Buying life insurance for the first time can be very nerve-wracking, as it is common for people to encounter problems and mishaps as they go along. And of course, with many legal matters, things can become confusing if you have never looked into them before. To prevent unnecessary hindrances and wrong decisions, keep these five tips in mind when purchasing your life insurance:
Understand Why You Need Life Insurance
The main purpose of life insurance is to provide families with financial security in times of untimely deaths of a spouse or a parent. Life insurance policies can be used to pay for immediate bills, food and rent, mortgages, a college education, and retirement.
If you are the breadwinner and your family depends on you for financial support, it is paramount that you enroll in a life insurance policy. Even if you do not need it right away, it is always wise to purchase a small policy because the younger you are, the cheaper it’s going to be.
Determine How Much You Will Need
A death benefit is the amount of money your life insurance’s beneficiaries will receive in the unfortunate event of your death. Different policies offer different death benefits, therefore, it is important to determine exactly how much coverage you will need.
The most common way to draft up an estimate is to take your annual salary and multiply it by 8. If you want to be more detailed, add up your family’s monthly expenses and divide by 7% plus any other one-time expenses that your untimely death will incur.
These calculations, however, will only give you a rough estimate on how much life insurance you will need.
Find the Right Policy
Once you figure out how much coverage you will need, you must find the right policy that suits those needs. There are generally two types of life insurance policies, namely; term life and permanent life.
Term life is the most inexpensive option, however, it only covers a specified time frame and it does not offer a cash value.
Permanent life, on the other hand, will cover your entire life. In addition to that, permanent life also offers an accrued cash value.
There are also other types of life insurance policies you can explore to get the exact kind of policy you need for your situation.
Check the Quality of the Provider
Before you decide to buy your preferred policy, it is important to first check the quality of the company you plan to purchase it from. You would want to buy your insurance from a company with a good record, a professional staff, and who can properly handle everything you need.
Consult a Professional
Leaving your family in a disastrous financial state in the case of an accidental death is something that can be avoided with proper life insurance. A well-nurtured policy will help keep them afloat even if they lose the family member they depend on financially.
Sometimes navigating through the details of life insurance can be confusing, so it is also a good idea to hire a professional advisor to assist you in finding and purchasing the perfect life insurance policy for you. That is where Bosworth & Associates comes in. We have been helping with insurance needs of every kind in Tyler, TX since 1939. For a unique and premier experience, give us a call today!