Life insurance is fundamental to your long-term financial plan, and you can purchase life insurance at any age. But, if you wait until you’re older to buy a policy, then your cost will be higher. Also, overall risk such as lifestyle and health also determine your premium. For example, if you use tobacco, then your premiums will be high. If you have a terminal illness like cancer, you can get a life insurance policy. In fact, guaranteed issue policies are explicitly designed to protect people regardless of their health.
So, when you’re ready to buy a life insurance policy, you’ll want to decide if you want to buy a personal life insurance policy or participate in an employer-sponsored plan. But, an employer-sponsored policy terminates when you quit your job, and most are not transferable. Next, you’ll want to decide if you want a term policy, which ends after a specific amount of time, or a whole life policy that protects you until death. Term life policies are cheaper than whole life policies, but whole life policies have built-in cash value. Once the policy matures, the owner is entitled to a payout. Regardless of which plan you choose, you’ll be asked to complete a medical exam that will help the insurance company gauge your risk for mortality.
Also, before you buy a life insurance policy, you’ll need to check relevant company information such as financial stability. A.M. Best Stability Rankings provides consumers with valuable information about insurance companies such as financials. Now that you’re a step closer to purchasing life insurance, complete the following quiz to test your readiness.
