Think You Need Life Insurance? Here are 10 Things to Consider

No one wants to take out the wrong type of life insurance policy, or pay too much for the right policy. Knowing that, here are 10 things to consider before finalizing a life insurance purchase.

1. If someone turns you down for life insurance, look somewhere else—Companies look at different information and use a variety of methods to figure out who they will insure. So, just because one provider turns you down, doesn’t mean that another provider will do the same. Actually, shopping around is a good idea because it will help you buy a life insurance policy that offers the best coverage, the best rate, or a balance between the two.

2. Make sure you really need life insurance— If there are people—a spouse, children, parents, siblings—who depend on you financially, life insurance will be a worthwhile expense for you.
3. Term life insurance or whole life insurance? —The two main types of life insurance are pretty different, so take the time to learn the difference before choosing one over the other.

• Term life insurance tends to have lower premiums associated with it (early on, at least), provides a person with coverage for a set number of years (it only pays out if you pass away during this “term”), and doesn’t build up a cash value that can be borrowed against or withdrawn.
• Whole life insurance also often called cash value or permanent, usually costs more (especially at the beginning), accumulates a cash value that can be borrowed against or withdrawn, pays out whenever one passes away, and provides protection as long as the premiums are paid.

4. If your beneficiary is a dependent, determine what sources of income would need to be covered if you pass away in an untimely manner—At the very least, you will want to replace the income you currently generate for your loved ones. You may also want to provide them with extra money that can be used to help them relocate or further their education.
5. Don’t forget these expenses while calculating your coverage needs—Although it’s doubtful you’ll forget to factor on-going expenses like those related to a mortgage, tuition, or daycare, also consider these immediate (burial costs and estate taxes are two examples) and long-term expenses or goals (such college or retirement savings) that will pop up in the event of your death.
6. Carefully consider all aspects of the premium payments—A couple of questions to ask yourself before going with one plan over another: can I afford the initial premium? Also, if the premium increases later, will I still be able to afford it?
7. Make sure you understand the renewal policies related to the plan you’re considering—Although it’s usually possible to renew a term insurance policy for additional terms (even if your health has deteriorated in some way), it’s possible that your premiums will increase with each renewal. We will help you understand what your premium will look like if you renew your policy.
8. Exercise caution before canceling your existing life insurance policy—Replacing an insurance policy can be expensive, so don’t cancel an existing life insurance policy while you search for a new one. Wait until you’ve received and reviewed your new policy before you even think of getting rid of the old one. You have a certain period (usually 10 days) to study and consider a new policy. If, during that time you decide a p policy isn’t for you, you can return it to me to have it canceled, and then receive a refund.
9. Pull out your policy every few years to review it—This is especially important if your family grows or shrinks or otherwise changes. Even if that isn’t the case, review your policy on a regular basis to make sure it keeps up with changes in inflation, your income, and your general financial needs.
10. Don’t hesitate to ask me for help —It’s our job, and responsibility, to help you understand the terms of your coverage, so don’t hesitate to pick up the phone and give me a call if have any questions about any aspect of your life insurance policy.