10 Things You Should Know Before Purchasing Life Insurance

This information will help you decide how much coverage you need, how long you’ll need it, and what you can afford to pay.

There’s no question that buying life insurance is a big deal. After all, no one wants to take out the wrong type of policy, or pay too much for the right type of policy.

Knowing that, here are 10 things you’ll want to look for, know, and consider before buying life insurance.

1. Review Your Insurance Needs

Talk to an insurance agent. He or she can help you evaluate your insurance needs and give you information about available policies.

2. Decide How Much Coverage You Need

How much of the family income do you provide? Does anyone else depend on you financially? How will your family pay final expenses and repay debts after your death? Based on the answers to these questions, decide how much coverage you need, for how long and what you can afford to pay. You want to make sure that you buy enough life insurance to cover the financial effects of an unexpected or untimely death.

3. Assess Your Current Life Insurance Policy

If you already have a life insurance policy, do not cancel it until you have received the new one. You then have a minimum period to review your new policy and decide if it is what you want. Keep in mind that you may not have to cancel your current policy. You may be able to change your policy to get the coverage or benefits you want now.

4. Compare The Different Kinds of Insurance Policies

There are two basic types of life insurance: term insurance and cash value insurance. Term insurance generally has lower premiums in the early years but does not build up cash values that you can use in the future. Cash-value life insurance may be one of several types: whole life, universal life and variable life. Your choice should be based on your needs now and in the future and what you can afford.

5. Be Sure You Can Afford the Premium Payments

Before purchasing a life insurance policy, be sure that you can handle the premium payments. Can you afford the initial premium? If the premium increases later, will you still be able to afford it?

6. Have an Insurance Agent Help You Evaluate the Future of Your Policy

How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level of cash value build-up. Ask your agent for a year-to-year display of values and benefits.

7. Keep Your Current Policy

It is important that you do not drop one policy and buy another without a thorough study of the new policy and the one you have now. Replacing your insurance policy may be costly.

8. Understand Renewal Policies

You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also, ask if you will lose the right to renew the policy at a certain age.

9. Read Your Policy Carefully

Do premiums or benefits vary from year to year? How much do the benefits build up in the policy? What part of the premiums or benefits is not guaranteed? What is the effect of interest on money paid and received at different times on the policy? These are all questions that you should be able to answer by reading your policy thoroughly. Your agent can help you understand things that are unclear.

10. Review Your Life Insurance Program Every Few Years

How will inflation affect your future needs? Do you need more insurance when your family size increases? Review your policy with your agent every few years to keep up with changes in your income and needs.

How To Choose The Right Life Insurance Policy!

I received this article on the importance of life insurance from Forbes and decided to share it. Having adequate life insurance can't bring your loved one back, but it can help provide you with financial security. I have numerous female friends who are living financially secure because their husbands had life insurance.

Whether it’s just you and your spouse or your family consist of a houseful of kids, a top priority for your peace of mind is having the right whole or term life insurance to make sure your loved ones are protected. Because there are so many options available, it’s easy to put off making a decision if you are overwhelmed with your choices or don’t properly understand them. The following 10 suggestions can help you make the right decision for you and your family.

1. Get multiple insurance quotes that include all options or restrictions so you know exactly what is available.
2. Stay away from any agent or organization that cannot or will not fully explain exactly what you are buying and why.
3. Always remember that you are the client. At no point should you feel bullied or intimidated into buying something that you aren’t sure of.
4. Though you certainly want to purchase adequate coverage, don’t overbuy. If your premiums are too high to manage because of the extras that have somehow found their way into your policy, you will be much more apt to allow it to lapse.
5. Once you find a company or agent that you are comfortable with, ask questions. The clearer you are on what type of life insurance rates and options are right for you, the easier it will be to agree on a package that suits your requirements.
6. Consider life insurance for the whole family, not just adults. Expenses that follow death or serious illness or accident will add more stress to an already devastated family.
7. Remember to regularly check your policy for changes that may affect you or your family. Almost all companies will send out notices to explain changes that they have made so make sure you review them.
8. Review your policies relevance regularly and update as your family and their needs change.
9. Consider your life insurance a fixed and non-negotiable expense in the same way you would your mortgage or car payment. It’s easy to consider life insurance as a luxury rather than a need, when in reality that is definitely not the case.
10. Don’t be overwhelmed by “what if” or worst-case scenarios.

No one wants to leave their family early, and no one wants to leave them struggling financially as well as the emotional trauma they will experience with the loss of a loved one. The proper whole or term life insurance can let you get on with the business of living while knowing that should the worst happen, your family is protected.