Personal Finance

Important Things to Consider Before Buying a Life Insurance Policy

Janney's Wealth Management Group shares important steps one should take prior to buying a life insurance policy.

REVIEW YOUR INSURANCE NEEDS
  • Speak with your financial advisor to help evaluate your insurance needs and circumstances.
  • Choose the kind of policy that has benefits that most closely fit you needs.

DECIDE HOW MUCH COVERAGE YOU NEED
  • How much of the family income do you provide? Does anyone else depend on you financially?
  • How will your family pay final expenses and repay debts after you die? Based on the answers to these questions, decide with the help of your financial advisor how much coverage you need, for how long, and what you can afford to pay. You want to be sure that you have enough life insurance to cover the financial effects of an unexpected or untimely death.

ASSESS YOUR CURRENT LIFE INSURANCE POLICY
  • If you have a current life insurance policy, do not cancel it until you have received the new one.
  • Keep in mind that you may not have to or want to cancel your current policy. You may be able to change your current policy to get the coverage or benefits you need now.

COMPARE THE DIFFERENT KINDS OF LIFE INSURANCE POLICIES

There are two basic types of life insurance policies:
  • Term InsuranceTerm Insurance has lower premiums at younger ages and does not build cash values that can be used in the future.
  • Permanent Insurance: Whole Life, Universal Life, Variable Life and Indexed Life
    Unlike Term Insurance, Permanent Insurance builds a cash value which can be accessed in the future. Your choice should be based on your needs now and in the future and what you can afford.

REVIEW YOUR LIFE INSURANCE EVERY FEW YEARS

Needs and policy types change over time and timely reviews will ensure the policy will do what was intended.


The concepts illustrated here have legal, accounting and tax implications. Neither Janney Montgomery Scott LLC nor its Financial Advisors give tax, legal, or accounting advice. Please consult with the appropriate professional for advice concerning your particular circumstances. Past performance is not an indication of future results. Insurance guarantees are subject to the claims paying ability of the issuing insurance company. Many insurance policies have surrender charges and other fees and expenses that may apply, consider these expenses as they apply to your specific circumstances.

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