4 Things You Need to Know When Purchasing Life Insurance

Insurance

There are a lot of options when buying life insurance. I have narrowed it down to the 4 most important things you need to know when considering purchasing life insurance.

1. NEED­

How much life insurance do I need? Most life insurance is put in place to cover the cost of funeral and final expenses. ​Funeral expenses​ are all costs associated with the funeral. For example: burial services, embalming, casket/cremation urn, tombstone, use of facility/cemetery or gravesite, transportation services, etc. Final expenses are any bills or debts that would be unpaid. For example: medical bills, legal expenses, credit cards, mortgage, or other debts.

These two categories are considered immediate cash needs upon death and are generally the basic coverage people put into place so that a person’s loved ones do not have to personally spend their own money. Another thoughtful consideration is leaving money for a spouse and there are many options to consider with this category. The most common one is leaving a surviving spouse and children enough money to not have to move out of the home or alter their existing lifestyle

2. BUDGET­…

Just like it sounds, how much money can you spend per month, comfortably?

3. TYPE…

What kind of insurance do I need? There are 2 basic types of insurance. Term and permanent. Term is just like it sounds and is for a specific period of time. Permanent is also just like it sounds and is designed to pay for the immediate cash needs (that were chosen when the policy was taken out).

How do I know which one is right for me? This is generally decided by the initial reason/goal for taking the policy out in the first place AND budget. Term has a cheaper premium and it might pay out a death benefit where a permanent policy has a higher premium and will pay out a death benefit. If money is tight is may be helpful to know that some companies will let you convert to permanent coverage (just make sure the policy conversion is the quality you want).

4. TRUST…

How do I find someone I can trust? The best way to start looking is someone you know who is already in the business. If you don’t know anyone off the top of your head, ask around and see if you can get a referral. You can do an internet check up on the recommended person, do a local internet search or just begin searching companies you would like to work with and they can have a representative call you.

Once you find an agent, set an appointment and ask them questions. Here are a few questions to help you build trust (or know it’s time to move on):

  1. How long have they been in the business?
  2. How did you get into this industry?
  3. How long have they been with the company?
  4. Can they sell policies from other companies?
  5. How long has the company they represent been in business?
  6. What are their ratings/financial strength? Note: you can look this up on your own on Google, A.M. Best Co., Standard and Poor’s and Moody’s.

When you find someone you would consider working with and are sitting down to meet with them, they should transparent about how they came to their recommendation for the amount of coverage they are suggesting and why (basically they should briefly summarize what is talked about in this article with respect to your personal situation). If they don’t, I know a great insurance representative that would be happy to!

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