Buying Life Insurance - the Basics

When you are buying life insurance you want a policy that will fit your needs so obviously you first have to decide on what your needs are.

How much coverage do you need? $50,000.00? $100,000.00? $1,000,000.00?

Also, very relevant is for just how long do you need that coverage? Is your child now 15 years old and since you're finally in position to spend more money on life insurance you want to buy more coverage on yourself? If you only want to make sure that the child is well taken care of until he turns 21 then you'll likely be looking for something different in a policy compared to having a child with special needs that will need a lifetime of care.

Incidentally, if you're in a hurry to find easy coverage I don't think there's any company on the internet easier and faster to deal with etc. The world's fastest life insurance policy? It's certainly a whole lot easier than sitting down with an insurance agent!

How much life insurance can you afford?

You also want to calculate how much insurance you can comfortably afford. It does you no good and much harm to contract for premium payments that you can only afford for a few months before you begin resenting the premium check that you have to write out every month.

You also don't want to be canceling a policy in order to be buying a cheaper one and lose all of the money that you have invested in the first. Can you go back to the same agent, explain the problem and have him re-write the policy to something cheaper?

Sure you can, but then there's the ego thing. We don't like to admit that we made a big mistake and simply cannot afford that much insurance. So, although it's always important to understand where we are financially before we make a big decision remember that the same principle holds true for when you are buying life insurance.

Life Insurance Planning

Life insurance can also be one of the ways in which you plan for your financial future. People will argue for years over how good life insurance in general is as an investment, how the investment quality varies from policy to policy and company to company, but when all is said and done, life insurance as an investment works well for many people. Without life insurance some people are just not disciplined enough to save consistently and something is a whole lot better than nothing.

Life Insurance Agents

It makes perfect sense to ask a life insurance agent to help you figure out what your options are in light of your goals. A good life insurance agent may even help you understand what you financial goals really are. Are you primarily looking for an instant estate so that those financially (and perhaps emotionally) dependent on you will be well taken care of or are you working for longer term goals that insurance is simply a part of?

Who should help you buy life insurance?

Understand, too, that some professional insurance salespeople are agents while others are brokers. While there may be some state-to-state variance in the meaning of these terms, typically an agent is one under contract to one specific company while a broker is one that has contracts with a great number of insurance companies and is captive to none.

Many people logically assume that the broker is going to have the resources available to find just the right policy for your unique needs. Just remember that the most important factor in meeting your needs with just the right policy is that the individual helping you must understand your needs thoroughly, be well educated in the industry, and be ethical in all of his dealings. Get that combination in the right person and it really won't matter whether the individual is a captive agent or a broker.