3 Tips for First-Time Life Insurance Buyers
Posted on Wed, Feb 01, 2012
Buying life insurance can be simple. Keep these three tips in mind to sail through the buying process and get the coverage you need.
Tip #1. Calculate how much life insurance you need. Before you comparison shop and request life insurance quotes, you should calculate the amount of insurance you think your family needs. This calculation is highly individualized because it accounts for the ages of your spouse and children, existing mortgages, college plans, and funeral expenses. Efinancial's life insurance calculators can help you figure out how much life insurance you need. For a detailed figure, you can also calculate your family's monthly expenses, including rent or mortgage, tuition, debt, living expenses, and other ongoing expenses. In addition to recurring expenses, add one-time expenses like funeral costs. Once you have a calculation you feel comfortable with, run it by your life insurance agent or financial advisor to get a second opinion to see if the figure is reasonable.
Tip #2. Identify the policy that is best for you. As you explore the process of buying life insurance, you'll find that there are several types of life insurance coverage. You will want to find the type that fits your specific needs.
Term life insurance is the least expensive type of policy because it protects you for a certain amount of time, usually between 5 and 30 years. This type of insurance works well for families with mortgages or student loans because if the insured passes away before the debts are paid, the insurance payout can cover the debts. It doesn't build cash value over time, but some term life insurance policies can be converted to whole life policies at a later date.
Whole life insurance policies cover individuals for their whole lives. As such, they are more expensive than term policies, but they offer other benefits in addition to the insurance protection. Some whole life policies pay annual dividends, and some offer loan options, so you can use the cash value to pay for education expenses or to subsidize your retirement.
Universal life insurance is a type of whole life policy that covers you from the date of purchase to the date of your death, but the insurer offers you flexibility in the amount of coverage you have at any given time. Thus, you can increase your coverage during vulnerable times and decrease your coverage when you're more secure, raising or lowering either the amounts or frequency of your premiums.
Variable universal life insurance policies combine universal policies with investment options, giving you more control over the cash value accumulating in your account. Used as an investment vehicle, these life insurance policies combine life insurance with retirement planning. Be aware, however, you may face IRS penalties if you withdraw funds prior to age 59 1/2.
Tip #3. Consult a licensed agent. Life insurance agents have experience helping people acquire the best policies for their individual situations. Licensed agents can help you find policies with reputable companies with top credit ratings. By establishing a relationship with a licensed agent, you'll have a professional who can help you make adjustments to your plan as your life situations change.
Buying life insurance doesn't have to be a headache. By following these simple tips, you can get the protection your family needs. The result will be peace of mind and a feeling of security for your whole family.
To get a
Term Life Insurance Quote or Research how to
Buy Life Insurance Online visit
Efinancial.com