A Guide to Buying Life Insurance
At least one person you care about in this world is a spouse, son, daughter, aging parents, or even a friend. Won’t it give you peace of mind to know that should anything happen to you, they will remain protected, cared for, and free from financial burdens? Opting to get individual life insurance is a necessity. However, choosing what type to go for can be an overwhelming task. Here are a few tips to guide you in making the right choice.
Determine how much coverage you need.
It is crucial not just to be insured but to be adequately insured. While you might leave your loved ones with financial resources (benefits and other assets), these might not be enough to pay for any financial obligations you might leave behind. These include credit cards, mortgage, auto loans, final expenses, raising kids and paying for their college education, and other debts and expenses that they might have to shoulder on their own. As a rule of thumb, your insurance should be able to cover for financial obligations that your existing financial resources could not pay.2. Choose which type of insurance is right for you.
There are two major types —Term Life Insurance and Whole Life / Permanent Life Insurance.
Term Life Insurance
- coverage is for a specific time only, usually 10 to 30 years.
- Premiums may be a guaranteed amount or may increase periodically.
- These policies are more affordable because there are no additional fees or maintenance.
- Recommended for people:▪ who have budget concerns▪ who can self-insure when their coverage runs out
▪ who simply want to have coverage for the expenses of their family
Whole Life / Permanent Life Insurance
- coverage is for life
- premiums are level (stay the same)
- These premiums are typically more expensive
- comes with cash value (an investment-like product that grows over time which you can loan out, use for retirement, or for funding the policy)
- more complicated and breaks down into several subcategories: traditional whole life, universal life, variable life, variable universal life
- Recommended for people:▪ who need help in covering for estate tax their assets are subject to▪ whose goal is to build cash value
Shop around for quotes.
You can get quotations from independent insurance agents or from a broker that works with different insurance companies. These quotes that feature prospective premiums and coverage amounts will help you find the best policy for you. Besides picking the cheapest policy with the coverage you need, it would help if you also considered other factors like the features and riders they offer. Look also at the company’s financial rating and size. Go with the company that will be there in the long run as you want to make sure it is capable of paying your beneficiaries when the latter file their claim. You may also want to investigate via NAIC or your state’s insurance department if there are any complaints against the company.
Complete the application process.
Your chosen life insurance company will then thoroughly evaluate your medical history as well as your background. Prepare to be asked about your income, net worth, any existing policy, the kind of lifestyle you have, and your hobbies, too. You would be scheduled for a medical examination unless you opted for no medical exam. After the underwriting process, you will be presented with a policy offer. Check the terms, sign the policy documents if you agree, and pay for the first premium. By paying for your premium, your policy becomes active.
Secure your policy. It is recommended that there be two copies of it, one inside your home, so your survivors can easily find it if anything happens. The other is to be kept outside your home, like in a safety deposit box to protect it.
Make sure also to keep a record of pertinent information regarding the policy, such as the policy’s type and number, when it was issued, how much the benefit is, and even the name, address, and contact details of your agent or broker.
More importantly, make sure that your loved ones are aware of the policy and would know how to avail it when and if the time comes.
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.