Purchasing
life insurance is a mature and safe decision towards
ensuring the financial
security of your family and loved ones after you
die. You may also want to buy life insurance to pay
off existing debts, leave money to charity or to cover
final and estate
expenses. Since this is not a fun subject to think
about or plan around, many people hold off on buying
insurance until they become sick or old, which will
make the premiums much more expensive.
Since you are going to be making a monthly payment that
will eventually go to your loved ones, you will want
to choose your life insurance policy and everything
involved with it carefully.
The article, “How to Buy
Life Insurance” posted on insurance.com offers
great topics to ponder prior to signing anything on
a policy.
Before you get started you should determine which type
of insurance you want: “term life insurance, which
provides life insurance coverage for a specified period
of time (the term) and cash value (permanent) life insurance,
which combines a death benefit with a cash value component.”
Cash value insurance covers you for life but is going
to be more expensive than term insurance.
Term insurance is beneficial if you have a specific
time period you need coverage for, such as until you
children move out. Some term insurance policies are
convertible, which means that you can change the term
policy into a permanent one after a specific point in
time.
Next, you will have to determine exactly how much coverage
you need. The amount of insurance protection you buy
should depend on how much income your survivors will
need after any outstanding balances are paid.
If you choose to buy term life insurance, you will need
to determine how long you want the coverage to last;
1 year to 30 years.
“Consider choosing a term that matches your need
for life insurance protection. For instance, if your
main reason for buying life insurance is to protect
your 7-year-old twins until they're out of college,
you'll want to buy a policy with a term of at least
15 years.”
How much will it cost?
“How much you pay for life insurance
will depend on a number of risk factors, including your
age, your health, whether you use tobacco, your family
health history, and the type and amount of life insurance
you're buying.” Also, keep in mind that if you
have term life insurance and want to renew it after
it ends, your premium will be much higher.
Once you shop around for the best rate and coverage,
you need to submit an application. This is also the
point when you will most likely be required to take
a medical exam that will be arranged and paid by the
insurance provider.
“The answers you give on your application, along
with the results from the medical exam and your past
health history, will help the insurance company determine
whether to offer you a policy, and if so, at what price.”
The last thing to do before completing the life insurance
purchase is to read the entire document.
“Policy provisions, the amount of benefits, the
premium, and other charges you'll pay will be listed
along with other important information such as the beneficiaries
you've named and the premium guarantee period. Make
sure you understand
everything in the policy.”
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