If you’re just starting the process of shopping for life insurance, you may be feeling a little overwhelmed. Thinking about your priorities can help set you on the right track. The main factors to consider when shopping for life insurance include what kind of policy is best for you, how much coverage you need and why, what life insurance company to use, and how life insurance will further your overall financial strategy. These are big questions, but this guide will help you with each of them.
To purchase a life insurance policy, follow these nine steps:
- Decide if you need life insurance.
- Determine which type of life insurance is right for you.
- Select and purchase a life insurance policy.
- Decide how much life insurance you need.
- Choose a life insurance company.
- Find the right life insurance agent or broker.
- Choose the right life insurance riders.
- Purchase a life insurance policy.
- Decide if You Need Life Insurance
The first thing to consider when shopping for life insurance is whether you need it in the first place. Life insurance is primarily designed to provide financially for your dependents after you die, although it also can be used for things such as benefiting a charity or keeping a business going if one of the key employees dies. If none of these rationales applies to you, there’s a good chance you don’t need life insurance and would be better off investing your money elsewhere.
Determine Which Type of Life Insurance Is Right for You
If you decide you need life insurance, the next step is to choose what type of policy is best for you. The main types of life insurance are:
Term Life Insurance
Term life insurance policies provide affordable coverage for a specific death benefit over a predetermined period, such as 10, 15, 20 or 30 years. It can be a smart choice for certain customers, like parents who want to ensure their children are provided for until they reach adulthood. However, once the term is complete, the policy is worthless. Instead of starting over from scratch, many life insurance companies offer the option to convert a term policy to a permanent one, such as a whole life or universal life policy. The costs and terms of these options vary by company and policy, and they are worth taking the time to discuss with a financial advisor before purchasing a new term life policy.
