5 Best Tips If You Are Buying Life Insurance For The First Time

Published on March 05, 2022, 5:54 pm
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Getting life insurance is a pretty big deal, no matter what your circumstances are. You might not like to think about ever needing a policy but there will always be a nagging voice in your head telling you that taking out a policy is the right thing to do. You will be giving your loved ones a financial security blanket in the event that something does happen to you. If that voice is getting loud and you have made the decision to get coverage, the following are some tips that will help you as a first-time buyer.

Length of Contract

You will have the option of taking out a policy for a specific period of time (term life) or you can take out cover for the duration of your life (whole or universal life). It is always a good idea to know what you want from your policy before choosing coverage and signing the contract. Do you want coverage while the kids are growing up or for the length of time that you will be paying a mortgage? Or do you want security for the rest of your days knowing that things will be looked after should you pass on?

Know What a Modified Endowment Contract Is

There are some specific terms that you should be familiar with. A modified endowment contract is one of them. This is especially important if you have assets that you would like to leave to your heirs. You need to understand the rules that govern the taxation and distribution of these types of contracts and you should know how to use them correctly to avoid a hefty tax bill. To learn more about these contracts and how to convert your assets, it is best to read online that explains the terms and conditions.

Who Will Your Beneficiary Be?

Your beneficiary is the person/people (or entity), who will receive the proceeds of your policy. It is best to not name a minor as there may be some complications when it comes to receiving funds. Likewise, if you choose to name your business as the beneficiary, it is important to take tax implications into account.

Calculate the Coverage You Need

So how much coverage do you need? There is no one size fits all approach to this so it is best to take a deeper look at your own circumstances. Think about different ways to save money while still acquiring the appropriate amount of coverage. Do you have any debt like credit cards or mortgage loans? Are you the sole breadwinner for your family? How many people are dependent on you? How much will burial costs be? Do you have young children who are in school/college? Do you want to ensure they are education will be paid for? These are all questions you need to ask yourself when it comes to calculating the coverage you need.

Compare Policies

So now you know how long you need coverage for, how much you need, who your beneficiaries will be and you are aware of the different terms used, it is time to shop for a policy. It is important to browse the options that are available to you and compare policies. Does one company offer lower premiums for the same cover? Are there any added bonuses you can avail of? Be sure to shop around to find the best deal.

Jonas Bronck is the pseudonym under which we publish and manage the content and operations of The Bronx Daily.™ | Bronx.com - the largest daily news publication in the borough of "the" Bronx with over 1.5 million annual readers. Publishing under the alias Jonas Bronck is our humble way of paying tribute to the person, whose name lives on in the name of our beloved borough.