Buying life insurance is one of the most important financial decisions. However, with so many options to choose from, making the right decision can be an overwhelming task. This is particularly true if you are a first-time buyer. To buy the policy that is the best for you, you have to familiarize yourself with the basics. So how should you go about the process of choosing life insurance for the first time?
Here are some things to keep in mind.
DETERMINE THE AMOUNT OF COVERAGE YOU NEED
Once you understand why you need the policy, you should determine how much coverage you need. When assessing your life insurance needs, consider both current and future needs. Some factors to take into account are your income, age, existing debt, and other long-term expenses. One rule of thumb is to ensure the policy is six to ten times your annual salary. However, you may require a lower or higher coverage amount depending on your situation and financial goals.
FIND THE RIGHT TYPE OF POLICY
When shopping for a policy, you should get to know the options available. Life insurance offers you two main options: term life and permanent life insurance. Term life insurance covers you for a specified period of time while permanent life insurance covers you for life provided you keep paying the required premiums. Term life insurance is associated with lower premiums and permanent life is known for offering more comprehensive coverage.
UNDERSTAND FACTORS THAT AFFECT LIFE INSURANCE PREMIUMS
There are several factors that insurance companies consider when determining how much you will pay for coverage. Generally, younger and healthier individuals are perceived as less risky to insure, meaning their coverage will typically be cheaper. The type of policy you choose and the amount of coverage will also affect the rate you pay. If you can only afford a term life policy now, there is the option of buying the policy and switching to a permanent policy later when your income increases.
SHOP AROUND FOR THE BEST RATE
It goes without saying that you need to get quotes from several insurers before making a decision. You can also enlist the help of an independent insurance agent to ensure you get the best coverage at the best price. In addition to price, you should also consider the policy’s internal costs. In the end, you will want to make sure you have adequate coverage.
READ THE INSURANCE POLICY DOCUMENT
You should take time to read and understand the fine print on your policy before purchasing an insurance plan. Making sure that there is no ambiguity in the terms and conditions will go a long way in ensuring your protection and that of your family. You can talk to a lawyer to help you understand your rights and avoid frustrations when the time comes to make a claim.
SEEK PROFESSIONAL ASSISTANCE
You should take time to read and understand the fine print on your policy before purchasing an insurance plan. Making sure that there is no ambiguity in the terms and conditions will go a long way in ensuring your protection and that of your family. You can talk to a lawyer to help you understand your rights and avoid frustrations when the time comes to make a claim.
BUY FROM A REPUTABLE COMPANY
Life insurance offers financial protection to your loved ones when you have passed away. You should check the background of the company you intend to buy the policy from before making your final decision. Make sure that the company is consumer-friendly, financially sound, and has a history of paying the promised benefits. Insurance ratings and online reviews can help you decide.
In the end, you should find the coverage that meets your needs and budget. At HST, we offer different life insurance plans to help you provide financial security for your loved ones in case the unexpected occurs. Contact us or speak to one of our local agents to get a quote and purchase your policy.
Healthcare Solutions Team is a wholly owned subsidiary of the National General Insurance Group and the Allstate Insurance Company.