5 Tips for Purchasing Life Insurance that Works for You

Posted on Wed, Jan 18, 2012

Life insurance is an important part of financial planning, and while it can appear intimidating, purchasing life insurance isn’t as difficult as it looks. Whether you are thinking about life insurance for the first time, or looking to supplement your current coverage, speaking to a life insurance agent and discussing your individual needs and options is the first step.

1. Determine Your Needs

Consider why you need life insurance before you commit to purchasing it. Life insurance is designed to provide financial security to your family in the event of your death. Some types can help to finance your retirement, pay off your mortgage and fund a college education. You can get a rough idea of your needs by using the online life insurance calculators available at Efinacial.com.

2. Understand the Different Types of Insurance Available

Term life insurance and whole life insurance are the two basic types, and it’s important to understand the difference before purchasing life insurance. As its name suggests, term life insurance provides protection for a predetermined number of years. Term life insurance is for protection, not investing, and does not include the savings component than many whole life insurance policies do. Unlike term life insurance, whole life insurance protects you throughout your lifetime as long as you continue to pay the premiums.

3. Comparison Shop

Once you’ve decided which type of policy is right for you, compare policies from different carriers to find the best deal before purchasing life insurance. The insurance industry is highly competitive, and comparing similar products from different companies can help you find the best deals.

4. Talk to an Advisor

Speaking to a financial professional, like an independent broker, can go a long way toward helping you find the right life insurance policy. This is especially true if you are a first time buyer. Your advisor can assist you with your decision making by providing insight into what each policy type can do for you. A good advisor should be helpful and let you know both the benefits and potential downsides of each policy.

5. Ask Questions

Never be afraid to ask your advisor tough questions; that’s what they’re there for. You should know your policy inside out before you commit to anything, so be sure to get all the information you need. Some good questions to ask: Are there any exclusions in your policy? Is the policy renewable? What is the premium rate and how long are the premiums guaranteed for?