10 Tips to Help Purchase Life Insurance | First Time Buyer FAQs

Tips to help purchase life insurance are what most people who are confused about when buying life insurance should consider first before getting a life insurance.

There’s confusion over how much & what type of life insurance to buy, and this has been one of the top reasons, why people give up not having life insurance.

Due to the COVID-19 pandemic, there’s been a call for many Americans, with up to one in three people (31%) reporting they are likely to buy a policy due to the pandemic.

If you want to get/buy life insurance but are confused about what to do, consider these 10 Tips to Help Purchase Life Insurance :

10 Tips to Help Purchase Life Insurance

Tip No. 1: Check your Current Financial Status

Check what you have in place to support your loved ones who depend on you financially. This will include an emergency fund, retirement savings, and any life insurance coverage through work.

it is recommended that you work with a financial planner to discuss what needs you should cover with life insurance. It might be a mortgage that will need to be paid, children who will need to be supported, a small business to maintain, or a legacy you want to leave.

Tip No. 2: Know How Much Coverage that’s Needed

Just like what the CEO of Ariva UK & Ireland General Insurance said, “People underestimate how much life insurance they need”. They tend to check your bank concerning how much would be needed to pay off their major debt, such as a mortgage.

However, they should consider how much more would be needed to help a spouse or partner pay bills, support children, pay for college tuition, or cover any other long-term needs, he says.

Tip No. 3: Select a Life Insurance Policy Type

Life insurance buyers  A term life policy will provide coverage for a certain period of time, typically 10, 15, 20, or 30 years. It can be an affordable way to get coverage until you reach a certain financial milestone, such as paying off your mortgage or putting your kids through college.

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There are other types of permanent life insurance in addition to whole life. Permanent life insurance provides lifelong coverage, which is one reason why it’s more expensive than term life insurance.

It’s also more expensive because it builds cash value. That cash can be used for whatever you want—to cover emergencies, supplement retirement income, help pay for long-term care or even cover the policy’s premiums. Whether you choose a term or permanent policy depends on your needs and financial goals.

Tip No. 4: Understand What Affects Your Life Insurance Rate

The two major factors that life insurance companies consider when determining the rate you pay for coverage include health & age. The younger you are when you get a life insurance the cheaper it tends to be.

This is because you’re more likely to be healthier while you’re younger, and this brings forth less risk to insure. The rate you pay also determines the type of policy you get, and how large the death benefit is.

Once you get a term life insurance policy, the length of the term you choose also will affect your premium.

If you can only afford a term life policy now but want permanent life insurance, most term life policies offer the option to convert to permanent life insurance. You can lock in a low rate with term life now and switch to a permanent policy if your income increases

Tip No. 5: Compare Life Insurance Companies for the Best Rate

Multiple insurers offer free quotes online, which makes it easier to compare life insurance quotes. Due to the fact that rates can vary, you should receive quotes from multiple companies to help you make the decision on which company to use for coverage.

You can also work with an independent insurance agent who works with multiple insurance companies and can assist you in finding suitable coverage at the best rate.

Tip No. 6: Don’t Just Focus on Premium

The rate one pays for life insurance is vital because you want to make sure the premium fits your budget. On the other hand, price should not be the only factor you consider.

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If you’re buying a cash-value life insurance policy, the policy’s internal costs can be just as important as the premium you pay. If you’re looking at indexed universal life insurance, pay special attention to guaranteed vs. non-guaranteed parts of the policy illustration.

Find a company that has strong financial ratings in the A range from independent rating agencies such as A.M. Best, Moody’s, and Standard & Poor’s. Insurance companies show ratings on their websites. Also, you can ask your life insurance agent to provide companies’ ratings.

Tip No. 7: Prepare to Answer Lots of Questions When Applying

The quote you get from an insurer is just an estimate of what your premium will be. To get a policy, you’ll have to complete a lengthy application. You’ll be asked questions about your age, weight, personal medical history and mental health, family medical history, and drug use.

Also, the insurer will ask questions about your driving record and if you have a dangerous job or hobbies that make you more of a risk to insure. This information is used to know what your actual insurance rate will be like.

Tip No. 8: Be Truthful While Applying

Be cautious not to omit or obscure any information on your life insurance application. it’s very important to be truthful because insurance companies make use of third-party sources to verify the information you give to them.

For instance, the insurance company can access your information by checking out your medical records, prescription drug history, motor vehicle report, and public records. Also, you might be expected to partake in a medical exam, which might include blood and urine tests.

Tip No. 9: The Process Doesn’t Have to Be Painful

You do not need to be poked & prodded during the application process. More insurers have drifted towards the options for no-exam-like insurance. Now, they rely on third-party resources in order to verify the information applicants provide & data modeling to rearrange their risk class.

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Know that there are different types of no-exam life insurance policies:

  • Accelerated Underwriting Policy
  • Simplified Issue
  • Guaranteed Issue Life Insurance 

Tip No. 10: Lock in Temporary Coverage

If the underwriting process will take up to a week or more for the policy you’re buying, you have access to lock in temporary coverage by attaching a check with the first premium payment for your application.

With this, you can get coverage, and peace of mind, while you wait for the application to be processed.

First-Time Life Insurance Buyer FAQs on Tips to Help Purchase Life Insurance

What’s the best age to start shopping for life insurance?

The best age to buy life insurance is the age at which you start having the need for life insurance. The younger you are, the less you’ll pay for life insurance.

Can you purchase life insurance online?

Yes, you can buy life insurance online. If eventually, you have some health problem, the insurer might decide to do a more traditional life insurance process that won’t be processed immediately including a life insurance medical exam.

Can I Buy Life Insurance for someone else?

Yes, you can buy life insurance for someone else, but first, you have to have an insurable interest, which means that you would be negatively impacted financially if they passed away.

On the other hand, you can’t purchase a policy on someone else without the person knowing. Insurers would not sell policies that way, and the insured person would have to sign the application personally.

Source: TopCelebBio