Perhaps life is like a box of chocolates. According to Faisa Stafford, CEO and president of Life Happens, a nonprofit organization sponsored by the insurance industry that informs customers about insurance, purchasing life insurance is more like ordering a coffee at Starbucks. Choosing from the many options available can be challenging. It can be really perplexing, she admits.

In fact, a poll by Life Happens and LIMRA found that one of the top excuses people offer for not getting life insurance is uncertainty regarding how much and what kind of coverage to purchase.Yet, the COVID-19 epidemic has served as a wake-up call for many Americans; according to the 2021 Insurance Barometer study, 31% of respondents say the pandemic has made them more willing to purchase insurance.

These ten suggestions will be useful if you’re considering obtaining life insurance but are unsure.

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Analyze your present financial situation

Before you can decide on the kind and amount of life insurance you require, according to Stafford, you must have a complete picture of your financial situation.

Think about the plans you have in place to support family members who rely on you financially. This would include any life insurance coverage obtained through employment, an emergency fund, and retirement funds. You might discover that you’re not as ready as you thought to deal with the unexpected.

The needs you should cover with life insurance, such as a mortgage that must be paid, children who must be supported, a small business that must be maintained, or a legacy you wish to leave, should be discussed with a financial adviser, according to Stafford. A financial planner may be available to you through your employer as one of your benefits. Alternately, you could use the National Association of Personal Financial Advisers to locate a fee-only planner.

Know how much protection you require.

According to Adam Winslow, CEO of Aviva UK & Ireland General Insurance, a division of Aviva’s global savings, retirement, and insurance business, most consumers underestimate how much life insurance they require. People frequently consider simply the amount required to pay off their largest obligation, such as a mortgage. But, he advises that they think about how much more would be required to assist a spouse or partner with paying bills, supporting children, covering college tuition, or any other long-term needs.

As a general guideline, you should have a policy with a death benefit that is 10 times your yearly pay. Yet, depending on your individual circumstances and financial objectives, you might need more—or less—than that. You can determine a more accurate amount with the aid of a financial planner.

Choose the Kind of Life Insurance Policy

While purchasing life insurance, consumers frequently compare term and whole life policies. A term life insurance policy will offer protection for a predetermined amount of time, usually 10, 15, 20, or 30 years. Until you hit a certain financial milestone, such as paying off your home or sending your children to college, it may be an economical method to obtain coverage.

In addition to whole life insurance, there are additional forms of permanent life insurance. One factor in the permanent life insurance’s higher cost compared to term life insurance is the lifelong coverage it offers. Because it increases in value over time, it is also more expensive. You can utilize that money anyway you see fit—to pay for long-term care, cover policy premiums, cover emergencies, or even supplement retirement income. According on your needs and financial objectives, you may decide to purchase a term or permanent coverage.

Recognize the factors that affect your life insurance rate.

Health and age are the two main variables life insurance companies take into account when calculating the cost of your coverage. According to Winslow, life insurance tends to be less expensive the younger you are when you purchase it. That’s because you’re more likely to be healthy and less risky to insure while you’re younger.

The type of insurance you choose and the size of the death benefit both influence the rate you pay. The term length you select when purchasing term life insurance will also impact your premium.

Most term life policies provide you the choice to switch to permanent life insurance if you currently can only afford a term life policy but desire permanent cover. With term life insurance, you can lock in a cheap rate today and switch to a permanent coverage if your income rises.

For the best deal, compare life insurance companies.

It’s simple to compare life insurance quotes because so many insurers provide free online quotes. You should request quotations from several businesses because prices can differ, and this will assist you determine which business to apply for coverage with. You might also deal with an independent insurance agent that represents a number of different insurance providers and can assist you in locating the finest protection at the most affordable price.

Don’t Just Focus on Premium

The cost of your life insurance is crucial since you want to be sure that the premium is within your means. A policy won’t help you at all if you can’t afford the premium payments, after all. Price should not, however, be your only consideration.

The internal costs of a cash value life insurance policy might be just as significant as the premium you pay. If you’re looking at indexed universal life insurance, pay close attention to the elements of the policy illustration that are guaranteed vs. non-guaranteed. Concerns regarding dishonest sales techniques for indexed universal life insurance are raised by consumer activists.

In your search, look for a business with solid financial ratings in the A range from independent rating organizations like A.M. Best, Moody’s, and Standard & Poor’s. Ratings are available on the websites of insurance providers. You can also request company ratings from your life insurance agent.

Be Ready to Respond to Many Questions When Applying

The quote you receive from an insurer normally only serves as an estimation of your premium. You’ll need to fill out a comprehensive application in order to obtain a policy. Your age, weight, personal medical history, mental health, family medical history, and usage of cigarettes will all be inquired about.

The insurer will also inquire about your driving history and whether you engage in any risky hobbies or work that increases your insurance risk. Your real insurance rate is calculated using the data provided.

Be Truthful on the Application

Be sure nothing on your life insurance application is hidden or omitted. Because insurance companies use outside sources to verify the information you submit, Winslow says it’s crucial to be honest.

The insurance provider, for instance, may be able to learn details about you by looking into your medical history, prescription drug usage, motor vehicle report, and public records. Also, you can be asked to undergo a medical examination that includes blood and urine testing.

The Process Doesn’t Have to Be Painful

During the application process, you won’t always be prodded and prodded. According to Stafford, an increasing number of insurers are now offering no-exam life insurance choices. Instead, they rely on other sources to validate the information applicants submit, and they use data modeling to identify the risk level of each candidate.

Be aware that there are different types of no-exam life insurance policies:

  • Accelerated underwriting policy. This type of policy often involves a lengthy application and the insurance company will collect information from third-party sources, such as your prescription drug history. The premiums are typically competitive with a fully medically underwritten policy with an exam.
  • Simplified issue. This type of policy only requires applicants to answer a handful of questions and relies on few, if any, third-party sources. Since there’s less information about you, these types of policies tend to have higher premiums.
  • Guaranteed issue life insurance. This type of policy asks no health questions and is usually the most expensive way to buy a no-exam policy. You cannot be turned down for guaranteed issue life insurance.

Lock in Temporary Coverage

By including a check for your first premium payment with your application, you may typically lock in temporary coverage if the underwriting procedure for the policy you’re purchasing will take a few weeks or longer. While you wait for the application to be processed, you have protection and peace of mind thanks to this. Inquire about this choice with your life insurance agent.


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