Tips for Buying Life Insurance for the First Time
Does all the terminology and array of options make you nervous about purchasing your first life insurance policy? Not to worry; I am going to provide you with a valuable list of tips for buying life insurance for the first time.
Perform a Financial Assessment
One of the first things you should do when beginning your life insurance journey is review your finances. Look at your current expenses and determine what you spend to provide for your family. This will help when you begin to determine the amount of coverage needed.
Decide How Much Coverage You Need
Ask yourself why you are getting the policy. Is it to be able to pay off your mortgage, send your children to college, help pay bills, or take care of any other long-term needs? The answer to these questions will help you decide on the amount of coverage you want to purchase. A general rule of thumb is that you want your death benefit to be about 10 times your annual salary.
Term Life or Whole Life?
Understanding the difference between term life or whole life is necessary when purchasing a policy. Term life is a temporary policy that is active for 10 to 30 years. It is one of the most affordable life insurance plans, but premiums can be expected to rise after the initial term.
On the other hand, whole life is a permanent life insurance policy. This policy is more expensive than term life but that is due to its lifelong coverage and building cash value. The cash value can be used for whatever you need, such as taking out a loan, retirement supplement, emergencies, or paying the premium. Both plans are good for what they are, but you must determine the best fit for your needs.
Find the Best Rate
A few things that affect the rate you pay for your coverage are age, health, and amount of coverage. That is why it is important to get quotes from various companies. This will allow you to make a more informed decision and ensure you get the best and most affordable coverage for your situation. Working with an insurance agent will make this process easier.
Be Honest When Applying
To get a policy, you will be expected to fill out a thorough application. Therefore, you should be prepared to answer questions related to medical history, age, weight, mental health, tobacco use, hobbies, driving record, etc. These questions are used to determine your rate, so the insurance companies may look to confirm if your information is correct. Always be honest and try not to leave anything significant out.
Get Temporary Coverage
The underwriting process can sometimes take a while. So, ask your agent about the option to lock in temporary coverage while you wait for your policy to kick in. All you would need to do is provide your first premium payment along with your application. This ensures that if anything were to happen to you during the application process, you would still receive the death benefits.
Life Insurance Questions?
We hope this information on buying life insurance is helpful.
If you’d like to learn how we can help you plan your retirement, call Empower Brokerage to speak to one of our Life and Annuity experts (888) 539-1633
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