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How To Choose Life Insurance: A Guide For First-Time Buyers

Updated: November 2019

Maybe a new baby sparked thoughts about the future, or perhaps you want to help protect your family's lifestyle. Whatever your reason, life insurance may be an important part of your financial strategy and a safety net for your loved ones

The benefits from a life insurance policy may help your family cover expenses like mortgage payments, college tuition and day-to-day expenses if you pass away. Some policies even have a savings component, called "cash value," that you may borrow from in case of an emergency1.

If you're buying life insurance for the first time, knowing the basics as you start your search can be helpful. Here are some things to keep in mind as you consider life insurance policies.

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Reasons to Purchase Term Life Insurance

A term life insurance policy may be useful if you want coverage for a specific time frame — maybe until your kids graduate college or your mortgage is paid off. Term policies typically provide coverage for a set period, usually from 10 to 30 years. If you pass away during your policy's term, your beneficiaries will receive the policy's benefit. Term life insurance policies are often more affordable than permanent life insurance policies, because they only provide coverage for a designated time frame, according to the Insurance Information Institute (III).

If you're concerned that your needs may change or you'll eventually want permanent coverage, talk to your agent about getting a "convertible" term policy. Convertible term policies provide the opportunity to convert to a permanent life insurance policy, although it's important to keep in mind that your premiums will likely increase with the change.

Reasons to Purchase Permanent Life Insurance

With permanent life insurance, as long as you continue to pay premiums, the policy will remain in force. Permanent life insurance may be a good choice if you want to have coverage for the rest of your life. The III says premiums typically remain the same over time.

In addition to the death benefit, permanent life insurance also provides a savings element, called cash value. Cash value may be available for you to borrow from1 or used to help pay your life insurance policy's premiums.

Premiums for permanent life insurance tend to be higher than term policies, due to the cash value feature and the length of coverage, says the III.

Depending on the type of permanent life insurance policy you choose, additional options and benefits may be available to you. For example, with whole life insurance, the cash value typically increases at a predetermined schedule. Universal life insurance may offer the flexibility of adjustable death benefits and premium payments. A variable universal policy may offer the flexibility of universal life as well as a choice of investment options for your policy's cash value.

Your agent can help explain the types of permanent life insurance policies so you can decide if one of them might be right for you.

Choosing Life Insurance Coverage Amounts

In addition to choosing what type of life insurance policy you'd like to purchase, you'll also need to determine how much coverage you'll need. First off, it's a good idea to plan for your policy's benefit to cover your final expenses, including funeral costs and estate taxes, says the III. Here are some additional factors may influence how much life insurance coverage you'd like to buy:

  • Your income
  • Your age
  • Existing debt
  • Current expenses
  • Future expenses, such as sending children to college

Keep in mind that how much you pay for a life insurance policy is based in part on the amount of coverage you buy (called the policy's "face amount"). Other factors that may affect your life insurance premiums include your age and health at the time of purchase. You may be required to undergo a medical evaluation or provide detailed medical information in order to obtain life insurance coverage.

Choosing to purchase life insurance is a big decision, and it's important to choose a policy that fits your family's needs. If you have questions, a local agent can help you select a life insurance policy that's right for you.

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This content is for informational purposes only and may not be applicable to all situations.

This life insurance information is provided for general consumer educational purposes and is not intended to provide legal, tax or investment advice. Allstate life insurance issued by Direct General Life Insurance Co., 911 Chestnut Street, Orangeburg SC 29115; Allstate Life Ins. Co. & Allstate Assurance Co., 3075 Sanders Rd, Northbrook IL 60062; American Heritage Life Ins. Co., 1776 American Heritage Life Dr., Jacksonville FL 32224. In New York, life insurance issued through Allstate Life Insurance Company of New York, Hauppauge NY. Life insurance also offered and issued by third party companies not affiliated with Allstate. Each company is solely responsible for the financial obligations accruing under the products it issues. Product guarantees are backed by the financial strength and claims-paying ability of the issuing company.

Securities offered by Personal Financial Representatives through Allstate Financial Services, LLC (LSA Securities in LA and PA). Registered Broker-Dealer. Member FINRA, SIPC. Main Office: 2920 South 84th Street, Lincoln, NE 68506. 877-525-5727. Check the background of this firm on FINRA's BrokerCheck website (

1Loans or partial withdrawals can reduce the policy's cash value and death benefit, increase the possibility of policy lapse and may result in a tax liability. Consult a tax advisor for more information on the tax treatment of loans or withdrawals from a life insurance policy.
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