford the increased cost to have this liquid account available to you? Term life insurance does not offer a cash value option.
Your income is a consideration when choosing a policy. Term life insurance typically runs in the hundreds of dollars annually, while any type of whole life insurance is likely to be in the thousands. Term is an easier option, but the years of benefit are capped. Whole Life insurance offers policyholders far more benefits, but as with all policies, the premiums must be paid on time, or the policy will lapse.
Knowing the five general insurance categories can help you get answers when meeting an insurance agent. In broad terms, they are:
When it comes to keeping your loved ones safe and debt-free, trusting a high-quality, financially stable institution is crucial. One way to determine a company’s creditworthiness is to review its rating on AM Best, a global credit rating agency. Read customer reviews to determine if the company has a good reputation for customer care.
You probably have some specific questions about a policy tailored to your needs. That’s why we are here. Call our office today to talk to an experienced insurance agent who can help you make the best decision on the best policy for you.