Life insurance—it’s one of those things that everyone needs, but only a few actually have. Generally, it’s easy to put off purchasing life insurance when you’re young and healthy.
However, any financially wise person knows that getting a life insurance policy can help provide financial security for yourself and your loved ones. When you finally decide to get life insurance, you must do serious research to find the right policy.
To help you get started, here are key questions you need to ask yourself when looking for an insurance policy.
- Who Is The Best Person To Talk To?
When searching for a life insurance policy, the right person can make it easier to choose the right policy for your needs and guide you throughout the process. Generally, you’ll meet two kinds of insurance people—a broker and an agent. Both insurance professionals specialize in life insurance and can help you find the right policies at a fair price.
However, there are critical differences between the two.
An insurance broker represents and works on behalf of the customer—you. Brokers like Lake Region Insurance Agency work closely with you to search and find the right type of policy you need and help review pricing, terms, and conditions. Then, they’ll make recommendations and help connect you with an insurance provider.
On the other hand, an insurance agent works for an insurance company. They help customers navigate the specific products of the insurance company and work on a commission-based structure. Once you buy a policy, they get paid for their efforts.
- What Is The Best Type Of Life Insurance?
Generally, there are two primary forms of life insurance—term and permanent insurance.
Term insurance covers you for a specific number of years and will provide your beneficiaries a death benefits claim only within that term as long as it meets the requirements. Typically, a term policy can cover you for one to 30 years, but some providers allow for term renewal. Although it may seem odd to purchase life insurance that ends after a few years, there are circumstances in which it makes sense.
For instance, if you’re young and want inexpensive coverage, you can use term insurance to lock in a 20 or 30-year premium at a low rate.
Meanwhile, permanent life insurance protects your entire life as long as you pay enough premiums to keep it in force. It doesn’t expire and can provide a payout to your loved ones upon your death, regardless of how long you live. Generally, permanent life insurance is more expensive and complex than term insurance. Depending on the policy you choose, permanent life insurance has equity that grows over time, and it’s an asset you can borrow against, making it more versatile than term insurance.
- How Much Insurance Should One Get?
The right amount of insurance will depend on two primary factors—how much your debts are and the amount your dependents need to maintain the same lifestyle once you’re gone. While all companies include this in the computation, insurance providers use different formulas and add more factors, such as future inflation, to determine the proper insurance amount you need.
That said, experts suggest you assess your debts and carefully consider your financial goal. You can work with your insurance agent to come up with the best amount, considering all your current and future needs into consideration.
- How Much Does It Cost?
The cost of a life insurance policy depends on several factors, including your age, lifestyle, gender, health habits, job, the coverage you need, and medical history, among others. These factors can help insurance providers assess your risk level. The higher your risk level, the higher your premiums will be.
Generally, the average cost of life insurance is between USD$40 and USD$55 a month. However, the actual rate will depend on your risk, the type of policy you choose, and your location.
- Does It Provide Living Benefits?
Most people think that life insurance only offers death benefits. However, most insurance policies also provide living benefits. Depending on your insurance provider, some of the most common living benefits included in life insurance policies are:
- Accelerated Death Benefits
This benefit allows you to get a portion of your death benefit if you face a critical or terminal illness to cover medical expenses. However, some people also use this fund to pay their debt or take a dream vacation during their golden years.
- Disability Waiver Premium
It allows you to skip paying your premiums if you suffer from a long-term or permanent disability. Although not a cash benefit, it’s a valuable option if you experience long-term disability and can’t pay for your premiums to keep your policy enforced.
- Long-Term Care Benefit
This living benefit provides you with funds to pay for long-term care services in case of critical or terminal illness and disability.
Takeaway
Nobody likes to talk about life insurance. After all, it’s an added expense you wish never to use and can bring your mortality to mind. However, purchasing the right life insurance can bring peace of mind, knowing that those you care for will continue to thrive when you die.
If you’re starting your policy hunt, keep in mind the above questions to guide you toward purchasing the right life insurance for your needs.
