Life insurance can be purchased quickly from almost any agent. Getting the best policy for the family requires considering some things before buying. When time is given beforehand to think about the family’s future needs, buyers can end up with a policy that will be more beneficial and offer a greater level of confidence and security.
When to Buy Life Insurance
Life insurance premiums base the cost of premiums on age and health. Because of this, buyers are much better off buying life insurance when they are young and healthy. Delaying to buy another year means that the premiums will be higher–and it increases the risk of developing a serious health problem or two. With some health conditions, insurability is near impossible at a reasonable rate.NerdWallet, for instance, says that the average rate for men at 30 for a $500,000 term policy is $227 annually, but it jumps to $835 at 50. The jump is much larger at 60, rising to $2,362. A whole life policy for $500,000 will cost $4,985 at 30, $11,250 at 50, and it becomes completely unaffordable at 60–$18,130.
Term or Whole Life
Any time life insurance is purchased, it will be necessary to decide whether term or whole life insurance is best. Term insurance offers coverage for a specific period or term. Most often, the terms are 10, 20, or 30 years, and the most common is 20 years. If still young, term insurance is much cheaper and offers much more coverage, but ensure when buying that it is convertible to whole life later.Whole life insurance offers coverage for life, and it has a constant face value. It also has a cash value that grows slowly. Some of the cash value can be withdrawn when needed, but it will decrease the face value of the policy.
Your life insurance can support your family when you leave the world. Dean Drobot/ShutterStock
Deciding How Much Coverage to Buy
Before looking at the total amount of coverage needed and the various riders, figure out how much money is available to spend on life insurance. Staying within the budget will ensure that the policy stays in force longer.When calculating how much coverage to buy, avoid doing it quickly. Start with how much would be needed to pay off all current debt—such as a mortgage, loans, and credit card debt. Add the amount needed to support the spouse and children—at least until the children get out of school. Forbes suggests buying enough coverage to equal 10 times the annual salary.
After calculating the basic needs for coverage, think about other things that could help the family after death. If desired, money could go towards college for the children or to leave a larger inheritance. Adding more money needs to be added if there are special needs children. Any assets should reduce the need for coverage.
Check the Policy for Renewal Privileges
If buying term insurance, make sure that it is renewable. If a guaranteed renewal clause is not included, health problems at some point could make the primary insured uninsurable when renewal time comes.Most policies will have a clause guaranteeing renewability—but not all of them. When it comes time to renew, the new premiums are based on age. Find out what the premiums will be when getting a new policy. InsureUOnline says to find out if there will be a time when renewing the coverage is no longer an option.
Also, be sure that it can be converted to whole life if desired. Some companies restrict the convertibility period to the first few years.
How to Get a Better Rate
If health issues are present that may jeopardize a good rate, take some time to eliminate them before buying. The best rates are given to healthy people. This includes things like quitting smoking, losing weight, getting diabetes and cholesterol under control, and reducing alcohol use. Quitting any dangerous hobbies might be a good idea, too.
A life insurance can benefit your life as well as your beneficiaries after you leave the world. Africa Studio/ShutterStock
Answer the Questions Correctly
Failing to answer questions correctly when applying for life insurance can be risky. The main reason is that the beneficiaries may not receive any proceeds from the company, says PolicyGenius. Answer the questions accurately and truthfully about personal health and health history, the family’s health history, and risky hobbies (such as skydiving, scuba diving, amateur pilot, etc.).The company will look at medical records, and get information about what medications were prescribed—most likely for the last 10 years.
Be Sure to Get the Riders Needed
Riders are options that are available with a policy that will provide even better coverage. Several riders are available, but these will vary between companies and sometimes between states. Child riders will insure children up to age 25 for one set price—unless they get married.Other riders include the waiver-of-premium rider, which cancels the need to pay any future premiums if becoming disabled. The accelerated death benefit rider will pay some of the death benefit to the primary insured if developing a terminal illness. The family income benefit rider pays an income to the family after death, and it will pay for as long as indicated when buying the policy. These are a few of the riders that may be available.
Taking time to think about the family’s needs and the cost of premiums will enable the best policy to be obtained that is right for the family. Ask the insurance agent about any questions and shop around to get the best price.
The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
