FAQs of First-time Life Insurance Buyers

Thursday, July 22, 2021

FAQs of First-time Life Insurance Buyers

If you have never bought life insurance before, then the process might seem like a challenge. For help, consider frequently-asked questions those in your position often ask.

1. What is life insurance?

Life insurance will pay out an amount of money if a person, whose life the policy insures, dies. The sum it will pay is a death benefit.

2. Who’s Who in Policies

There are three parties involved in most life insurance policies.

Sometimes, you can be both the insured and the policyholder. In other words, you can take out a policy on your own life that will pay someone else as the beneficiary.

You can also be both the policyholder and the beneficiary. You might name someone else (like a spouse), the insured. You can then make yourself the beneficiary in case your spouse dies. Yet, to name someone else as the policy’s insured, you will likely need their permission.

If you are the insured, then you cannot be the beneficiary. That’s because you’ll have to die for the policy to pay.

3. Who can be my beneficiary?

You can name almost anyone as a beneficiary if you are the insured, including:

4. How much coverage do I need?

We recommend that you carry at least 10-15 times your annual income if yours is the insured life.

Some people want their death benefit to go towards specific purposes, like mortgages or a child’s education. In these cases, you will need at least enough coverage for these costs.

5. Are there different types of policies?

The two most-common types of life insurance are:

Within the spheres of term and whole-life policies, there are further options. Let one of our agents help you determine the right course of action for your needs.

6. What will my policy cost?

The type and amount of coverage you buy will of course influence your policy’s premiums.

Insurers will also look at various demographic factors to set individual rates. Those can include (but are not limited to):

Generally, the policyholder will pay more for a policy if the insured person has a higher risk of dying. The factors above might influence those risks.

If you want life insurance, but have questions, we are ready and able to help. Contact us or request a quote today to get started on your life insurance policy.