There are a few ways to explain how to buy life insurance. Some people prefer using their local insurance agent from State Farm, Farmers, AAA, etc. Others needing life insurance might see an advertisement from an insurance carrier such as Met Life, and call the company directly.
How to Buy Life Insurance
The best way to buy life insurance, in my opinion, is to get multiple online life insurance quotes from a company that offers quotes from several different carriers. For example, a company such as Select Quote or Accuquote will be able to provide quotes from multiple companies.
Selecting the Amount You Need
The two questions you need to know before purchasing life insurance are “how much do I need?” and “what type of insurance is right for me?” We’ll first address the amount of death benefit needed.
Most people purchase life insurance to cover a specific financial need. One of the most common is when an income producing spouse and/or parent wants to protect against his or her loss of income due to an unexpected death. This is a wonderful reason to have life insurance in place on your life.
Say you make $60,000 per year and you’re a 38 year old male. You might be working for another 20 to 30 years before you’re able to retire. Just imagine how much future income is lost if something happens to you before reaching retirement age!
Since income replacement is a very common reason to purchase life insurance, we provide an income replacement life insurance calculator on our site for free. Just go to: How Much Life Insurance Do I Need?
If the life insurance calculator is too complex for your needs, a good rule of thumb is to carry 5 to 10 times your annual income on your life. Of course you’ll need to take your current assets and debts into account. The individual who has $500,000 in a personal IRA may have a decreased life insurance need in comparison to an individual with nothing in the bank and $100,000 in credit card debt, all things equal.
Other valid insurance needs are to cover debts, a mortgage, a business loan, to cover a key employee (known as key man insurance), to pay for estate taxes or death taxes, and to pay for death and funeral expenses.
Which Type of Life Insurance is Right for Me?
Please read the section above before this section. If you’re need is for income replacement, you almost certainly need term insurance and nothing more. Term life insurance covers you for a specific period of time, and is typically much less expensive than whole life or universal life insurance.
On the other hand, if your need life insurance protection for the rest of your life, or if you are interested in the ability to grow cash value (from which you can borrow or withdraw funds), then you will need to consider a whole life insurance or universal life insurance quote.
If you’ve read the sections on selecting the amount you need and what type of insurance to buy and are still confused, call us at 877-966-9383 to tell us your situation and we’ll help you.
How Much Will I Pay?
This question depends on several factors. Life insurance companies charge different rates to males and females of the same age and health status, so sex is the first variable. They take mortality risks into account such as health problems (heart disease, cancer, diabetes, high blood pressure, etc) or other risks not related to your health such as occupational risks, hobbies and activities, and family health history.(continued on page 2)