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How to Buy Life Insurance: Guidelines to Find the Right Policy

Updated: August 29, 2018

A lot of people will ask about how to buy life insurance, but they do not take the time to understand the various available policies.

The only way you can find the right life insurance policy is if you are fully aware of what these policies are offering.

Through understanding comes an ability to go through all the available policies and select the one that best meets your needs.

For example, some individuals may benefit from a term life policy, while others will prefer universal life insurance.

Here is a look at some guidelines you can use to find the best life insurance policy.

Types of Life Insurance Explained

The first guideline is to understand and find the right type of life insurance policy for your circumstances. There are so many varieties of life insurance, but they typically fall into three or four major categories.

Universal life insurance offers some of the perks of whole life insurance, but also includes the option to lower your premium payments if the situation demands it.

These categories are universal life insurance, term life insurance, adjustable life insurance and whole life insurance.

Term life is a policy that lasts for a set amount of time – say ten or twenty years. Meanwhile, whole life insurance is for your entire life. Adjustable life insurance provides the “best of both worlds,” giving policyholders the flexibility to change their term when necessary.

Universal life insurance offers some of the perks of whole life insurance, but also includes the option to lower your premium payments if the situation demands it.

Depending on your circumstances, you may find any one of these types of life insurance appealing. Talk with an insurance agent about the specific pros and cons of each policy offer from their company. This will give you an idea about what type of policy is offering you the most value.

Reasons to Buy Life Insurance

There are so many reasons why a person may consider life insurance. But the first and most obvious benefit is the ability to provide money for your family after you are dead.

If you have dependents who will have a hard time surviving without the income you provide, you may want to protect them through life insurance.

A lot of people think it is morbid to plan for their demise, but it is better to look at this situation practically. If you have dependents who will have a hard time surviving without the income you provide, you may want to protect them through life insurance.

This will allow you to set a lump-sum amount of money that the policy will pay your dependents when you pass. Universal and whole life policies also have an added cash value, which refers to the interest-driven profit coming from the premiums you pay over time.

All of this money adds up and becomes a significant nest-egg for your spouse or children at the event of your passing.

When you provide your family with life insurance, you no longer have to worry about how they will survive financially when you are gone. They will not have to worry about money or expenses during the months and years after your passing.

Should I Get Life Insurance?

The question about whether you should get life insurance really depends on your circumstances. Some individuals go through life without getting married or having children. If you have no significant dependents, you may not find the perks of life insurance appealing.

Not only can you provide for loved ones through life insurance, but you can use the policy’s cash value to withdraw and/or borrow money if you require it for emergency or retirement purposes.

But those individuals who do want to provide for a spouse, child or sibling after their passing, life insurance is the best way to achieve this goal. Even if you are not married or with children, you may have a sibling, parent, niece or nephew who you can protect financially through these types of policies.

Not only can you provide for loved ones through life insurance, but you can use the policy’s cash value to withdraw and/or borrow money if you require it for emergency or retirement purposes.

When you do the proper planning with regards to a whole or universal life insurance policy, you can make it a significant part of your retirement or estate planning.

As long as you have the financial means to afford life insurance premiums, these policies are a fantastic option for almost anyone who wants to leave behind money for other individuals.

Best Life Insurance Policy

The best life insurance policy is the one that best fits your needs. Too many people look for an absolute solution when it comes to life insurance. But the reality is that an insurance policy that works for you may not work for another person.

While whole life and universal life are preferable to term life insurance, because of their permanent benefits, not everyone can afford these policies.

For example, we can take a look at two different people to understand this concept. One is a 34-year-old woman who is planning her life insurance policy. The other is a 55-year-old man who has never taken out a life insurance policy before.

The 34-year-old woman will get much better offers on whole life and universal life insurance policies. Meanwhile, the 55-year-old might find it financially prudent to get a 20-year term life policy, because the premiums are much more affordable.

All these types of policies have their merits. While whole life and universal life are preferable to term life insurance, because of their permanent benefits, not everyone can afford these policies.

And it does not make sense to force yourself into getting a life insurance policy when you cannot afford the premium payments.

Saving Money on Life Insurance

Saving money on life insurance is all about making smart decisions. Not only must you consider getting a policy early in your life, but you have to take a look at your personal and professional habits.

Even if you meet all the criteria for “discounts” on life insurance, you cannot get the best policy if you are not shopping around.

For example, one of the best ways to save money on life insurance is by avoiding unhealthy habits such as smoking or gaining excessive amounts of weight. Individuals can also save money on their life insurance policy if they are a safe driver who does not get into accidents.

Even if you meet all the criteria for “discounts” on life insurance, you cannot get the best policy if you are not shopping around. You must take the time to talk with different agents to see what is available.

If you pick the first policy on offer, you will end up in a situation where you missed out on some deals because you did not even bother to look for them.

Shopping around will also give you a better understanding of the different types of life insurance coverage you can buy. This knowledge allows you to select the policy best suited to your circumstances.