Buying life insurance for the first time can be a daunting experience, but knowing why, when and how to buy life insurance can make the whole experience a lot easier. Before you contact your insurance agent, check out these nine simple tips on how to make the whole process less complicated.
- Why are you buying life insurance? The main reason that people buy life insurance is to provide financial security for their children or spouse. The benefits of your life insurance payout can be used to pay for funeral costs, the remaining balance of a mortgage or college tuition, or just to replace the income that you provide for your dependents.
- When should you buy life insurance? Life insurance is less expensive the younger you are when you buy it. While your needs may change as you age (additional beneficiaries, increased expenses, and so on) you can always add another policy. Some life insurance policies also allow for conversions and upgrades when your needs change.
- Who are your beneficiaries? Your beneficiaries can be a person, a business, or a charity. Before buying a life insurance policy it is important to know who your beneficiaries are so that you can buy a plan that will meet their needs.
- How do you make sure your benefits go to whom they’re supposed to? By having a last will and testament you can make sure that your life insurance benefits are paid out to the proper beneficiaries.
- How much coverage do you need? A general rule of thumb is to buy coverage that is equal to eight years of your salary, but this is not set in stone. Everybody’s needs are different in this regard. It’s good advice to speak with a financial professional to get a better understanding as to what kind of coverage you need before speaking to an insurance agent.
- What type of policy is right for you? There are two main types of life insurance policies: -term life and permanent life.
A term life policy is purchased for a specific period of time. If your term life period expires before you pass away then your benefits will not be paid out. Some term life policies can be converted to whole life policies before they expire, so it’s important to know whether or not your policy can be converted. The benefit of a term life policy is that they are generally much less expensive than whole life policies.
A whole life policy provides lifelong protection, and some whole life policies even gain interest. A whole life policy is more expensive than a term life policy because it often accumulates cash value and is designed for a longer period of time.
- How much coverage should you buy? Two things to consider in regards to how much coverage you should buy are what you need and what you can afford. You don’t want to buy life insurance that you can’t afford. Find out what coverage you need, and then discuss with your insurance agent to find the best way to cover your needs within your budget.
- Should you buy your policy through the insurance company or an independent agent? You should buy your life insurance policy through an independent agent. An insurance company can only sell you what they offer, but an independent agent can shop multiple insurance companies to find you a policy that best fits your needs.
- How should you choose your insurance company? It is important to choose a quality provider. This is another benefit of using an independent agent to find your policy for you. An independent insurance agency will know which companies have the best rating and will still be around to pay out your benefits. Many of the top rated insurers have liability to pay out to their customers even if the company itself goes under. You can also check out a qualified rating service like A.M. Best Rating Services, which rates insurance companies for consumers.
Talk to a Yetter insurance agent for more information about obtaining a new life insurance policy. We’ll help you choose the right plan that fits your needs. Contact Yetter Insurance today at our Milford office. Visit www.yetterins.com or call 570-296-8329.