Getting Life Insurance in 2022? 3 Moves to Make First
Check these off your list before starting that application.
- There's no such thing as the right or wrong age to get life insurance.
- Before you apply, figure out your coverage needs, the type of policy you want, and whether there are steps you should take to improve your health.
Buying life insurance is a move that could protect your loved ones in the event of your passing. Even if you don't work, it could still pay to put coverage in place.
Say you're a caregiver for an older family member, or you're a stay-at-home parent whose children are too young to attend school. If you were to pass, paid care might be needed, which makes the case for a policy as well.
But if you're going to apply for life insurance this year, there are a few moves it pays to make first. Here are three to aim to check off your list.
1. Decide how much coverage you need
It's easy to get upsold on life insurance. Before you apply, run some numbers to see how large a death benefit you think you'll need. There are different formulas you can use. One convention is to secure enough coverage to replace 10 times your income.
But you may want to take a different approach. If you have a working spouse, for example, you may decide that instead of replacing a specific multiple of your income, you'd like to secure a benefit that could pay off your combined debts, like your mortgage and cars, and leave enough money left over for your children's education.
Ultimately, there's no right or wrong answer when it comes to determining how much coverage to get. The key, though, is to avoid buying too large a policy, because that could drive your premium costs way up. If you earn $60,000 a year, for example, you probably don't need a $2 million death benefit.
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2. Figure out if you want term versus whole life insurance
Term life insurance covers you for a preset period of time. It can last 10, 20, or 30 years, for example. If you never end up having to use your term policy, you don't get any money back once it expires.
Whole life insurance, on the other hand, accumulates a cash value over time. That's money you can opt to cash out or borrow against. Also, whole life insurance coverage never runs out. But it also costs a lot more than term life, so you'll need to weigh the perpetual coverage and cash value aspect against the higher premiums you'll be forced to pay.
3. Get a health checkup
If you can't remember the last time you saw a doctor for a physical, you may want to schedule an appointment before applying for life insurance. That way, you'll have a sense of how healthy you are, and you'll potentially get a heads-up on aspects of your health you may want to work on improving.
The better your health, the more likely you'll be to spend less on life insurance premiums. If a medical appointment reveals you're mildly overweight, you may decide to try to lose those extra 15 pounds and then apply for life insurance.
Putting life insurance in place is one of the most important financial moves you can make. If you take these steps beforehand, you may wind up in an even better position to choose the right coverage and snag an affordable rate on your premiums.
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