According to the 2020 Insurance Barometer study from LIMRA, 36% of Americans plan to purchase life insurance coverage in the next year, meaning the intent to buy a life insurance policy is high.
With this in mind, here are a few essential tips to get started with life insurance.
Evaluate Your Financial Situation
You need to know how much money you have before deciding on the type of life insurance you can get and how much you can afford. Consider the safety net you have in place that can help your loved ones after your death. You may want to talk to a financial advisor to know the needs that your life insurance should cover.
Know the Difference between the Available Insurance Policies
You will probably have to choose between whole life and term life insurance. Term life insurance policy will give you coverage for a specific period, usually 10, 15, 20, or 30 years. It is an affordable way of having a life insurance coverage. Whole life or other life insurance policies are more expensive but offer coverage throughout your life.
Find out What You Need
The aforementioned LIMRA study also revealed that more than half of Americans significantly overestimate the cost of term life insurance, with younger Americans estimating it to be five times more than the actual cost. A rule of thumb is to buy a policy with death benefits equal to at least ten times your annual salary.
Understand What Affects the Insurance Rates
Some of the factors that affect the rates of a life insurance policy include age, health, and the type of policy. The rate will also depend on the policy you choose and the length of the term.
Shop for the Best Rate
Try not to settle for the first quote you get. You can easily get and compare different quotes online. Alternatively, you can talk to a professional insurance agent to help you find the best insurance coverage at the best rate.
Try Not to Focus on the Premium
A policy is only good if you can afford its premium. However, do not focus only on the price. The policy’s administrative fees are also as important as the premium, and therefore, you should pay attention to every aspect of the policy.
Get Ready to Answer All Questions
To determine the right coverage and rate and get the right quote from an insurer, you will have to fill out a lengthy application. The insurer will need to know your age, risky hobbies or jobs, medical history, weight, tobacco use, family medical history, driving record, and mental health.
Be Truthful
When filling out your forms, be as truthful as possible. According to an article published by CNBC, lying on your insurance application forms can cost you heavily in the end because insurers typically verify the information you give them. For example, your insurer may require you to take a medical exam.
Be Patient
The application process might take a few weeks because your insurer may need time to verify your information to evaluate the risk associated with your policy.
Get a Temporary Coverage
As you wait for the insurer to process your application, you can lock in a temporary cover by paying your first premium with your application. This is particularly important if the underwriting process takes several weeks.
Follow these essential tips to get started with life insurance. If you have any questions or want to get started with life insurance, contact the experts at Donald Weiss Insurance Services. Our dedicated team is ready to assist you with all your insurance needs.
