When Do I Get Life Insurance?
A life insurance policy is a contract with an insurer that states, in exchange for premium payments, the insurer will pay a lump sum called a death benefit to your beneficiaries after your death. Beneficiaries can use the money for whatever they choose, often paying off debts and ensuring children are financially taken care of.
To calculate how much coverage you need, consider your monthly expenses and the amount of debt you have. Then, factor in your mortgage and children’s college costs, and subtract any savings or investments you have that could be used to cover those expenses in the event of your death. It’s also important to consider if you have any special circumstances that might require additional coverage, such as a family history of terminal illness or a dangerous job or hobby.
Once you know how much coverage you need, you can begin the process of purchasing a life insurance policy. You can either contact an insurance company directly or work with a financial professional who works with multiple insurers. When shopping for a policy, make sure you compare quotes to find the best coverage and premium for your needs.
During the application process, you will be asked to provide personal information such as your age, weight, medical and prescription drug histories and family health history. You might also be required to undergo a medical exam. In some cases, insurers offer no-exam policies or accelerated underwriting that skips this step, but these policies typically cost more. You will also need to name beneficiaries — primary and contingent. It’s important to be honest on your application because the insurer will likely access third-party sources, such as your driving record, motor vehicle report and public records.