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Three Tips on Buying Life Insurance for the First Time

Well, you finally realized that you are not immortal. Itís time to start thinking about sad things, and one of those things is life insurance. Donít worry, after this article you can go back to laughing about John & Kate Gosselin. For now though, itís time to consider three tips that are going to help you when you choose a life insurance policy. Other people are now depending on you so you canít take life insurance shopping lightly. You have to research the companyís policy and be sure what you want before signing a contract. That brings us to tip #1%u2026

1. Know what you want before looking for life insurance.

You should know specifically what you want to leave your loved ones in the event of death. Donít enter into a plan just because it seems like itís a prestigious one or just because someone else recommended it. All of these policies involve very specific details, as well as inclusions and exclusions. The main priority here is what you want to leave behind and for what purpose. For instance, some people want to leave money behind for specific financial benefits, like a college education, a mortgage or a charitable organization. You have to carefully analyze the chart and decide what you can afford to pay monthly and how much money your loved ones will need to survive (and for how long a period of time).

2. Know what policy benefits you and your family the most.

You will have four basic plans to choose from and many variations of these plans, depending on how much you are willing to shop around. Term life insurance is the most popular plan because it is the cheapest. Term life only covers you for a specified period of time. This type of plan pays cash value; it does not accumulate value or receive dividends. Itís typical for younger individuals to pay for term life during their 20s and 30s and then eventually switch to a permanent plan. The reason being that whole life insurance is permanent and the price does not change from year to year or contract to contract. This policy is in place until death or until you wish it to change. Whole life insurance policies also build cash values. Universal Life is a type of permanent policy that provides access to cash values that grow tax-deferred and a policy that is more flexible than regular whole life. Variable life insurance allows policy holders to have money allocated to a variety of investment options.

3. Research the quality of the company and read the contract carefully.

Both company reputation and the fine print of the contract need to be cautiously researched and analyzed. The insurance policy you choose will only be as good as the company that backs it. What good is a lifelong policy if the company isnít reliable enough to even stay in business? Therefore try looking up ratings agencies online that rate insurance companies on qualities like fiscal reliability, quality of investment and financial soundness. The most well known agencies are A.M. Best, Standard and Poors, Moody's, and Fitch. At the same time, be careful to read over the contract and make sure you understand what every sentence means. If you have doubts then talk to a lawyer or someone experienced in life insurance plansóanyone other than the company trying to sell you the policy.

Life insurance is an unpleasant subject, but itís imperative that you secure a policy nowówhen you are active and healthy. Remember that if and when death ever occurs, your family members will be counting on you to help through this troubling ordeal.

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