Life is uncertain. One of the best ways to protect those who rely on you is life insurance.
Life insurance isn’t for you — it’s meant to replace your income so your loved ones have a way to survive in the event you pass on too soon.
However, buying life insurance can feel like a daunting task. The good news is that, even if you’re buying life insurance for the first time, there are a few things you can do to make it easier.
Review your current financial situation
The first thing to do is get a picture of your finances. Look at your emergency fund and other assets, as well as your obligations.
You might have debt, including a mortgage, that your life insurance could pay off so that your family could continue to live in the home after your passing. Get an idea of what you might want covered, such as college for your kids or income replacement for your spouse.
Once you have an idea of your financial situation, and what you want covered later, you can decide on a coverage amount that will give you peace of mind while providing stability to your family.
Know whether you need term or permanent life insurance
Understand the difference between term and whole life insurance. Term life insurance expires after a set period of time, usually five, 10, 15, 20 or 30 years. On the other hand, permanent life insurance covers you your entire life, as long as you keep paying premiums.
Term life insurance is usually less expensive and can be one way to get life insurance coverage for a low cost. It’s especially affordable for families just starting out. Permanent life insurance can ensure that you’re covered throughout life. Additionally, some policies build cash value, allowing you to use it for expenses later in life if you decide to cash it in after you no longer need it.
Carefully consider your needs. Many people find that term life insurance fits their needs, even though it expires after a while.
Understand the factors that influence your rate
Your health and age are the most important factors companies take into account when giving you a life insurance quote. The younger you are, the more likely you are to pay a lower premium.
As you get older, life insurance — both term and permanent — becomes more expensive. Your health situation also factors heavily. You’ll answer a lot of questions on your application about your habits. Unhealthy habits that increase your chance of an early demise could lead to higher rates.
Some insurers, like Bestow, offer affordable term life insurance without medical exams, but you might not get the level of coverage you want.
Look beyond the premium
While your monthly cost, the premium, is often one of the biggest factors to consider, it’s not the only thing to think about.
Look at what else is offered. When you choose a company like AIG for your life insurance, you also have access to a full-service company that offers other types of insurance — and potential discounts. Other companies, like Haven Life, offer great customer service and a relatively painless process.
Also, be aware that if you get permanent life insurance, there might be additional internal costs. So, even though it seems like you’re getting a good deal on the premium, there might be other issues to consider.
Shop around for life insurance
Finally, make sure you shop around for life insurance, comparing rates and companies and choosing what’s likely to work the best for you.
There are different aggregators, like Policygenius, that can help you quickly and easily compare quotes.
However, it can also be a good idea to shop around on your own, making sure you get the policy that fits your budget and your long-term needs.
3 of the best life insurance companies
If you’re looking for a good start, consider our favorite picks for the best life insurance.
Bestow offers affordable term life insurance without the need for a medical exam. On top of that, the process for applying is fairly straightforward and easy.
Gone are the mounds of paperwork and long wait times. Bestow can get you a quote quickly, and then institute your coverage within minutes, assuming you’re approved.
There are also a number of options that allow you to choose your term length, as well as coverage amount. It’s fairly easy to mix and match to find the right policy for you.
In addition to term life insurance, Haven Life also offers disability insurance and annuities. Haven Life is issued by MassMutual, one of the most well-known insurance companies.
Haven Life offers a minimalistic online application for life insurance, making the process fairly easy. On top of that, Haven Life is known for its customer service.
If you’re looking for a full-service broker, AIG is one of the largest and oldest insurance companies. In addition to term life, AIG offers permanent life insurance.
You can also get guaranteed issue life insurance, which can be more expensive but allows you to get a higher amount of coverage without the need for a medical exam.
Life insurance is one way to protect your loved ones in the event you have an untimely death. It can provide income for your family after you’re gone, or offer a way for them to pay off debt if needed. You also get peace of mind with life insurance, knowing your loved ones are taken care of.
Before getting a policy, though, make sure you understand your current financial situation, as well as your money needs and goals. Compare different companies and use different quotes to get the policy most likely to provide you with the coverage you need at a price you can afford.
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