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Looking to buy life insurance? What to know first

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If you're considering buying life insurance, there are a few things you need to consider first.  / Credit: Miljan Lakic/Getty Images

If you’re considering buying life insurance, there are a few things you need to consider first. / Credit: Miljan Lakic/Getty Images

Life insurance offers policyholders peace of mind and beneficiaries financial protection in the event of the death of the policyholder. In exchange for a monthly payment to a provider, the insured can rest easy knowing that their loved ones will be protected for years to come.

Although the benefits of life insurance are significant and valuable, many American adults still do not have this protection in place. In fact, about 106 million adults don’t have life insurance or don’t have enough coverage, according to a 2022 study by LIMRA and Life Happens.

The decision to find – and buy – a life insurance policy can be confusing, but it doesn’t have to be once you understand some basics.

If you’re looking for life insurance, consider talking to a life insurance expert who can walk you through the process. You can get started today by getting a free quote.

What you need to know before buying life insurance

Here are three things to know as you embark on your search for life insurance.

You may already have it

Many Americans already have life insurance through their employer. As part of a package that often includes medical, dental and vision benefits, many employers also offer some form of life insurance protection. So the good news is that you may currently have life insurance.

The bad news is that the amount provided is unlikely to be what most financial advisors would recommend. The amount of life insurance you need is subjective and tied to your personal financial situation and long-term goals. That being said, a policy that is one to two times your annual salary probably won’t be enough.

Therefore, you will want to supplement your employer-provided plan with one of your own. Speak today with a life insurance agent who can help you increase your protection.

Different types have different benefits

There is no one-size-fits-all approach to buying life insurance. Nor is there a standard type of insurance policy. Do your research to find the most cost effective and reliable option.

A term life insurance policy, for example, can provide coverage for years (even decades) at a reasonable cost. But there is no withdrawal option and once the term is over, the money you spent on the policy will be gone.

A whole life insurance policy, on the other hand, is usually more expensive. But it does come with a cash option that policyholders could potentially use to pay off debt or use for expenses (after the policy has had time to build up).

There are also versions of universal and variable life insurance policies that can be advantageous. So know what you want, then choose a plan that will allow you to achieve your goals.

It will become more expensive if you wait to buy it

Once you’ve done your research on employer-provided plans and determined which type of policy is right for you, it’s time to sign up with a provider.

Don’t wait too long. This is because life insurance will only get more expensive as you age and the cost of insurance will become more prohibitive. Young people, in particular, will benefit from a diet now instead of waiting until they are older and have medical problems.

So act now to lock in a low rate. You can use the table below to start researching suppliers.

The bottom line

Life insurance is a fundamental part of sound financial planning. But choosing the right amount and type is essential. Consider speaking to a life insurance expert who can help you get started with a free quote so you know exactly what to expect with a policy.

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