10 Things to Know before you buy Life Insurance
1. Know what your needs are. Many people have a difficult time in determining how much life insurance they need. A common rule of thumb is to multiply your yearly income by 5 - 10 times, using the lower number for less dependants and the higher number for more dependants and debt. Another way to get a rough estimate is to add together your debt, estimated funeral costs and a year of replacement income. Either way you should go into the purchasing decision with a good idea of how much life insurance you need.
2. Buy Life insurance when you are healthy. As we start to get up there in age and our health starts to deteriorate, this is often the time that we start to get serious about purchasing life insurance. Unfortunately, this is also the time when life insurance becomes the most expensive. So buy life insurance as early as you can, but wait until you have dependants.
3. Ask questions. Understand the policy you are purchasing. You should know the policy inside and out before purchasing it. Is the policy renewable and non-cancelable? How long are the premiums guaranteed for? Is there a disability rider? What are the exclusions?
4. Shop around for life insurance. Like any insurance policy, premiums can vary from carrier to carrier. They depend on your sex, age, health, activities, and in some cases profession. Be sure that you use a site like www.FreeInsuranceReport.com to make sure that you are getting the best value for your insurance dollar.
5. Buy from a financially solid company. Insurance is only as good as the company standing behind the policy. This is especially true with life insurance as if things go well, we don't expect the company to pay out on the policy for many years to come. So, be sure to check out the carrier ratings from AM Best to make sure that the company is solid enough to stand the test of time.
6. Tell the Truth. There's no sense in being anything but truthful on your application just to save a few dollars. Be assured that if a claim is made, the insurance company will investigate before paying.
7. Take a Free Look. You have 30 days to look at the policy and understand it. If you are not satisfied with it during that time, cancel the policy and you will get your premium back.
8. Get Healthy. Simply put, health people pay less for life insurance than those who are overweight, smoke or have health problems. So put down the cheeseburger, throw away the cigarettes and save.
9. Make adjustments as needed. As you and your children age, or your income changes, you might want to adjust your benefits. Don't be shy about adjusting coverage to meet your needs.
10. Make sure you have it. Going without life insurance if you have dependants won't affect you - it WILL affect your family and loved ones. No matter how much or how little life insurance you can afford, make sure you have something in place for them.