Consider These Factors When Shopping for Life Insurance
If you view shopping for life insurance as a dreaded chore, you aren’t alone. Most people don’t want to think about the end of their life, so they put off planning for their loved ones or skip buying life insurance.
Many people think they’re too young to worry about life insurance or have enough money set aside should they die.
This usually isn’t the case, leaving many without the necessary finances.
The pandemic changed the way people think. It made many people realize the importance of planning for the unexpected. So if you’re in the market for life insurance in Los Angeles, here’s what to consider as you shop around.
How Insurance Agents Help
Insurance agents are there to help you choose the products that your family needs. They solve problems for you that you may never have thought of yourself. A qualified insurance agent will discuss your financial situation, future needs, and the type of legacy you want for your family.
Insurance agents ask many questions and dig deep to ensure you plan for your financial future with their products. They may ask you questions you never thought of and make you aware of situations you should consider when planning your life insurance.
It may feel like they are there to sell you something, but they are more like financial advisors, helping you to understand your big financial picture. Life insurance is one of the most important decisions you’ll make in your lifetime and could make or break the financial future of your loved ones. So finding an agent you connect with and who understands you is essential.
Questions Agents May Ask
Throughout your interview with an insurance agent, they’ll ask you pointed questions to ensure you get the proper coverage. These questions may include:
- What is your annual salary?
- Does your spouse work?
- Are you the breadwinner?
- How old are your children?
- What do you want your children to have financially if you die prematurely? (aka pay for college, money for a house, etc.)
- Do you have children that will need long-term care even into adulthood?
- Do you have a mortgage?
- Do you have any major liabilities?
Answer the questions as openly and honestly as possible. This will ensure you get the policy and coverage that suits your family’s needs. Focus on the premiums you’ll pay and the protection the policy provides your loved ones.
Qualify any Online Policies
If shopping around and interviewing insurance agents in Los Angeles doesn’t interest you, you might consider an online life insurance policy.
These policies are often entirely acceptable, but always ensure you work with a licensed insurance agent. In other words, don’t just apply online; never talk to a human, and pay your insurance premiums.
Most online policies are suitable for supplementation but won’t cover your loved ones’ complete financial needs if you die.
At the very least, qualify the insurance agent on the other end of the phone, ensuring he/she is licensed in California and has the right to sell you life insurance. The last thing you want is to leave your loved ones without financial coverage when you die.
Determine if you can Pass a Medical Exam
Most life insurance policies in Los Angeles require a medical exam. If you can’t pass the exam, you won’t qualify for fully underwritten life insurance. There are other options, but fully underwritten life insurance is the most affordable coverage.
If you know you won’t pass a medical exam because you have a serious pre-existing condition, you could apply for guaranteed life insurance or simplified issue life insurance. Neither policy requires a medical exam, but the premiums are higher, so keep that in mind as you shop around for the right policy.
Decide if you want the Policy to Have a Cash Value
Term life insurance is the most common life insurance policy. This policy is good for a certain number of years, such as 15 years. If you’re alive after the policy expires (it’s a good thing), but your policy expires.
When your policy expires, you can shop for a new term life policy if you need it, but most people carry term insurance to cover life when their children are young, have a mortgage, or don’t have a large amount of money invested or saved yet.
Cash value life insurance policies have higher premiums, but a portion of their balance gets invested. It’s like a forced savings account. You can use the cash value funds while you’re alive. Say, for example, you are diagnosed with a chronic illness and have a policy with a cash value of $500,000. You can use the funds to cover your medical bills or other expenses.
When you use the cash funds, you can use them as a withdrawal (not paying them back) or as a loan. However, if you withdraw the funds and don’t pay them back, your loved ones will receive less of your death benefit. Say, for example, you had a $750,000 death benefit but used $200,000 of your cash value. As a result, your loved ones would receive $550,000 when you die instead of $750,000.
When shopping for life insurance in Los Angeles, you have a lot to consider. Do you want a term or cash value policy? Will you pass a medical exam? Do you need coverage that lasts your lifetime or just to get you through a specific period?
Answering these questions honestly will point you in the right direction. Next, it’s important to work with a qualified insurance agent who understands your financial needs, can pick up on any problem areas your family would have if you died, and can provide you with a qualified life insurance policy.