Having a family is particularly challenging, but it’s also a fantastic experience at the same time. As you begin your parenting journey, your life will surely change – and so does your financial situation. Since life is full of uncertainties, you need to protect your family by any means, and purchasing life insurance is the best place to start.
As a young family, it’s not unusual that your kids are still dependent on you. Life insurance can offer you financial safety in the event of an unexpected death. For example, life insurance can cover expenses such as mortgages, debts, medical bills, burial costs, and future education costs for your children.
If you are considering applying for an insurance policy, we have listed eight essential tips you need to look into before getting covered:
1. Learn the Basics of Life Insurance
The most important thing you need to do before getting life insurance is to learn how it works. You’ll have an easier time deciding which one to get if you know the different kinds of insurance and how each one of them works. You may be overwhelmed by the number of products available in the market today, but they sure are easy to understand.
Some of the basic ideas you need to know when dealing with life insurance include:
- The company that will provide the life insurance coverage.
- The owner who has complete control of the contract.
- The person who is covered by the contract.
- And the beneficiary who will receive a sum of money if the insured person dies.
In most cases, the owner of the life insurance contract and the insured are the same individuals. It is also important to know standard life insurance terms or lingos to understand them better.
2. Know Your Options
Many life insurance companies offer a lot of coverage options for new families. The most common types of life insurance are permanent and temporary. Permanent life insurance is more expensive than temporary as it can build up cash value over the years. It somehow acts as a savings account for your family. This life insurance coverage is bound to remain active endlessly.
On the other hand, temporary life insurance, also referred to as term life insurance, is the most common and most affordable option for insurance policies. Term insurance offers temporary coverage for a specific duration known as time lengths which can either be 10, 20, 25, or 30-year contracts. Insurance rates under term policies are locked for the entire duration of the contract. If you are considering term life, make sure to get the lowest rate possible as you will be paying for it for a longer time.
3. Now Is the Time to Buy
The rates of life insurance policies are determined by several factors such as lifestyle, health history, habits, and of course, age. It is always better to buy while you are still young when it comes to life insurance policies. If you are growing a family, purchasing as early as possible is mainly recommended to get affordable rates. The earlier you will get, the bigger payoff you and your family will get in the future.
4. Know Your Budget
When applying for a life insurance policy, you need to consider your budget and the financial requirements of the life insurance company. As you start your own family, think of several factors such as your family’s expenses, debts, and other additional costs you may have. You need to carefully consider everything when deciding how much you will allocate for the needed insurance amount.
5. Choose Your Beneficiaries
One important thing about a life insurance policy is the beneficiary who will receive the death benefit if you pass away. In most cases, the primary beneficiary is generally the wife, husband, or children. Some insurance policies consider a second beneficiary, also referred to as a contingent beneficiary who will receive the death benefit if the primary beneficiary passes away.
6. Choose Your Insurance Company Wisely
If you have already decided what type of insurance policy you will be applying for and your listed beneficiary, it is time to consider your company options carefully. Choosing the right insurance provider that will cater to your coverage needs at a low and affordable rate that can fit your budget is very important. You need to select an insurance company that is helpful and reliable, especially if you have questions or concerns regarding your insurance plans.
7. Think Before You Switch or Cancel
If you happen to have an insurance policy when you were a child, you need to think carefully before you decide to cancel your insurance or switch to a new one. In most cases, there is a good chance permanent life insurance accumulates cash growth. Make sure to check on its value first and the charges that may be incurred in case of cancellation. If you have plans on canceling or switching existing life insurance, remember to make sure that your new coverage is already active.
8. Find Experts In The Field Of Life Insurance
The internet is one of the most convenient ways to begin your search for the best life insurance policies and companies. However, if you want a detailed orientation on how it works and the coverage options that will suit you, it is highly recommended to hire an expert in the field of life insurance.
Many agents can help you navigate through different insurance policies and providers that will suit your criteria. Considering that everyone has different insurance needs, it is best to work with independent agents to get you the best offer you can deal with.
For new families, purchasing a life insurance policy is always an excellent choice. With life insurance, you can protect your family from any financial problem should anything unexpected happen to you. You will also provide a financial cushion to your family since most insurance policies have a death benefit. Getting an insurance policy now is the first step to protect your family’s future fully.