If you are preparing to buy life Insurance for the first time it feels overwhelming. There are a lot of terms you never hear of. To help you get started on your search here are 4 tips to consider if you are planning to purchase a life insurance plan.
Tip 1 Understand why you need life insurance
Do your research first. First Life insurance is a serious investment and one that should not be made without research. Also not everyone needs life insurance.
Tip 2 Get basic knowledge on types on life Insurance
There are two basic types of life insurance policies: life and whole life. Term life insurance policies last for a specified period of time. Term life is less expensive than whole life because it usually expires before the benefits are used. For example I purchased a 10 year term life insurance to cover my mortgage just in case God forbid I was to die! Not my plan is to have the home paid off in 10 years.
Whole life insurance lasts from the day you buy the policy until the day you die, no matter. A whole life policy is more expensive because the coverage could last a few years or several decades. Whole life policies can be borrowed against at a high interest rate, while term life policies.
Then there are riders on the policy. Our Ask The Latina video explains what a rider does to a policy.
Tip 3 Know When to Choose Term
If you are in a situation your dependents will not rely on you financially forever, your best bet is probably a term life policy. For example, many parents choose term life policies that are in effect until their children move out and become financially independent. Once kids are, there is no reason to continue paying for life insurance. Your beneficiaries will rely on your contributions.
Tip 4 Know How Much to Buy
Understanding the potential needs of your beneficiaries can also help you decide how much insurance you should have. Don’t follow any “rule of thumb” guidelines you may read. Your needs are specific to you. Your decision will depend on the math.
How much money do your dependents need each year and for how long? Because your children are likely different ages, that number is different for each beneficiary. Calculate the needs of each dependent annually, multiple times the number of years support is needed and then add those numbers together so all dependents have what they need.
You do not have to be a US Citizen to purchase Life Insurance!
In our Ask The Latina video interview we found you do not have to be a citizen of the USA to have life insurance. This is important to Latinos and especially with children living in another country. They are still able to get the benefits from the policy as long as they are the beneficiaries.