UPDATED: Mar 26, 2020
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Buying term life insurance for the first time can be a difficult task. It can be tempting to buy the first insurance policy offered but it is important to consider the right plan that suits your lifestyle and financial needs. Below are some questions to consider before buying life insurance for the first time.
1. What do I want from my term life policy?
Knowing why you need the insurance can help you to find the right policy. Are you simply looking for a small amount to cover funeral costs? Or do you want to use the payout for future spending like college or retirement? Is replacing income to support the family the reason you are buying a life insurance plan? Remember that most people who choose a term life insurance policy will never make a claim as the term runs out before their death. Therefore, you may want to choose a term life insurance to cover your family as they grow up, and once the kids leave home and your mortgage is repaid, you would leave less of a financial burden if you died.
2. Who will receive the benefits?
If you have a spouse, he or she will mostly be your beneficiary. But children, other relatives or even a nonprofit organization can be chosen as beneficiaries. Whoever you choose as your beneficiary, it is important they know about the policy and where to find the proper paperwork in case they need to file a claim. It is also important to review the policy regularly to ensure the correct person remains your beneficiary.
3. What if I don’t die?
Interestingly enough, some people who buy term life insurance get upset when they find out that if they don’t die, they don’t get anything back. If this is a concern for you, it’s important to get an understanding of what will happen to your policy as you near the end of the term. Typically what happens when your policy expires is your premium goes up.
When you first applied for your 10, 20 or 30 year policy you were younger and healthier. When the end of your term approaches, you will have the option of keeping your policy. If you do, you can expect a hefty jump in your premium due to the significant age change. If you are still healthy at this time in your life and you want to keep the coverage, it may be best to apply for a new policy.
4. Which life insurance company should I choose?
When choosing the right insurance company to provide life insurance needs, it is important to consider financial ratings of the insurer, not just popularity. It is also important to consider the financial strength of the company and the product’s features including the length of the guarantee period, convertibility rights and available riders. Some companies offer better ratings for people with certain health factors than others. All of the companies we work with are top rated companies and we can help choose the best one for you.