39% of Americans Plan to Buy Life Insurance in the Next Year. Here’s What to Know About Buying It for the First Time

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Ready to buy life insurance? Read on for some key points to keep in mind. 

If there are people in your life who depend on your income, or who stand to get hurt financially in the event of your passing, then life insurance is a really important thing to buy. And if you’re contemplating a life insurance purchase this year, you’re in good company.

An estimated 39% of U.S. adults say they intend to buy life insurance coverage within the next year, according to data from LIMRA. And the intent to buy life insurance is even higher among younger generations, with 44% of Generation Z adults and 50% of millennials planning to get coverage this year.

If you’re new to life insurance, it’s important to have a few basic points covered as you seek out a policy. Here are some tips to help you get started.

1. Know how much coverage you need

The higher the benefit associated with your life insurance policy, the more it’s apt to cost you. As such, you don’t want to overbuy life insurance. But you don’t want to underbuy coverage, either.

A good rule of thumb when purchasing life insurance is to secure a benefit that will replace at least 10 times your salary. You may want to aim for 12 times your income for added protection.

On top of salary replacement, it’s a good idea to consider your debts when determining how much life insurance you need. If you own a house with a $300,000 mortgage jointly with a spouse, you may want to add $300,000 to whatever 10 to 12 times your salary is. Otherwise, your spouse might struggle to keep your family in your home without your income.

2. Understand the role your health plays in your premium costs

The more health issues you have at the time you apply for life insurance, the more risky a candidate you come across as. And more risk on the part of a life insurance company means higher premium costs.

As such, if there are aspects of your health you can improve before applying for life insurance, it pays to make that effort. Shedding a few pounds, for instance, could result in a nice amount of savings.

3. Don’t be lured by whole life insurance

When you’re first buying life insurance, whole life insurance might sound appealing because it not only covers you on a permanent basis, but it also accumulates a cash value over time. Term life insurance, by contrast, only covers you for a preset period of time, and it does not accrue any sort of cash value.

But one thing you should know is that whole life insurance can be extraordinarily expensive. And if you sign up for it, you might risk falling behind on your premiums due to the cost, thereby losing your coverage altogether. You may be much better off with a term life policy that lasts 20 or 30 years. And if you like the idea of forced savings, you can always take the money you’re not spending on costlier whole life premiums and stick it into the bank.

Buying life insurance is an important thing to do for your family. Keep these tips in mind as you attempt to secure the coverage your loved ones need.

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