Life insurance plays an integral part in an individual’s financial plan. The first time consumer has several important factors to consider before purchase of a policy. As with any financial tool, a needs-based analysis will identify the proper policy for you.
ASSESS AN ADEQUATE AMOUNT OF COVERAGE: It’s important to evaluate beneficiary death benefit needs. What are your current financial responsibilities and how will an untimely death affect your survivors? Each of us carry different liabilities that may include debt balances, family obligations, and basic survival necessities. Additionally, medical treatment and funeral expenses for the deceased, are often overlooked when one determines a reasonable amount of death benefit. Keep your premiums within budget, even if you’ve decided you need more coverage than you can afford. A policy lapse due to un-affordable premiums defeats the entire purpose of buying a plan.
CHOOSE A COMPANY WITH A STRONG FINANCIAL RATING: People often forget your policy is as good as the company backing it. If your life insurance company encounters financial hardship, or the company historically denies life claims, your beneficiaries may never receive the intended death benefit. All insurance companies are required to provide financial statements to the state insurance commissioner however, a drastic event could easily bankrupt a low-rated company.
Financial strength is commonly rated by AM BEST, MOODY’s INVESTOR SERVICES, and STANDARD & POORS. These companies review liquidity, operating performance, financial flexibility, capital strength, management quality, competitive positioning, and long-term business viability. Each rating is independently determined, and picking a company rated highly by all three agencies, is advised.
CONSULT A FINANCIAL PROFESSIONAL: In today’s marketplace, the number of financial professionals have greatly increased. Finding an unbiased, ethical professional can be difficult. Ask trusted individuals for a referral, or make contact with multiple advisors. Life Insurance must be sold through a licensed registered agent. Trust your judgment and instincts to work with an agent who provides value to the transaction.
DON’T PROCRASTINATE: No one is immortal and “Chance favors those prepared” Louis Pasteur. Death is eminent for everyone. Life happens every day and it’s easy to hold off on your life insurance purchase. If you can’t afford your ideal amount of insurance, you are probably someone who needs life insurance the most. Imagine the financial legacy you can leave your loved ones to either continue with their lives without the strain of financial worry, or take care of your personal financial needs left behind. Death is costly, and if you do not want to burden others with your passing, don’t wait.