5 Tips for Buying Life Insurance

We can never prepare or plan for all of the twists and turns in life. But we can make sure that if the unexpected happens, you and your family can be provided for. Buying life insurance can help protect your family if something devastating is to happen. It can also be helpful in leaving your family with the same lifestyle as they deal with the loss of a loved one. It can help support the payment of debts, living expenses, medical expenses and final expenses. Upon death, your life insurance policy will pay the specified death benefit and is generally not subject to federal income tax. This part of planning is vital to consider and is an essential part in providing for families after the loss of someone they love.

At its core, life insurance exists to protect your family. So if you’re looking into buying life insurance, here are five tips to keep in mind.

  1. Compare life insurance types
    There’s the basics to learn plus the nitty gritty. For starters, you’re going to be looking at term life, whole life, variable universal life and universal life insurance. While they all sound similar, there are a lot of differences between them all. How you pay, the length of coverage, the benefits and how they’ll grow vary greatly. Here’s a short breakdown of each:
    • Term life: provides protection for a specific time period, is usually in force for a limited amount of time, or to a specific age.
    • Whole life: premiums are fixed for your entire life, can have a cash value that accumulates over time and can be accessed for a variety of things (college, supplemental income during retirement, starting a business, etc.), and provides a death benefit for the entirety of the insured’s life.
    • Universal life insurance: has a flexible premium*, can accumulate a cash value over time to support the cost of insurance charges when someone is older, the cash value is credited with a declared interest rate which can change over time, and has a death benefit that will pay out upon the death of the insured.
    • Variable universal life: has a flexible premium, also can have a cash value but the cash value can be invested inside of the policy in sub accounts that fluctuate based on the performance of the underlying investments (so you need to pay close attention to this type of policy), can be a useful tool for long term accumulation goals, and provides a death benefit upon the death of the insured.
    We suggest looking at the chart in this blog for a better understanding. Please note: investors are asked to consider the investment objectives, risks, charges and expenses of the investment carefully before investing. Both the product prospectus and the underlying fund prospectuses contain this and other information about the product and underlying investment options and can be obtained from your Registered Representative. Please read the prospectuses carefully before investing.
  2. Purchase as soon as you’re able
    Starting sooner allows you to accumulate more cash value and gives you more budget-friendly options.
  3. Know what you’re looking for
    If you’re looking for immediate protection without committing to a permanent policy right now, you may want to consider term life. If you need a versatile policy that will protect your loved ones during your entire lifetime and accumulate cash value, think about one of the many types of permanent life insurance, like Universal Life or Whole Life.
  4. Work with someone who can help you evaluate your future policy
    Some policies have low cash level values while others build over time. Work with an agent who is certified and can show you a year-to-year display of values and benefits of the different plans.
  5. Understand what you’re buying
    Read the policy carefully. Will your premium payment increase or stay the same? Will your cash value increase or stay the same? How does inflation affect it? You need to fully understand your policy and what you’re buying into.
  6. Be sure to check the health of the insurance company you buy a policy from
    You might think that all policies are the same, but… what if you buy a policy from a company who dies (goes out of business) before you do? You may end up without the much needed coverage you thought you had. Checking the ratings of insurance companies can be a useful tool in the buying process to filter out the companies who may be financially unstable. Don’t just shop for the lowest price coverage.

If you’re looking for assistance picking out the best life insurance policy for your needs, contact Mark here.

*Accessing cash value will reduce the available cash surrender value and death benefit. Loans against your policy accrue interest and decrease the death benefit and available cash surrender value by the amount of the outstanding loan and interest.