Life insurance is one of the most important purchases you will ever make. Don't forego it simply because you are unsure what type of life insurance to buy. Here are the steps you need to follow.
Step 1: Acknowledge You Need Life Insurance
Figuring out which life insurance policy is best for your needs can feel like driving through New York City's streets for the first time. Fortunately, just like there are maps for driving, there are resources for figuring out what kind of life insurance you need. So how do you know what's best for your needs? Arriving at a decision can also be like NYC driving– you have to figure out where you're headed, why you're going there, who will be with you on the ride, and the best way for you to get there.
Step 2: Learn the Basics of Life Insurance
The first step to figuring out what kind of life insurance is for you is to learn all you can about it. Buy Insurance For Dummies, talk to friends and family about the choices they've made, and familiarize yourself with basic life insurance terminology. It may not be the most exciting adventure you'll ever embark upon, but it is one of the most important ones, both for you and your dependents. As you learn more about life insurance, you'll find there's much more to the "Gerber Grow Up plan" than complicated lingo and varied options.
Remember the Ultimate Goal
If not for yourself, purchasing life insurance should be done for those you will leave behind. It may be uncomfortable to think about, but life insurance is just as important as having a plan for retirement. Once you begin delving into the subject of life insurance, you'll likely discover you've gone from purchasing it just because you feel you have to, to actually wanting to buy it, once you see what it can do. Before you begin exploring different kinds of life insurance, read up on life insurance and give yourself a mini 101 course. You'll feel much more relaxed, capable, and comfortable when you start asking for life insurance quotes and can understand basic terms. It will also let any professional you're talking with know you're serious about your decision.
Step 3: Assess Your Needs, Goals, and Current Finances
After you've done your research and are familiar with all kinds of life insurance, make a list of everyone that could be affected by your policy. As you educate yourself on the subject, keep a list of your goals. Are you single and just want to buy a life insurance policy that will cover your final expenses? Do you have a spouse and children and want a policy that will provide for them if something happens to you? Perhaps you want to know they'll be able to be able to pay for your final expenses and remain financially secure for the rest of their lives. Perhaps you're at a place financially where you want to make sure your family is provided for and also allow some investment opportunities.
Consider the Future Goals of Your Family
When assessing your needs and figuring out who will be affected upon your death, consider your beneficiaries' future goals as well. Maybe you and your spouse have decided that whenever one of you passes, the other will take the family and relocate to a certain area. Do your children want to go to college? Do they want to become a doctor, necessitating money for medical school? Even simple things should be considered ñwill your family be able to cover funeral costs, your medical bills, and all future expenses such as debt or mortgage obligations, and even the everyday cost of living? One of the biggest reasons people buy life insurance is so they can leave behind enough money to cover the cost of their final expenses and ensure their family is able to maintain the same standard of living even after they're gone.
Examine Your Current Finances
Before you buy a policy, you'll want to not only examine your future goals, but also examine your present financial situation. By now you've established your goals, your loved ones' goals, who you want and need to provide for, and how much money you should be prepared to leave behind. Now it's time to look at your current financial situation: how much coverage can you afford to buy right now? What kind of policy is best for your current financial situation, meaning what kind of policy will get you as close to meeting your goals as possible, while still considering your present finances? Do a few calculations to prepare yourself for the next step.
-Calculate your current monthly income.
-Total up your monthly expenses.
-Determine your current assets and any costs associated with them.
-Review your taxes from the last few years to notate any significant changes or possible savings you've missed. Make note of any potential savings you could make.
-Remember to note any large future expenses coming up as well as any changes that could be taking place in the next few years, such as a spouse returning to work, a raise, or an addition to the family.
-Consider your findings and estimate what amount you could comfortably spend on life insurance premiums. If you don't have the money to pay the policy premiums for the life insurance you'd like to have, what is the best thing you can do in the meantime? Remember, there's no rule saying you're only allowed to buy one life insurance policy in your life. People cancel and buy new policies all the time. You can only do what you're capable of, and just because you buy a policy now that isn't exactly for the amount you want, or that doesn't have the components you want, doesn't mean that one day you can't buy a policy that does. Everyone has to start somewhere — you have to make your first turn down that NYC street.
Step 4: Purchasing Life Insurance
Now, you're ready to reach the final destination: purchasing coverage. You've done your homework and are now armed with a working knowledge of life insurance products and terms, know what your needs and goals are, and know what kind of budget your currently working with. It's time to dive in.
Get Some Quotes
Getting life insurance quotes is something that can usually be time consuming, but since you've already done the "leg work" and know what kind of coverage you're looking for, you can get estimates and see if any of them come close to what you've budgeted for insurance. Creating a budget beforehand and establishing goals is incredibly important before you do this, because otherwise, you'll be getting quotes blindly, not knowing what type of policy you're getting a quote from or what it will mean. Then if you buy that policy because it has a good price, you could end up with something very far off from what you need. Getting quotes will allow you to make adjustments to your budget, reevaluate your needs, and re-examine what you know about life insurance. Remember that many quotes are not going to be precise until you've given all your information to an insurer, but getting quotes will also tell you which companies you should probably follow up with instead of wasting time getting quotes from companies that don't offer what you need or who are too expensive.
Research Companies
After you've found some quotes that have spiked your interest, it's time to check out the company — before you talk to a company's representative. It's a great idea to do your research and figure out which life insurance carriers have the best reputations and are well respected in the industry and by consumers. Ask friends and family members for recommendations, do some research online, and check with the Better Business Bureau for any company's complaints. You could also check the A.M. Best Company, the country's number one statistical rating organization, which analyzes factors such as an insurance company's ability to pay claims based on the strength of their finances. Even if you've received a great quote, it doesn't mean it's from the best company.
Talk to an Agent
Once you've found a few companies that offer the kind of life insurance you're looking for and who you feel comfortable doing insurance with, either contact the company directly or seek out a life insurance agent from the company. If you find an agent first and then research companies, you'll likely waste a lot of time since you've done a large part of the elimination process beforehand. By following up with an agent, you're prepared with tons of information by this point, which also means the agent is less likely to try and pull one over on you. Remember, most insurance agents and brokers work off of commission only. Researching the company, its products, and prices before you even speak with an agent– whose goal is to try to sell you as many products as possible, regardless of price– will keep you in control. Additionally, from a financial standpoint, it's better to try to pay for products directly instead of paying a commission fee as well. Whatever money you can save can be put toward your future, and if you've already made coverage decisions, you can avoid a large level of the pressure. You'll also save tons of time not having to get quotes and information on products you're not interested in.
Buying life insurance can be a complicated matter, but only if you let it be. Remember, you are the one driving to your destination and, unlike driving in NYC, with life insurance you are likely to drive well, get to your destination quickly knowing where you want to go, and handle any roadblocks along the way.
We Want To Hear From YOU!
We want to hear from you about YOUR life insurance experiences. From who you believe is the best life insurance company, to what you've learned along the way, to what kind of life insurance you've bought, we want to know what life insurance consumers are doing these days. Although buying a policy may not have been as easy as it will be if you follow the above tips, we want to know your triumphs and struggles. Please drop us a line at [email protected] or visit us on Facebook and tell us YOUR life insurance story.
-Desiree Baughman, InsuranceQuotes.org
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