3 Things to Think About Before Buying Life Insurance
Life insurance is one of the most beneficial tools that you can purchase, providing you with the ability to financially secure the future of your loved ones through suitable coverage. There are numerous types of policies that you can purchase at various coverage levels, and this flexibility means that you can easily set up the right policy for your needs. However, it is important that you understand what your requirements and needs are before you start shopping around. These points will help you narrow down the options.
Your Budget. With life insurance, you will be responsible for the annual premium. This may be paid on an annual, quarterly, or monthly basis in most cases. It is important that the coverage is affordable for your budget, so take time to review your budget up-front so that you are aware of how much money you can afford to pay for the premium.
Future Financial Needs. Next, consider your future financial needs. Many people purchase life insurance for the death benefits it provides to loved ones upon your passing. With this in mind, consider how much money your loved ones would need to supplement your lost income if you pass away. Think about factors such as how much it would cost to pay off the home mortgage, the credit cards and the car loans, for example. You may also think about major life events, such as paying for the kids' college education out of the proceeds. When you add up all of these expenses, you will be able to determine how much money your loved ones may need to live comfortably on the death benefits.
Your Financial Investments. Some life insurance, such as whole life or universal life, will accrue cash value and can be considered as a financial asset or investment. These policies typically have a higher premium than a term life insurance policy, which will not accrue cash value. Therefore, consider if you need or want your life insurance policy to be an investment or to simply provide coverage.
You have many options to consider when you are searching for the right life insurance policy to purchase. The policy should meet your needs and be affordable for your budget. Keep these points in mind as you shop around for the right policy to purchase.
About the author: Seth Gowdy is the Sales Manager for Pivot Insurance and holds multiple insurance and securities' licenses. He has been part of the financial services industry for nearly 20 years. In his free time he enjoys being outdoors fishing, hiking, and geocaching with his wife and two children. Seth most enjoys helping clients with Pivot’s customized process and needs' calculators. You can reach Seth at 1-800-651-1953 or firstname.lastname@example.org.
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