Buying life insurance is a common and critical step to provide financially for loved ones after your death. Some people purchase life insurance to provide an inheritance to surviving heirs or for other purposes as well. Regardless of why you intend to purchase coverage soon, this is not a task to rush into. Before you start shopping for life insurance coverage, focus your attention on these tips.
1. Know the Difference Between Term Life and Whole Life
There are two primary life insurance products to choose from, and these are term life and whole life. Term life offers benefits for a specific period, such as for the next 20 or 30 years. Whole life offers benefits indefinitely as long as the premium continues to be paid. Another important difference between term and whole life is that whole life may have a cash accrual benefit.
A portion of each premium may be allocated to an interest-bearing account and may, therefore, increase in value slowly over time. Because of this feature, however, whole life is usually more expensive.
2. Examine the Amount of Insurance Benefits Needed
A common question that people have when buying life coverage relates to the benefits needed. Some people purchase a small policy that covers burial costs only. Others need to provide financially for loved ones after their passing. They may need enough benefits to pay off a home mortgage, to supplement lost wages and even to put the kids through college.
Using an online calculator may help you to determine a suitable amount of coverage.
3. Choose a Reasonable Term Length
If you opt for term life coverage, you will need to decide on a term length. To do so, focus on the reason for buying coverage. For example, do you want coverage to support children in the event you die before they are grown? If so, select a term length that provides benefits through their childhood and college years.
4. Determine Who the Beneficiaries Are
In most cases, the beneficiary of a life insurance policy will be your spouse if you are married. It may be an adult child if you are not married. If your children are minors, the primary or secondary beneficiary may be the person who you have named in your will as the custodian for your children. Remember to update your beneficiaries periodically as needed.
5. Decide If Your Health Status Can Be Improved Soon
Your insurance rate is directly linked to your health status. You may even need to sit for a physical and provide blood and urine samples. Factors like your weight, cholesterol level, blood sugar level and more may be analyzed, and they can drive your rate higher. This rate will be locked in for the entire length of your policy, so you should take steps to improve diet, lose weight or take other reasonable steps before buying coverage. However, rates also increase with age.
Therefore, take steps that may have a quick and beneficial impact on your health.
Regardless of why you purchase life insurance, you understandably have specific needs in mind. Each of these tips can help you to get a reasonable rate on a policy that addresses your needs directly.