Key Factors to Consider When Buying Life Insurance in NY and Pennsylvania

Apr 29, 2021

Life Insurance

Key Factors to Consider When Buying Life Insurance in NY and Pennsylvania
Are you looking to buy life insurance in Batavia, NY, or other areas like Pennsylvania? You're about to make a potentially long-term financial commitment, which is why you need to carefully choose your coverage. Different types of life insurance policies may vary in aspects such as the exact benefits offered as well as the length and cost of coverage. Read on to learn more about choosing an ideal life insurance plan for you and your family.

What Is Life Insurance?

Life insurance is a legally binding agreement between you, the policyholder, and your insurer. The contract names the beneficiaries who will be paid a specific amount of money when the policyholder passes on. In exchange for the coverage, you'll pay insurance premiums as per the terms of your policy.  The main components of different types of life insurance plans include:
  • Death benefit- The insured amount that's paid to named beneficiaries when the policyholder dies.
  • Premiums- The money you pay to your insurer (the cost of having life insurance).
  • Cash value- The investment component available with certain types of permanent life insurance.
  • Term- The coverage duration in years, such as 10, 20, 30, etc.

How Can Life Insurance in New York and Pennsylvania Help You?

Life insurance can be a critical investment strategy, especially if you are your family's sole breadwinner. You can use it to safeguard your dear ones' financial future by paying for their expenses after you pass away. Life insurance benefits include:
  • Paying for final expenses-The policy can help relieve your family of certain final financial obligations after you pass on. For example, it can cover funeral or cremation bills or medical costs that are not included in your health plan. It may also pay for estate settlement costs.
  • Replacing your income-Life insurance benefits may replace your income after you die. As such, your family can use the compensation amount to pay for essential day-to-day expenses, such as utilities. It can also help fund your children's college tuition.
  • Paying off debt-The benefits can cover outstanding debts like a mortgage, car loan, or credit card bills.

Why Do You Need Life Insurance?

If you have dependents or people who financially depend on you in or outside your family, then you should consider buying life insurance. You may need a policy if:
  • You're a parent and need to protect your minor children from financial difficulty when you're no longer alive to provide for them.
  • You have a special-needs adult child who needs lifelong care and is unlikely to ever attain self-reliance.
  • You co-own property with another person, such as a spouse.

Key Factors to Consider Before Choosing Your Life Insurance Plan

To select a life insurance coverage that addresses your unique needs, consider the following factors:
  1. Age
Age is a critical element in deciding the most appropriate life insurance plan to choose. It also determines the type of insurance offerings available to you. Typically, you have a wider product range to choose from when you're younger. For certain insurance products, such as basic term life policies, you are ineligible to buy once you reach the age of 60.
  1. State of Health
The state of your physical and mental health is one of the key factors to consider as you evaluate your options. That's why most insurance companies will require you to provide a physical examination report or answer several medical questions before selling you a life insurance plan. The state of your health will determine your premium rates. As such, the healthier you are, the lower the cost of your insurance plan will be. Don't forget that life insurance providers often associate age with health. Thus, younger policyholders tend to be healthier and eligible for lower life insurance premiums.
  1. Budget
You'll also want to consider your budget and costs before committing to any specific type of policy. Typically, term life insurance premiums tend to be lower than permanent life insurance rates. The reason for this is that term life covers you for only a certain length of time. Additionally, it does not include a cash value component that usually increases premium rates. Depending on your budget and needs, you can buy a term insurance policy for a term of 30, 20, or as few as 10 years.
  1. Coverage Needed
When buying life insurance, be sure to carefully consider the death benefit based on your needs. Think about the expenses that your dependents will face when you're gone, and then estimate the life insurance amount you need to buy. Here are some of the factors to consider in your coverage calculations:
  • Debts-Any auto loan, private student loans, or mortgage.
  • Income replacement- How long do you need life insurance to replace your income and support your dependents after you've passed on?
  • Final expenses-Funeral or cremation costs based on your wishes.
  • Education-Consider the costs of educating your children, including college tuition fees.
  1. Duration of Need
Consider the length of time for which you need life insurance protection. For instance, a 30-year term life policy may be perfect if you just took out a 30-year mortgage. However, permanent life insurance may be the better plan if you'll still need coverage 45 years from today.
  1. Other Financial Objectives
Besides the death benefit, some life insurance policies offer an investment component. For example, if you need a plan that lets you build up cash value, consider buying permanent life insurance. You may be able to borrow money against the tax-deffered accumulated cash on your insurance policy. Keep in mind that you can use funds from your policy's investment account while you're alive. These are some of the most important factors to consider when buying life insurance. If you'd like professional assistance in selecting a life insurance plan that suits your budget and needs, contact the experts at Tompkins Insurance Agencies today. We are happy to help you get a personalized policy, whether you live in Batavia, New York, or southeastern Pennsylvania.
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