Your need for life insurance depends on factors such as your current lifestyle, debts, and future financial goals.
1. What type of life insurance policy should I get?
There are two main types of life insurance policies you can purchase – term life insurance and permanent life insurance.
2. How much life insurance coverage do I need?
The answer depends on several factors. For example, ask yourself how much your loved ones need financially to maintain their current lifestyle. You should also consider how much debt you have and the duration of your mortgage if you have one. Using a life insurance calculator can help you prepare for your meeting with an insurance agent.
3. How much does a life insurance policy cost?
The cost of a life insurance policy depends on several important factors. The insurance agent needs to know your age, sex, lifestyle, the type of policy you need, and your health status. Anything that affects your health – including your job, hobbies, and smoking habits – can increase your risk level and affect your rate. If the life insurance company deems you a high risk, your life insurance premium will be more expensive.
4. Does a life insurance policy provide living benefits?
There is a common belief that life insurance policies only provide death benefits. You may be surprised to learn that many life insurance policies also provide living benefits such as borrowing against the policy’s cash value.
5. What are the guaranteed benefits of a life insurance policy?
Whether you have a term or permanent life insurance policy, if you pass away while the policy is in force, your beneficiaries will receive your death benefit – in most cases. However, there are certain circumstances where the life insurance company may deny your life insurance claim, such as if you commit suicide during the contestability period of the policy or if the company determines that you hid health information during the application process.
6. When can I expect returns?
If you’re considering a term life insurance policy, the policy will not include a cash value component. If you’re considering a permanent life insurance policy, you should be prepared to wait several years before the policy builds significant cash value. It’s also important to note that cash value growth is not guaranteed in all types of permanent life insurance policies.
7. What if my health changes?
Unless you buy a guaranteed life insurance policy or purchase life insurance through your employer, you will likely need to undergo a medical exam. Throughout your policy term, your health may change for better or worse. In some cases, you may be able to undergo another medical exam and underwriting process that may potentially lower your premium – such as if you quit smoking or left a dangerous job.
8. What if I need more coverage in the future?
Your life insurance needs may change as you age. You may also need to change the terms of your life insurance policy. If you have a term life policy, the idea is that your need for insurance should disappear or decrease by the end of the policy term. However, if you anticipate needing to extend life insurance coverage after the policy term ends, you may want to consider adding a conversion rider when buying the policy.
Source:
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