Life insurance is one of those things that we know we need, but don’t want to talk about or think about. The thought of leaving your family behind is terrifying, especially if you are worried that they are not going to be financially equipped without you. There are ways however to ensure that if tragedy were to strike, your family would be okay.
While studies have shown that around 80% of people have some sort of life insurance policy, studies have also proven that the coverage most people have is inadequate. They are either paying too much money for their policy, or the policy will not help out enough. Here are some things to keep in mind when you are buying life insurance.
Know What Type of Policy You Want
The first thing you want to keep in mind when purchasing life insurance is to determine what type of policy you want. While there are thousands of different premiums out there, life insurance falls mainly into two categories, term insurance, and permanent insurance.
Term Insurance
This is the most commonly purchased insurance and also the most affordable of the two major ones. Term insurance is exactly how it sounds, you pay a premium each month and you will be covered for the length of a term. The duration depends on what you negotiated with your insurance provider. When the term expires, it is up to you to either renew with that same company or move to a new company.
One of the major issues with term insurance is that it starts off fairly cheap, but can grow to exorbitant amounts when you are trying to renew or get a new policy. This is due to the risks associated with you getting older. Therefore, it is important that you compare term life insurance policies whenever you are looking to renew or purchase. By doing this, you can ensure that you are getting the best price. You can also look to negotiate and lower the price of one company by giving them a quote you got from another. Regardless of the issue, you should always shop around and try to find the best term insurance available for you.
Permanent Insurance
Permanent insurance is the more expensive life insurance that is often reserved for the rich and famous. When you purchase permanent life insurance, you agree to pay the same premium for the rest of your life. These payments will never change and will slowly add up and build interest over the years.
Eventually, when you finally pass, not only will your family receive the death benefit that they are entitled to, but will also receive a large tax-free amount of money that was put aside through this policy. The payoffs are quite nice but they do come at a price of high monthly payments.
Branching off from there, you can look into a universal permanent insurance plan. This is almost the exact same as the above, however, it allows you to negotiate your premium each month to benefit you. Because you are putting aside extra money with the policy, at any point that money can be used to contribute to the premium. This gives you a little more flexibility and room to work with if you run into financial issues.
Find A Reputable Company
WIth insurance companies, you want to pick one where you will not worry about their ability to make payments. While it might be tempting to go with a cheaper policy from an unknown company, at any point that the company could fold and all your money will be gone. This is why people tend to stick to the major companies when shopping for insurance. It is guaranteed that you will be able to receive your money back.
If you are unsure about the company you are looking to go with, Google them and see what their reviews and reputation is like. If there is anything concerning, perhaps you should go with a different company. Always make sure that you are finding a reputable company to do business with when it comes to insurance.
Get a Policy That Works For You
Once you have found a company that you are happy with, you now have to go about finding a policy that works for you. Consider your lifestyle, your health, your field of work, and what you plan on doing in the future. You want to find a policy that can cover any risks that you involve yourself in, while also ensuring a high enough payment to support your loved ones.
For example, a policy that only gives out one year’s salary to your family is not going to be enough to support them. This will mean paying more per month, but you need to make sure that you are getting a payout that can sustain them. This becomes a balancing act of finding the perfect number.
If you reach for a policy with a high payout, you will most likely be paying a lot more money upfront. A policy with a low payout will be much cheaper, but the reward will be low. Have that difficult discussion with your family and see what expenses would be. At the end of the day, you are not getting life insurance for yourself, you are getting it for them.
Finally, don’t allow yourself to be upsold when dealing with an insurance salesperson. They will often try to talk you into spending money or getting packages that you do not need. Be aware of what coverage you want and stick to it, or else you’ll be paying too much money per month.
These are all things that you have to keep in mind when you are looking to buy life insurance. For an added benefit, look into group rates with your spouse or significant other. These will offer better rates, better payouts, and will have more incentives for a cheaper price. Don’t run from a difficult topic. Get yourself the protection you need and the safety net that your family would want. Don’t let tragedy destroy everything that you have built for you and your loved ones.
WRITTEN BY
Clara Rose