If you have dependents, you should carry a life insurance policy to replace your income in the event of your untimely death. While life insurance is important, only 57% of Americans had it in 2020, as reported by Statista. Here are 10 tips for buying life insurance.
1. Find out Whether You Need Life Insurance
According to the Insurance Information Institute (III), life insurance is only necessary if you have dependents and outstanding debts. Therefore, buy it only if you fall in this category.
2. Determine How Much Life Insurance You Need
To avoid underinsurance, ensure you calculate how much the funeral expenses, outstanding debts, and income needs of your beneficiaries will be. This way, you will be able to determine the right amount of life insurance you need.
3. Consider Other Aims for Your Life Insurance Coverage
Other than paying for death benefits, some life insurance policies allow you to save money for other expenses when you’re still alive. For instance, if you have a terminal illness, you should choose a coverage that will pay for your medical expenses.
4. Determine the Best Type of Life Insurance for Your Needs
While term life insurance policies provide coverage for a specific period, often 20 years, whole life insurance covers you until you die. This means that you should choose the right policy depending on how long you want the coverage to last. Take note that term life insurance is cheaper but provides less coverage.
5. Determine What Riders You May Want to Add to Your Policy
Riders are additional benefits provided on your life insurance policy at higher premiums. Examples of life insurance riders per the Society of Actuaries (SOA) include critical illness rider, chronic illness rider, and accelerated benefits rider.
6. Understand the Factors That Affect Life Insurance Premiums
Data from the Life Insurance Marketing and Research Association (LIMRA) shows that Americans pay an average of $126 per month for life insurance coverage. The actual figure depends on factors such as age, amount of coverage, health status, and lifestyle.
7. Provide Accurate Medical History
Usually, the underwriting process of life insurance involves undergoing a medical exam. However, in the case of a no-exam policy, ensure you are truthful about your medical history to avoid possible future problems with the insurer and to lower your premiums.
8. How to Find Coverage That Meets Your Needs and Budget
Data from the National Association of Insurance Commissioners (NAIC) shows that there are at least 5,900 insurance companies currently operating in the U.S. To find suitable coverage, ensure you compare quotes from different insurers and choose a policy that best meets your budget and needs.
9. Choose a Payment Interval for Your Premiums
Life insurance policies allow monthly or yearly payment of premiums. Take note that while monthly payments are probably easier considering the smaller amount, annual payments are cheaper.
10. Inform Your Beneficiaries
Once you find the right life insurance policy, you should make your beneficiaries aware. This is because an average of $2000 worth of life insurance benefits goes unclaimed every year by one in every 600 Americans, according to Consumer Reports.
To get the best life insurance policy for your needs, follow these ten tips. Do you need help securing the right life insurance to fit your needs? Contact the experts at John E. Peakes Insurance Agency for the assistance you need today. Our dedicated team is happy to address all your coverage needs in Lancaster, California.