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Nov 17

6 Things To Consider When Scouting Life Insurance Online

Reading Time: 6 mins

Whether through employment or business, all of your efforts to earn money will be useless if you’re not financially prepared for the future. How can you enjoy your earnings if you end up spending them on hospitalizations bills when you’re old?

Life is unpredictable, which is why it’s crucial to invest in online life insurance as soon as possible. Being insured is one of the smartest investments you’ll ever make in your life as this will financially protect your family, replace lost income, and help pay off your loved one’s debts. Life insurance can also help pay for your children’s future education expenses. 

When scouting for life insurance online, don’t forget to consider these so you’ll end up getting coverage that suits your budget and financial goals:


  1. Assess How Long You Need Coverage

Nowadays, insurance companies offer policies with different timelines. These options allow you to invest in life insurance that suits your lifestyle and financial goals. 

When scouting for life insurance online, start by deciding how long you need coverage. Life insurance is a broad term that can mean two things: insurance that lasts for a certain period (often referred to as term life) or permanent life insurance. 

The section below will discuss how these types differ:

  • Term Life

If you only need insurance for a specific timeframe, say 10, 20, or 30 years, consider getting term insurance. Term life insurance is an inexpensive way of getting coverage until you accomplish a financial milestone, namely putting your children through college or paying off your mortgage.

  • Permanent Life

If you need life insurance throughout your lifetime for things like income replacement of a spouse, financial aid for long-term medical care, and burial expenses, permanent life insurance is ideal. This type of life insurance is more expensive as it builds cash value over time. 

Both of these types are beneficial, but you need to get one that suits your current needs and financial goals. Carefully assess the pros and cons of each life insurance to make a sound decision.


  1. Calculate How Much Life Insurance You Need

You’ll be paying for life insurance for years, which is why it’s important to determine how much life insurance you need. Life insurance is important, but spending too much on one can adversely affect the quality of your life. This is especially true if you start sacrificing important expenses such as rent or mortgage just to afford life insurance.

To ensure that you’ll end up with a policy that fits your budget, calculate how much life insurance you need. Using the DIME method can help. In life insurance, DIME stands for:

  • Debt

Consider your existing mortgage, car loans, credit cards, and private student loans. You should also include the amount and terms of these debts. Debts can cause a lot of financial stress, so make sure these expenses don’t fall on the shoulders of your family and other dependents. 

  • Income Replacement

Think about the life expectancy of your spouse or anyone who depends on your income. Do you want life insurance that can replace your income when emergencies arise?

  • Mortality

This covers funeral and burial costs and other expenses accumulated during the end-of-life. When estimating final costs, always allocate a little extra for expenses you can’t exactly determine the amount and duration, namely medical and hospitalization bills. 

  • Education

If you have dependents—your spouse or children—who are going to school soon, think about the cost of their education. Aside from the expenses they’ll incur at the school, consider other costs such as lodging, food, and transportation.

List down and add up all of your expenses using the DIME method. The sum will give you an estimate on how much life insurance you need.


  1. Choose A Policy That You Can Afford

After determining how much life insurance you need, it’s now time to choose a cover you can afford. It’ll be easier for you to regularly pay for your insurance and avoid penalties if you choose a policy that suits your budget.

Ideally, you should scout life insurance online and assess the terms of its annual premiums. Make sure that the life insurance you get has terms you can easily afford. For example, if you’re planning to get term life insurance for ten years, see to it that its premium is suitable to your budget every month.


  1. Learn More About ‘Riders’

In insurance, a ‘rider’ is an insurance policy provision that amends the terms or adds benefits to a basic insurance policy. Riders allow you to customize a policy, so you can avail of different types of protection suitable to your conditions. The more riders your policy has, the more expensive it gets.

When scouting for life insurance online, make sure to include the following riders in your policy:

  • Guaranteed Insurability

With this rider, you can avail of additional insurance coverage without submitting for medical examination.

  • Accidental Death

This rider pays out a death benefit if the insured dies due to an accident. 

  • Waiver Of Premium

Getting this rider means waiving future premiums if the insured loses the financial capacity or becomes permanently disabled due to an injury or illness.


  1. Shop Around For The Best Rates

When you type in ‘life insurance’ in your search engine, expect to find thousands of results from your query. And while it can be tempting to only click the first suggestion and get life insurance from that website, don’t do it. Numerous companies now offer life insurance online, which is why you should exert time and effort to compare options.

Rates and terms often vary per insurance company, so shop around to get the best deals. This can mean spending a few hours online comparing at least three insurance companies and getting quotes from your preferred options.

You can also inquire from an independent insurance agent who’s affiliated with several insurance companies. They can work with you in finding the best life insurance appropriate to your budget, needs, and financial goals.


  1. Talk With Professionals

Getting life insurance is an important and expensive investment. Depending on the type of life insurance you’ll get, you might have to spend thousands of dollars every month for at least ten years or the rest of your life.

When scouting life insurance online, consider working with several professionals. With their training and experience in the financial industry, they can guide you throughout the entire process to ensure you choose the best life insurance. 

Do you have zero background on life insurance or its importance? Are you clueless about which insurance company to choose? Are you still having problems choosing the type, cost, and term of your life insurance? The right professionals can educate you on these matters.

Generally, you need to consult the following before buying life insurance online:

  • Financial Advisor Or Planner

An online calculator can give you a ballpark figure of how much life insurance you need, but this tool won’t look into your financial situation, estate planning, and long-term goals. As a result, an online calculator might not give you the best estimates on how much life insurance you need.

A financial advisor or planner can provide an in-depth assessment based on your current financial standing and long-term financial goals, making it easier for you to assess whether you need term life, permanent life, or a combination of both. They’ll provide individualized financial solutions based on your risk tolerance, budget, and goals. 

  • Accountant

Getting life insurance will qualify you for tax-deferred benefits. This means you don’t have to pay any taxes on the money you’ll get from a life insurance payout. Aside from this, insurance companies also offer different types of permanent life insurance products that you can use as your investment vehicles. For example, some types of permanent life insurance enable you to invest in the stock market.

If you want to maximize your life insurance, work with an accountant before getting one. They can guide you in picking the best life insurance that allows you to maximize several tax benefits.

  • Estate Attorney

Only a very few people with term life policy have a living trust or will. The absence of these estate planning documents can cost a lot of money to your family, even when you have life insurance. Without a will, your family home will end up in probate court when you die. Additionally, a family-owned business could be closed permanently if there’s no living trust.

Working with an estate attorney is a must before getting life insurance online. They’ll make sure you have a will and a fiduciary who can handle all of your financial affairs in case you lose the mental and physical capacity to do so. They can also make legal arrangements concerning the guardianship of minor dependents.


Knowledge Is Power

Life insurance is important for many reasons, but you need to be careful about what insurance to get. Keep in mind that insurance companies offer different policies, and hastily picking a provider might only cause financial stress in the long run.

To ensure that your online life insurance can improve the quality of your life, use this article as your guide. When you know what to consider when scouting life insurance online, you won’t have any problems narrowing down your options and getting the best policy.


Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.


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