9 Things You Need To Know When Buying Term Life Insurance

With all the information on the internet, it can be hard to figure out what type of policy to buy.

  1. Know before you go. The vast majority of life insurance policies are sold by agents who may be basing their recommendations on the amount of commission they will receive. Make sure you know what a "good rate" is before you buy.
  2. Use the internet. The internet can help you learn about different insurance options, rates, and terminology on your own; allowing you to be more confident in making your choices whether talking with an agent or using a licensed, online agency.
  3. There are two types of life insurance: term life and permanent life. Term life is life insurance for a set amount of time (20 years). With permanent life insurance, your policy builds cash value over time making it an investment product.
  4. Term life insurance is less costly than permanent life insurance. The premiums for permanent life are higher because you are also paying for the investment component. If you can't afford permanent life, term life may be for you. Don't be left underinsured by choosing a lower insufficient face value.
  5. Insurance may not be the best investment. You may not be able to tell what percentage of your premium is going to pay for the risk element versus your investment. Permanent life policies often include high fees which eat up the annual return of your investment dollars. By keeping your insurance and investments separate, you can be sure you aren't losing money to high fees and commissions.
  6. Get the right amount of insurance. Term life insurance premiums are at an all-time low. Be sure that the face value meets your needs. Click on Income Replacement Calculator to see how much life insurance you need.
  7. For the right amount of time. Make sure that you are covered until all of your children have left the nest, and you have built up your retirement savings.
  8. Buy life insurance before you need it. Buy life insurance when you are still young, before you develop any illnesses or conditions. If you are a non-smoker, great! Tobacco users, even those who only smoke on occasion, will have higher premiums.
  9. Always be honest. While it may seem like a good idea to omit something that is a blemish on your health application, it is best to be truthful. A claim can be overturned if discrepancies between your medical history and your application are found, leaving you with nothing but wasted payments.
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