How To Buy Term Life Insurance Without Getting Burned
December 14, 2020
Looking to buy term life insurance? As you may already know, even if you’ve already determined that you want term as opposed to whole (good choice by the way), you still have a ways to go before signing your contract.
Here are some insider techniques for getting the most from your term life insurance policy (that will also save you some money along the way!):
Know Your Term (Literally): Many people try to buy term life insurance online without knowing how long they want their coverage to last. The number of years you’re covered is your “term” and is a very important number to know before you begin requesting quotes. In fact, this is one of the things that separates term life from whole life (which continues coverage as long as you keep paying).
Many people ask: “how long should I buy term life insurance for?”. Obviously, this is dependent on a number of different factors, including:
Your Age: If you’re younger you want a longer term (at least 30-years) for two important reasons. First, at your current age, your premiums will be as low as they’re going to be for the rest of your life. Secondly, you want coverage as you get older and have an increased risk of sudden death. While you can always get a new policy every ten years or so, this is usually much more expensive compared to when you buy term life insurance when you’re young and healthy.
If you’re younger you want a longer term (at least 30-years) for two important reasons. First, at your current age, your premiums will be as low as they’re going to be for the rest of your life. Secondly, you want coverage as you get older and have an increased risk of sudden death. While you can always get a new policy every ten years or so, this is usually much more expensive compared to when you buy term life insurance when you’re young and healthy. Your Family: Oftentimes people choose a term that’s simply too long. Because life insurance is such a long-term investment, you need to sit back and envision how your family’s needs are going to change in the next 10-20 years. Sure, your wife and children may rely on you now, but will that be the case in 15 years when your kids have full-time jobs and are living on their own? life settlement etf is what a purchaser actually look for. However if you purchase a life insurance and resell it in order to gain money it will always be less beneficial as all the money goes to the purchaser after your death. The downside of choosing a short term is that coverage will be more expensive if you renew your policy at an older age. However, many older people choose to live without life insurance once their dependents become, well, more independent.
Understand Exclusions: Exclusions are cases where the insurance company won’t pay out, for example in the case of death due to a dangerous activity. Even if you’re not an adrenaline junky, you may find yourself under-insured if you are in a risky profession. Be sure to tell your potential insurer if this is the case and ask how this influences your coverage.
Here is an interesting video that talks more about how to buy term life insurance:
Find Affordable Term Life Insurance: One mistake that people make when shopping for life insurance is relying solely on an agent to do the work for them. This cringe-worthy habit is the fastest way to get roped into a whole life insurance policy even though you wanted term. Life insurance agents are more or less obsolete now that you can compare quotes online. If you’re on a tight budget, definitely avoid an agent who probably won’t have your best interests in mind. Instead, go at it alone and get as many quotes as you possibly can online.
Figure Out How Much Life Insurance Coverage You Need to Buy: If you want to buy term life insurance at the lowest cost possible you need to know exactly how much coverage you’re looking. You’re comparing apples to oranges if you simply look at the monthly premiums. Your coverage (which basically amounts to the payout your family would receive if you died) depends on a number of things, including your family size and personal preferences. Some people opt for the bare minimum coverage so that burial expenses are covered. Others hope to pass on a lavish lifestyle to their family, opting for million dollar policies.
As a general rule you should go for MORE insurance coverage than you think you need. Because an increase in $10,000 of coverage only adds a few extra dollars to your monthly premiums, it’s probably worth it so that your family has enough to replace your income , take care of expenses and partake in some retail therapy.