5 Questions to Ask Yourself Before Buying Life Insurance
Purchasing life insurance is a great way to protect your family and loved ones, but it can also feel overwhelming. Insurance can be intimidating, but there are ways to make the process go smoothly. Before picking out your policy, you can examine these questions and gather your answers to ensure you have considered several factors.
Do I have financial dependents?
If you have a spouse or child who relies on your income for financial stability, life insurance can help ensure that they are taken care of in the event of your death. If one of you is a stay-at-home caregiver, it’s equally important to consider the financial impact of your passing. It’s estimated that the average stay-at-home parent works more than 90 hours a week, which would be the salary equivalent of more than $100K.
Do I have substantial debts?
The amount of debt you have can affect your family significantly in the event of death, primarily if they are jointly held debts. If you have a mortgage or other debts that would need to be paid off in the event of your death, life insurance can help to alleviate your loved ones from such financial burdens.
What about exceptional circumstances or medical conditions?
If you have a particular case, such as a disabled child who will need lifelong care, life insurance can help ensure your family has the resources they need to cover those costs. Life insurance can also pay off chronic conditions and medical debts. Preexisting conditions can disqualify you from some life insurance policies; however, you may qualify for other coverage options depending on the policy type, type, and severity of illness.
How much/what type of coverage do I need?
This will depend on your circumstances, such as your financial obligations, age, and health. Your lifestyle also plays a role in choosing the right life insurance policy. You will need to purchase more coverage if you have dangerous hobbies or work in a risky profession. If you have a large family or significant debts, you will need a policy with a higher death benefit.
Regarding policy types, there are two central policies to choose from: term life insurance and whole life insurance. Both have advantages and disadvantages, so it’s essential to understand the differences before deciding.
Term Life Insurance: temporary coverage that lasts for a specific period, usually 10-20 years. The premiums are typically lower than whole life insurance, but the death benefit is only paid if the policyholder dies during the term.
Whole Life Insurance: provides lifelong coverage and builds cash value over time. The premiums are higher, but the policyholder will receive a death benefit regardless of when they die. Choosing the right policy type depends on your specific needs and goals.
Where should I buy my life insurance?
One of the most important factors when purchasing life insurance is choosing a reputable company to guide you through the process. We recommend contacting a local insurance provider who can help you understand your state’s claims process and policies.
Ready to get started? Take the first step by contacting LBP Insurance. With more than 50 years of combined insurance experience serving the greater Boston area, we will be more than happy to help get you started on your quotes and plan options.