Guide to Life Insurance Basics
Let’s face it: Men typically pay higher rates for life insurance. A 2014 Chicago Tribune article revealed that males pay up to 38 percent more than females for the exact same policy and benefits. Much of this is due to men’s statistically higher mortality rates, with their lifespans averaging anywhere between 4 and 7 years shorter than those of women from the same racial backgrounds. However, you can still benefit from some wise shopping strategies. Knowing what goes into your quote, as well as selecting the right product, can help you find the right policy.
Understanding What Impacts Your Quote
Several factors affect the price you’ll pay for coverage. Investopedia spelled these out in their guide to life insurance quotes. Some specifics, such as your gender or family medical history, are completely out of your control. The same generally applied to your age, although you can buy a policy when you’re younger to see lower premiums.
Even so, you do have some control over other inputs typically used in underwriting to determine your premiums. Risky leisure activities or professions such as mining, car racing or mountain climbing can drive your rates up. It’s also a good idea to manage certain health conditions, such as high blood pressure or diabetes, prior to shopping. You could opt for coverage that doesn’t require a medical exam, but you’ll likely pay more. Finally, smokers should consider kicking the habit before getting a quote, as they can pay twice as much as their non-smoking cousins. If you are a new dad, get rid of the smokes anyways. Come on, now.
Term Life or Permanent Life?
When you think of the words “life insurance,” you probably pictured something like permanent whole life or universal life. Even so, those aren’t the only choices available to you. As explained in a 2016 New York Times piece, term life proves to be the best option for many individuals. This straightforward type of policy pays a fixed amount to your beneficiary should you die within a specified amount of time, which is anywhere between 10 and 30 years. In contrast, permanent life accumulates a cash value and will pay out after you’re done footing the money for premium.
Which version should you buy? It’s important to consider your family’s financial needs when you make this vital decision. NerdWallet suggests that whole life is appropriate in a few key scenarios, especially if your goal is to leave behind extra money:
- Covering estate taxes
- Providing for lifelong dependents’ care
- Spending retirement savings while funding final funeral costs
- Providing inheritances equally to your heirs
Joint life insurance policies can save on premiums, but keep in mind they share one death benefit (as opposed to two for individual insurance policies.
Other situations dictate that term life may be a more appropriate solution. Replacing income lost suddenly to your death is just one example, but you might choose term life for its affordability. Depending on the policy amount, term length and the age at which you purchase it, you’ll probably pay out only several hundred dollars a year versus a few thousand for whole life. Keep in mind that some versions of term policies can be converted into permanent life at a later date. It’s prudent to ask your Florida life insurance agent plenty of questions before choosing your products.
Choose Your Policy Wisely
Buying life insurance might make you feel like you’re navigating a maze of choices, but you just need some key pieces of information to make the right decision. Remember that your quote will be impacted by both factors in your control as well as things you can’t change. If you’re a younger dad, obtaining a policy now will cut your costs a bit. Nevertheless, even older men have options for coverage. Finally, consider your family’s financial needs when selecting between term or permanent life. These tips, plus choosing an experienced agent, will help guide you in picking the best policy for you.
Life insurance for new dads isn’t as exciting as the latest hot toy review – I know this – but that doesn’t make it any less important. One may even argue that your family’s well-being ranks a tad above which toy your kid might like best (sarcasm). I hope you found this post helpful.
