Most people know that life insurance protects families from the financial hardships that can befall them after the death of a loved one. Yet, many people do not take the necessary step to safeguard their families from the burden of expenses that will accompany their deaths. Why do people overlook this important life decision? Maybe people do not understand the options available to them when it comes to life insurance or maybe they do not see life insurance as an affordable investment. Whatever the reason, buying insurance does not have to be a daunting process or crippling to your pocketbook. Here a few tips to help you get started if you have never bought insurance before:
1)Permanent (e.g. whole) insurance is for the rest of your life. It costs more than term
insurance, but has cash value. You can borrow against it if you need to.
2)Term insurance is only good for a fixed period of time. It costs less than permanent
insurance, but does not have a savings option. Term insurance is only payable in the event
of your death.
3)The older and less healthy you are, the more expensive it will be to get life insurance.
Thus, when you renew a term life policy in twenty years, it is going to be more expensive
for the next term. You need to decide if lower payments today are worth higher payments
later in life. In other words, a term life insurance policy is only a good choice for people
who think they will still be healthy when it is time to renew the policy.
4)Life insurance is subject to estate taxes. However, it can help cover the cost of other
estate taxes. This is an important consideration because if you die, you need to know how
your loved ones will afford to pay for your estate taxes. Life insurance can take care of
that.
5)Make sure you understand the policy being offered to you and that it fits your needs.
6)Watch out for surrender penalties. You do not want to lose money if you drop the policy.
7)Start now, research your options, and shop around for the best rates.
If you are a first-time life insurance buyer, you are not alone. Hopefully, though, these tips will help you get started.