10 Factors to Consider When Getting Life Insurance

In the US, just over half of the population has life insurance, but not everyone who has taken out a policy is optimally covered. Before you sign up, you should consider a wide variety of factors and speak to an insurance agent. A professional will help you determine whether you need to get insurance, who your beneficiaries should be, what risks and lifestyle choices affect the cost of your insurance, and what kind of policy is best for you.

They can also provide you with a wide variety of quotes so you can select an appropriate insurance company, and they will help you fill out all the necessary forms. In some cases, the amount of insurance you need increases or decreases as you grow older, but there are policies that cater to these fluctuations. Read on to find out what you should consider when getting insurance.

10 Factors to Consider When Getting Life Insurance

1. Do You Need Insurance? 

Not everybody needs to get insured to the same degree, so you should consider various factors before you sign up to a policy. The most important is whether you have any dependents who would suffer if you no longer provided them with financial support. Most commonly, dependents are children, but this doesn’t have to be the case. If you and your partner have bought a house together and your partner’s income isn’t enough to pay the mortgage, they are also your dependent. 

Someone who doesn’t have anyone relying on their income, such as a single person with no close relatives, might not need to get much insurance. However, anyone who has loved ones that need their support should take out a policy. Similarly, you should get covered if you would like to continue subsidizing a charity, church, or individual after you pass away, or if you know you will not have enough liquid funds to cover your own funeral and don’t want your extended family to be responsible to do so.

2. Choosing Your Beneficiary

You will have to choose your beneficiary before you can put together a suitable policy. Typically, this is a close family member such as a child, a spouse, or an elderly parent, but your beneficiary can be anyone, whether they are related to you or not. In some cases, people leave their money to a charitable organization, a close friend, or a trust.

While some have just one beneficiary, others have multiple people relying on them. If you are currently supporting several others, you should consider how much money each beneficiary needs and for how long. For instance, if you have several children, the younger ones are likely to require more assistance than the older ones, who might have already gone through school and started their college education.

3. Your Risks and Lifestyle Choices 

People who lead a healthy life and don’t participate in any risky activities are much less likely to pass away early, but that doesn’t mean they shouldn’t take out an insurance policy. In fact, healthy individuals will have an easier time finding a good deal because they are less of a risk for the insurance company. By quitting smoking, achieving a healthy weight, and avoiding dangerous behaviors, you can decrease your premiums significantly.

Some people, such as firefighters or construction workers, are more at risk of becoming disabled or passing away due to their job. While you can’t do anything about this, you should look into getting insurance at a younger age if you work in a risky environment. That way, your family is taken care of, no matter what happens.

4. The Best Kinds of Policies

There are various kinds of policies available, and not all of them will suit you. The best way to find out what your options are and to select a suitable deal is to speak to an experienced insurance agent. The two basic types of policies are term insurance and whole life insurance. The former ends after a specific amount of time, such as five, ten, fifteen, or twenty years. It is a great option for people who want to be covered until they achieve retirement. 

The latter covers you for the rest of your life, so your beneficiaries will get paid no matter when you pass away. This is a more expensive type of cover, but it can act like a savings account for your dependents. There are also other policies that cover specific items. For instance, mortgage insurance covers the remaining cost of your mortgage if you pass away before it is paid off, and funeral insurance covers your end-of-life costs.

5. How Much Coverage You Need 

Once you’ve determined what kind of coverage you need, you have to think about the amount of money you would like your beneficiaries to receive. You should consider various factors, including the amount your spouse or children would have to spend on the mortgage, any remaining education costs, the regular cost of living, and potential future medical needs. 

Most people underestimate the amount of cover they need, so it could be worth speaking to an expert before deciding on an amount. Since future expenses are somewhat variable and subject to change, it can be helpful to add a certain percentage to the expected total to make sure your beneficiaries don’t run out of money.

6. Factors that Affect the Price

Several factors affect the price of your insurance policy. As discussed, your lifestyle impacts the premium you’re charged because people who lead a risky life are more likely to develop life-threatening conditions or to pass away. Additional factors that make a big difference are the type of policy you select and the amount of cover you need. 

Your insurance agent can help you to estimate the amount you will spend on insurance. They will take into account your lifestyle, your job, your current age, your desired level of coverage, and your medical history. Once you’ve found out what your insurance is likely to cost, you can determine what kind of policy is within your budget.

7. How You Can Find the Best Policy for Your Needs

There are countless insurance companies out there, and not all of them offer excellent value for the money spent. Remember, the primary goal of an insurance firm is to make a profit, so they will try to charge you as much as they can. To make sure you’re not spending too much, you should contact an insurance agent, who can help you compare quotes and select the deal that offers the best coverage for the least amount of money. 

Often, there are introductory offers that pull you in and promise you cheap premiums, but you should be wary of those. Carefully read the small print of the policy you’re considering before you decide to sign up. This can prevent you from getting locked into an expensive plan.

8. What Information You Need to Provide 

Before sending you an accurate quote, insurance companies will ask you to provide them with a lot of information. That way, they can assess whether you are living a risky lifestyle or not. Some of the documents you might need to show are your proof of ID, a record of your personal medical history, your driving record, and some evidence of your occupation.

You will also be asked to fill out a lengthy application, which includes questions about your smoking habits, your alcohol consumption, your weight, your mental health, and your hobbies. Although you might be tempted to lie, it’s always best to be truthful because your insurance company might use third-party sources to verify the information you give them. If you’re working with an insurance agent, they can help you with this process.

9. Your Future Needs 

The needs of your beneficiaries will change drastically over time, and your cover should reflect this. For example, young children who need a lot of financial assistance are likely to be self-sufficient by the time they have completed their college degrees. Therefore, you won’t need to provide support for them once they have their own full-time job. Similarly, your mortgage might be paid off in several years, at which point your expenses will drop.

On the other hand, medical needs often increase with age, so your spouse might need more money to cover various treatments and medications as they grow older. When signing up for an insurance policy, you have to keep all these factors in mind. Many insurance companies offer individualized plans, so you might be able to decrease or increase your coverage over time.

10. Your Funeral 

When calculating the cost of your policy, you shouldn’t forget about your end-of-life costs. The biggest one is likely to be your funeral, but there might be medical bills or other expenses, as well. To take some of the stress and trauma out of your passing, you should consider getting funeral insurance. In some cases, this is included in a general insurance policy, but you can also get it separately. 

Life insurance is important for anyone who has dependents or would like to pass their wealth on to an individual or organization after they pass away. If you’re interested in getting insured, you should speak to a professional, who can provide you with various quotes and guide you through the process. Call us today at ISU Armac to find out more about the policies you are eligible for.

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