How to shop for life insurance

Who needs life insurance? Anyone with someone to protect or provide for. We talked to John Carter from TDI’s Life and Health section to find out what Texans need to know about buying life insurance. https://www.tdi.texas.gov/consumer/life-insurance.html

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Who should buy life insurance?

Anyone with a family business, assets, or people to protect. Life insurance isn't just for people who are married and have children—single people may need life insurance too.

What’s the difference between term life and permanent life insurance?

Term life is generally the least expensive, and it’s based on a time period or your age. When you get to the end of the term period or reach that age, the insurance ends. With term life, there may not ever be a payout. You're covering yourself for that portion of your life when you have obligations to other people.

Whole life insurance, also called permanent insurance, is there for your entire life. Whole life can be expensive, but that’s because it lasts until you die, when the policy pays out. Unlike term life, a whole life policy will accumulate cash value over the years.

If you get life insurance at work, is that different?

Employers generally offer a base life insurance policy for employees, sometimes at no cost. The payouts may be low, designed to cover funeral costs. And they’re only good while you’re with that employer.

Some employers let you buy more insurance, generally based on a multiplier of your income.

When should you make changes to your life insurance?

When you have a life event, such as getting married or having children. If your needs change, you may want to increase your coverage.

Is there a rule of thumb for how much it costs?

No, it’s based on a lot of factors: what type of insurance are you buying, is it term life or whole life, or is it a universal life policy? It’s also based on your age and health. It's
important to shop around once you determine the type of insurance coverage you need and the amount you need.

What about annually renewable term life insurance?

You may see advertising on TV for annually renewable term life insurance. And, basically, that policy is good for a year and then it renews, but it renews at a higher cost each year.

Can a life insurance company limit the amount of coverage you get?

Yes. For example, if you're single, fresh out of high school, and maybe have a new job, and you go to an insurance company and apply for a $10 million policy, they're going to turn you down. You don’t need that much insurance. They're going to limit how much you purchase because the company doesn't want to expose itself to too much risk.

How do you determine what you need?

A basic question you can ask yourself is, “If you were to die, how would that affect the people in your life?” Would there be money to pay for the funeral? How much money would the people in your life need to make ends meet without your income? Would they lose their home?

If you have children, who’s going to pay for their education? And you may need money for childcare if your spouse needs to go back to school or work to increase their income. Write those questions down, and it will help you determine a cost.

How do you find out if a deceased relative had a life insurance policy?

Try to have those tough conversations with your family ahead of time. But if it’s too late for that, look at your loved one’s bank statements or checkbook to see if they've made payments to an insurance company. Look at their phone contacts to see if there’s an insurance agent listed. Check where they worked to see if they had life insurance from their employer.
00:00 How to shop for life insurance
00:23 Who should buy life insurance?
00:57 What’s the difference between term life and permanent life insurance?
03:30 What kind of life insurance do you get through an employer?
06:10 How much should life insurance cost?
08:37 Can a life insurance company limit the amount of coverage you get?
09:34 How do you determine what you need?
13:04 How do you find a deceased relative’s life insurance policy?
13:44 For life insurance questions visit https://www.tdi.texas.gov or call 800-252-3439

Видео How to shop for life insurance канала Texas Department of Insurance (TDI)