5 Questions to Ask Before Buying Life Insurance
When buying life insurance, you may feel a little unsure about where to start. The process can seem complicated and even a little intimidating, but if you ask the right questions and research your options, you’ll be armed with the information you need to make a smart decision.
As you shop for life insurance, start by asking the five questions below.
Why do I need life insurance?
There are lots of different reasons why people buy life insurance. If you ask people who own life insurance why they purchased coverage, most would probably tell you they did it to protect their loved ones financially, or to help cover funeral costs, medical bills and other expenses after they’re gone.
As you think about whether you need life insurance, think about the people close to you and the financial legacy you want to leave behind. Life insurance is a simple way to help shield others from financial burden after you pass away.
How much life insurance coverage do I need - and how much can I afford?
How much coverage you need depends on your individual situation. Here are some things to consider:
- What expenses are you likely to leave behind? Will your loved ones be faced with paying funeral costs, medical bills, or debt?
- Do you have enough in savings or other investments to cover those expenses? If not, how much cash would be enough to cover the gap?
Once you’ve got an idea of how much coverage you need, the next step is to see how much you can afford. Many life insurance companies offer free, no-obligation quotes online, so you can quickly see rates from a number of providers and decide what amount of coverage fits your budget.
What type of coverage is best for me?
Although there are several different types of affordable life insurance, the two main product categories are defined as term and whole life insurance:
Term life insurance is coverage for a specific period of time. This type of life insurance offers lower initial premiums that increase at regular intervals until coverage ends.
Whole life insurance, also known as permanent life insurance, offers protection for life. Premiums are usually higher than term insurance; however, they do not typically increase during the life of the policy. Additionally, whole life insurance can build cash value over time that you can borrow against as needed.
Am I willing to take a medical exam to obtain life insurance?
When choosing coverage, don’t forget to consider the application process:
Most high-coverage policies require you to undergo a medical exam and blood work (in a process known as full underwriting). Some people don’t mind seeing a doctor to get life insurance, especially if it means getting more coverage or paying a lower premium. However, this process does take time, and some people find it inconvenient or intrusive.
On the other hand, many life insurance companies now offer affordable coverage that requires no medical exam or blood work (using a process called simplified underwriting). You may have to answer some health questions and provide information, but you won’t have to visit a doctor. These policies typically offer smaller face amounts, but many older adults find that the coverage meets their needs and prefer to avoid the hassle of a medical exam.
How do I choose the best life insurance company?
An insurance policy is only as good as the company that backs it. You want to be sure the company you are relying on is financially strong and will be around years from now to pay the full value of your coverage.
It’s a good idea to research a company’s history in the market, read industry and customer reviews, and even look at life insurance financial strength ratings. Looking at these elements will help show you which company may be the right choice for you.
This article is provided by New York Life Insurance Company for informational purposes only. This article is not intended to provide tax, legal, financial, or accounting advice. Please consult your own professional for advice specific to your circumstances.