For anyone buying life insurance for the first time, it may seem like a complex puzzle. It not only involves you as the policyholder but others who will receive benefits when you die or become too ill to work. The more you learn about it, the easier it will be for you to choose the right type of plan that works for you and your loved ones. Here are some valuable tips for buying life insurance.
1. Life Insurance is Necessary if you have Dependents
One of the main reasons for buying life insurance is to protect your children and other dependents. It pays them living expenses if something prevents you from supporting them. A helpful way to plan on estimating the amount of coverage to buy is to multiply 60 percent of your annual income by the number of years until you retire. You should also add the value of benefits such as healthcare to your income. From there, subtract taxes and family expenses.
2. Different Life Insurance Plans
Before buying life insurance, you should talk with an experienced expert who can explain the different plans available. There are two main types of life insurance, term life insurance, and whole life insurance. Term life, which lets you buy coverage as you need it, costs much less and is affordable to anyone who can pay about $30 per month, which can provide $500,000 in coverage. Ultimately, you will pay about 1 percent of your salary to get term life insurance.
The best way to understand term life is that it provides more coverage for less money in the short term. However, the coverage only lasts for a set duration, which is valuable because then, it can be used to pay off a mortgage. On the other hand, whole life insurance costs much more but provides lifelong protection for beneficiaries. A significant benefit of a whole life plan is that it builds investment value and lets you borrow against it when you need extra funds.
3. Understand Your Coverage
As with any type of insurance, make sure you understand all the terms so that there is no confusion when payouts are necessary. Many people imagine they have more coverage than they have paid into because it is just easier to assume that way than to read all the details. Even if you’ve read the policy completely on your own, you should still discuss it thoroughly with an expert and ask questions for clarification.
4. You May Need to Make Changes
Multiple scenarios exist that may require you to modify your life insurance plan over time. Examples include when new family members are born or if your salary changes. So it is essential to review your policy at least once a year to make sure it is up-to-date with your coverage needs. Flexibility is one of the reasons people choose term over whole life insurance. You may also want to explore what is known as adjustable life insurance.
5. Choose Your Insurer Carefully
Not all life insurance companies are equal, and some have operated as scams. So you need to be very cautious when selecting a company, which should be one that’s been around a long time and has earned a respectable reputation. The financial strength of the company is also a factor, as you do not want to throw money away on a company that will eventually go out of business. You should know more about life insurance basics to have more control over deciding what is right for you. Discuss with your insurance agent and research online to understand what kind of life insurance coverage you need.
How Do I Get Started?
When you are ready to secure the right life insurance for your finances and family, talk to the team at Kneller Agency today. We are ready to get started on your tailored coverage that can help your family through the toughest of times. At Kneller Agency, we are fully committed to helping you get the protection that you need. As an independent agency, we work for you, getting you the best price and coverage from among our many providers.
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