Whether you’re looking to purchase life insurance or you want to make sure that your family has the protection they need after you’re gone, there are some things you should know.
Learn more about our top life insurance tips and tools by clicking below. Then contact us today for a free quote on the best policy to meet your needs.
Know Your Needs
You can buy life insurance to cover a variety of expenses, but it’s important to determine your financial goals before purchasing a policy. For instance, you might want to pay off your mortgage, other debts, or fund your children’s education.
It’s also vital to determine how long you want your coverage to last. If you need life insurance to cover a specific amount of time (say, until your kids are grown), you can purchase term life insurance. However, if you need life insurance to last your entire lifetime (for things like income replacement), you’ll want to consider permanent policies, such as whole or universal life.
When applying for life insurance, you’ll need to disclose your health history and other personal information. It’s essential to be completely honest because the insurance company can check public records, medical records, prescription drug database, motor vehicle report, and other sources for verification. This information will help them evaluate your risk and determine how much coverage to offer you.
Know Your Options
Before you purchase a policy, it’s important to know your options. Compare rates, policy features and benefits to ensure you’re getting the best value for your money. It’s also important to choose a company with a strong financial rating. Ratings can vary widely between agencies, so word-of-mouth and referrals from friends and family may also be helpful.
Finally, decide how much coverage you need. To determine this, consider your debts and future income needs. Add these up and subtract your survivors’ current resources to get the amount of insurance you need. This will help you avoid over-insuring or under-insuring yourself.
If you need life insurance for a specific period of time (to cover your mortgage, for example), then you’ll want to look at term life policies. If, on the other hand, you need life insurance to last your entire lifetime, then a permanent policy will be more appropriate.
You’ll also need to decide whether you want a simplified issue or fully underwritten policy. Simplified issues require less information from you when filling out the application, but they’ll generally be more expensive than fully underwritten policies. Fully underwritten policies, on the other hand, will ask more questions and require a medical exam, but they’ll often be cheaper. In both cases, it’s important to be completely honest with your application. Insurance companies use third-party sources to validate the information you provide.
Know Your Policy’s Exclusions
The concept of life insurance is fairly simple – the insurer pays out a sum to your beneficiaries when you die – but the details are more complex than that. There are different types of cover available and a variety of exclusions that may apply. And if you get the wrong cover or miss the fine print, it could end up costing your family dearly.
Some life insurance exclusions are general and will differ between policies, while others are specific to your circumstances. General exclusions include suicide and self-harm, illegal activities and terminal illness at the time you take out a policy. Other specific exclusions include risky lifestyles and travel plans, bad health, dangerous occupations and high-risk hobbies.
While some exclusions are understandable, others can be unfair and can leave your loved ones with a mountain of debt that they’ll never be able to pay off. It’s also important to be completely honest on your application, even if you don’t think it’ll be a problem. If the insurance company finds out that you have been dishonest, they can cancel your contract and it’s definitely not worth lying to save a few pounds on your premium.
To avoid these pitfalls, you should carefully go through the fine print and speak to your financial professional about any part of the process that is unclear. And you should revisit your coverage on a regular basis to ensure that it’s keeping pace with your financial needs and income.
Know Your Policy’s Benefits
When you buy life insurance, it is important to know what you are buying. The last thing you want is to find out that the policy does not cover your final expenses or that it will only pay in certain circumstances. You should also learn as much as you can about the insurance company and the policies available to you. Official ratings are a good start, but referrals and reviews from family and friends can be helpful too.
You should also decide what type of policy and how much coverage you need. The amount of coverage you need will depend on your financial goals, but it is usually a good idea to include an emergency fund and debt payments in your calculation. You may also want to consider your survivors’ other financial resources and income needs, including retirement savings.
Finally, it is a good idea to choose a beneficiary and add contingent beneficiaries to your policy. These individuals will receive your death benefit when you die. It is also a good idea to review your beneficiary designations on a regular basis, as your situation and financial priorities may change.
The process of choosing and purchasing life insurance can be complex, but a financial professional can help you determine your needs, explore options, and make an informed decision. Ultimately, the right policy will provide peace of mind for you and your family.