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Life Insurance Basics

3 steps to get you started when buying life insurance

When it comes to buying life insurance there are several basic steps that will help you as you begin to evaluate products, pricing and companies. It's easier than you think.
According to the 2017 Insurance Barometer Study, more than 40 percent of adult Americans have no life insurance.1 It can be intimidating to sort through all the different types of life insurance and to try to determine how much coverage you need. Don’t let fear of the unknown stop you for getting the coverage you need. Here are three basic steps to get you started: 

1. Calculate your life insurance needs

How much will your loved ones need when you die to meet immediate financial obligations? Include things such as final expenses (funeral/burial costs), medical bills, debts, and mortgage. Then consider your finances and the standard of living you want to maintain for your dependents. For example, how much future income will be needed to sustain the household after your death? In addition to income replacement, think about future expenses such as college, health care costs, and enough money for an emergency fund. Get an estimate of how much you might need with a life insurance calculator.

2. Understand the policy types

Confused about what type of policy to buy? Then do some research. Begin by understanding that there are two main life insurance categories: term and permanent.*  
Term life insurance is more of a temporary policy with a set expiration date, while permanent insurance (such a whole life, universal life, and variable universal life) is meant to last a lifetime. Then compare the benefits and features of each to decide what policy type is best for you.

3. Check ratings and rates

Don’t settle for the lowest premium without checking the insurance company’s financial rating. Why? Because ratings indicate the company’s ability to pay claims. You want to make sure the company is around in case you aren’t. Many websites offer reports from the major insurance rating agencies such as Standard & Poor’s and A.M. Best. To help reduce premiums, consider getting life policy quotes from the company that you buy your home and auto from. Often companies will provide a bundle discount by adding a life insurance policy. Also, consider paying your premium annually to avoid extra fees for monthly payments.
These are just three basic steps you can take to purchase a life insurance policy. The most important step is not to wait. Remember, the older you get, the more expensive coverage can be. Lock in low rates today while you still maintain your good health. 

*As long as required premium payments are timely made.

1. LIMRA 2017 Insurance Barometer Study



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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