What To Consider When Buying Life Insurance

When you get your new policy, read it carefully. Every new life insurance policy issued in Washington state comes with a 10-day free look period. This means if you're not satisfied with your policy, be sure to:

what to consider when buying life insurance

In fact, confusion over how much and what type of life insurance to buy is one of the top reasons people give for not having life insurance, according to a survey by Life Happens and LIMRA. But the COVID-19 pandemic has been a wake-up call for many Americans, with almost one in three people (31%) reporting they are more likely to buy a policy because of the pandemic, according to the 2021 Insurance Barometer study.

The rate you pay also depends on the type of policy you get and how large the death benefit is. If you get a term life insurance policy, the length of the term you choose also will affect your premium.

If you can only afford a term life policy now but want permanent life insurance, most term life policies offer the option to convert to permanent life insurance. You can lock in a low rate with term life now and switch to a permanent policy if your income increases.

Many insurers offer free quotes online, which makes it easy to compare life insurance quotes. Because rates can vary, you should get quotes from several companies to help you decide which company to apply to for coverage. You also could work with an independent insurance agent who works with several insurance companies and can help you find the best coverage at the best price.

Yes, you can purchase life insurance online. Some insurers specialize in instant life insurance that often uses algorithms to instantly offer you a price, provided that you qualify based on your age and health.

Life insurance can be a vital tool for financial planning, but finding coverage that meets your goals and budget can be challenging without guidance. Don't worry. A few simple steps will help you focus on the essential aspects of buying a policy that fits your needs.

Next, subtract your survivors' financial resources from their financial needs to determine how much coverage to buy. Many people are underinsured, often because they skip these steps or take a shortcut (such as simply buying a multiple of annual income). For more help in determining the right amount of life insurance, see: How Much Life Insurance Do I Need?

The overall reason for buying life insurance is to leave behind financial resources for who or what is important to you. Premiums payments to the insurance company go toward the death benefit, the financial payout after your death. Many people plan for this money to take care of their final arrangements, cover living expenses for loved ones, or support a favorite cause. However, you can also use a life insurance policy to accumulate savings, maximizing the income you will have for your retirement or providing an income stream after your death for your survivors.

You may have heard about various categories of life insurance, including term life, whole life, and universal life. Each of these comes with fundamental distinctions. Consider how these differences might work for you.

Term life policies offer payment of a specified death benefit for a specific term of your life, such as five, ten, 15, or 20 years. Term life insurance coverage for most people tends to involve lower premiums; however, the longer the term, the more expensive your premiums may be. If you want insurance coverage for only a specific period or are on a limited budget, a term life policy may be a good fit.

However, what if you want to purchase insurance coverage for several decades until your death. Or, perhaps you'd like the option to use some of your premiums to accumulate savings? A whole or universal policy might be a good option in either of these cases. Basic whole life insurance involves a fixed premium and promises a minimum rate of return on the dollars invested, which builds the policy's cash value. A universal life insurance policy may offer the potential to increase the death benefit or adjust premium payments.

Life insurance policies offer primary benefits according to the type of policy you purchase. But your coverage can be expanded or personalized through riders, optional additions to a life insurance policy that provide supplemental coverage or benefits you wouldn't receive with a standard policy. Adding some riders may increase your premiums, while other riders might be free.

There are two riders that you may want to consider: waiver of premium and guaranteed insurability. Some policies come with one or both included with the basic contract, but if not, it is generally a good idea to add them. Waiver of the premium pays the life insurance policy premium for you if you are disabled. Guaranteed insurability permits you to add to the death benefit without providing additional evidence that you are in acceptable health.

There are many ways to save money when buying life insurance, but they don't always entail paying a lower premium immediately. Nonetheless, life insurance is a very competitive business, and, therefore, quotes can vary significantly between companies. Consider that what's important is that you get the coverage that fits your budget and financial goals. If you choose to work directly with an agent, make sure your agent knows about your financial situation and takes time to explain your options in easy to understand terms.

Once the policy is purchased, tell your beneficiaries which company issued it, where to find the paper copy of the policy, and any specifics about what you want them to do with the death benefit. While it is rare for people to be unaware they are the beneficiary of a life insurance policy, it does happen, and benefits may go unclaimed. Don't forget to store your documents so that your beneficiaries can easily access them.

Most of us need life insurance at some point in our lives. But don't buy a policy just because you heard it was a good idea. Life insurance is designed to provide your family with financial security in case you, your spouse, or a parent passes away.

Life insurance can help pay off your mortgage, help with college expenses, help fund your retirement, and help with estate planning. If you have loved ones who depend on your income for support, you should strongly consider getting life insurance. Also, the younger you are, the less expensive life insurance will be, so even if you don't have an immediate need you may want to consider purchasing a "starter" policy for the future.

Using these tools and educating yourself on the workings of life insurance and other financial products, however, can help you feel more comfortable when discussing your needs with a financial professional like a New York Life agent.

New York Life Insurance Company is one of the largest mutual life insurance companies in the world.1 Being mutual means our primary focus is on creating long-term financial safety and stability for our policy owners.

A financial professional can help you factor in your financial considerations, your needs, and your family's needs. Ask your financial professional about any aspect of a financial policy or product that is not clear to you. Review your insurance coverage with your financial professional on a regular basis to ensure that the coverage is keeping up with changes in your needs and income.

With terms like "premium," "dividend," "beneficiary," and so on, understanding how life insurance works can be confusing. To help you understand this whole process, we have put together a glossary of insurance terms to help you understand this process.

Reasons to buy insurance are different for everyone. But the decision to purchase insurance is, at its core, all about providing financial security for yourself and the ones you care about. Learn why life insurance is important, and who needs it.

Buying life insurance protects your spouse and children from the potentially devastating financial losses that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.

Your life insurance policy can deliver a specified sum of money when you need it. Upon your death, your family will receive your policy payout immediately. And that death benefit is generally not subject to federal income taxes. For example, a $500,000 policy provides $500,000 in death benefit proceeds directly to your beneficiary.

5. Dividend potential One of the benefits of purchasing whole life insurance from New York Life is that you will be eligible to receive dividends.4 Although they are not guaranteed, when dividends are awarded, you can take them in cash, use them to offset your premiums, or use them to buy paid-up additional insurance that increases your coverage and cash value, use them to offset your premiums, or take them in cash.

1The life insurance death benefit is the amount that is paid when the policy is in effect and the insured dies. The insured is the person whose life is covered under the policy. Accessing the cash value of a Whole Life policy for special expenditures will reduce the available cash surrender value and the death benefit.2A living benefit is any benefit the policy owner can access while the insured is still living. Not all life insurance policies are designed to offer living benefits. 3All guarantees are based on the claims-paying ability of the issuer4While dividends are not guaranteed, eligible policy owners have received them for more than 160 years. Some policies are participating but are not expected to receive dividends.

Decide How Much Coverage You Need How much of the family income do you provide? Does anyone else depend on you financially? How will your family pay final expenses and repay debts after your death? Based on the answers to these questions, decide how much coverage you need, for how long and what you can afford to pay. You want to make sure that you buy enough life insurance to cover the financial effects of an unexpected or untimely death. 041b061a72