When you are accountable for a life other than your own, you want to make sure that life (or lives) are protected in case something were to happen to you. That’s where life insurance comes in.
If you’re thinking about purchasing a life insurance policy, you want to make sure you’re well-researched before doing so. Here are 5 things to know before buying life insurance.
Quick Article Guide:
- Why Do You Need Life Insurance?
- There are Different Types
- How Much Coverage Do You Need?
- Don’t Wait to Buy
- Work with an Independent Agent
- The Bottom Line
We briefly highlighted one reason you might need life insurance above – to protect your family. However, that’s not the only reason people have when the purchase coverage.
Here are some reasons you might want a life insurance policy:
- To cover your children’s expenses/college planning
- To cover burial expenses
- To replace a spouse’s income
- To pay off debts (such as a mortgage or other loans)
- To pay off estate taxes
- To buy a business partner’s shares (in case something were to happen to him/her)
If you are single with no dependents or financial responsibilities, you may not need life insurance. But if you have anyone who relies on you or own a business with one or more people, life insurance might be a smart investment.
Now you may or may not already know this, but there isn’t just one type of life insurance – there are multiple! There are two main types: temporary and permanent.
Temporary policies come in the form of term life insurance. Permanent policies include: universal life, whole life, indexed universal life, variable universal life, variable life, and survivorship life insurance
In addition, even though guaranteed universal life insurance isn’t technically labeled “permanent,” it can be depending on what age you receive coverage until. GUL policies can go until age 90, 95, 100, 105, 110, or even 121. With an average human lifespan of 79-years-old, choosing coverage past 100 will most likely guarantee permanent coverage.
With this in mind, make sure to speak with an independent agent and discuss your needs, so he or she can recommend the correct type of coverage to purchase.
Now that you’ve determined which type of life insurance you’d like to buy, the next step is to decide how much coverage you’re going to need. There are two ways to approach this: an income replacement approach or a needs-based approach.
If you choose to go with this approach, you will need to consider your age and earnings. Start with your age, and decide how many years of income you’d need to replace if you were to pass away.
For example, if you are 35-years-old, you may want to look at a policy that would cover 25 or 30 times your annual income. You’ll want to take inflation into consideration, as well as what your annual earnings will be after taxes when using this approach. The income replacement approach often yields a higher number than a needs-based approach.
This approach is a little more personalized – it considers your specific situation and assesses the impact your death would have on your dependents. It considers how many children you have, how much their education will be, whether or not your spouse would continue or start to work, and if you have a mortgage or any other loans to pay off.
If you’d like to learn more about deciding coverage needs, check out our life insurance coverage calculator.
With all the other bills you have to pay, we know adding another one to that list is probably the last thing you want to do. However, when it comes to life insurance, the earlier you buy, the better.
The younger you are, the more likely it is that you’ll get a lower premium as opposed to someone older. Reason being, those who are younger are typically in better health, and are less of a risk to the life insurance company than someone older who may have health issues, or are at risk for developing one.
If you do wait until you’re older, you run the risk of developing a health issue or disease, which would result in a much higher premium, or possible denial all together. So don’t wait to buy!
There are two types of life insurance agents – ones that work directly with a life insurance company, and independent agents who work with multiple companies.
If you work with an agent who only has access to one company’s information, you won’t be able to compare rates and know if you’re getting the best deal or not. In addition, oftentimes those agents work off of commission, so they will try to sell you a policy even if it’s not in your best interest.
When you work with an independent agent like the ones at JRC Insurance Group, they work with many different life insurance companies, and therefore can cater to your needs and health status. They can compare rates for you to show you the different costs of each company, and recommend which one they think would be the best fit for your specific situation.
Shopping for life insurance can be stressful, but it doesn’t have to be! Call JRC Insurance Group today and speak with one of our independent agents to help you figure out what policy would best fit your needs.
At JRC Insurance Group, our agents are experts with over 50 years of experience. We are appointed by dozens of top-rated life insurance companies and our agents are not pushy salespeople. Our agents do not have quotas; we’re here to help. We have helped hundreds of clients, and we can help you too. Our passion is finding our clients affordable life insurance coverage to protect their families.
Give us a call today, we would love to help! Toll free: 855-247-9555, or request a free quote below.