Life insurance is an insurance policy that pays out a specific amount of money upon your death to provide financial protection and a safety net for your family. Perhaps, because nobody likes to think about their demise, many people put off buying life insurance until later in life (or even avoid it altogether). However, procrastination has consequences. Moreover, the younger and healthier you are when you buy a life insurance policy, the cheaper coverage tends to be. That makes now a great time to start looking at what's available. In its essence, choosing your first life insurance policy may not seem like such a complicated process. But before you begin, there are things you should know. This post can serve as a guide to first-time life insurance policyholders. How To Shop For Rates When looking for life insurance, it's crucial to compare rates. Many people don't realize that life insurance rates vary between companies. However, the variations might not be that profound. Comparing rates is generally quick and straightforward. You only have to fill out a form with your information (age, gender, etc.) and wait for your quotes to be emailed. You can also call an agent directly if you'd prefer to speak with a representative of the insurance company. By comparing multiple quotes from different companies, you'll get a sense of the average rate in your area. Having information about varying rates can enable you to make the most cost-effective choice. What To Know About Premiums Life insurance premiums are payments you make over time in exchange for the promise of a death benefit. To start, there are two things to keep in mind: how much your payments will be and how long. Generally speaking, premiums should be settled either per month, quarter or annually. This depends on the policy you have. Furthermore, the life insurance policy you’ll be getting often dictates the amount you have to pay and how long you are expected to pay. For instance, if you get the term life insurance, you’ll be setting the duration or term for the policy to be in effect. This also refers to the coverage period you’re obligated to pay. So, as long as you pay your premiums, you are considered insured. And, suppose, if you die within that term, your family and beneficiaries will receive the death benefit. However, if you're still alive at that point, there may be no death benefit for you or your family. Fortunately, some life insurance policies let you extend beyond the initial coverage period by making extra payments (called 'riders'). This extension allows your family to claim benefits if you die after the agreed period. What To Know About Insurance Entry Age For most people, the younger you are when you purchase life insurance, the better. Premiums are generally based on several factors that determine your level of risk. So, the older you get, the higher the risk you pose to insurance companies. As a general rule of thumb, it’s best to buy life insurance while you’re in your 20s and 30s. That’s because, as mentioned, age affects policy rates- they are much cheaper than if purchased at an older age. To give you a better idea, it’s believed that premium amounts tend to increase about 8-10% for every year of age. How To Determine Coverage Needs To determine how much life insurance you'll need, you should consider your short-term and long-term financial goals. For instance, if you have young children, you may consider coverage that will meet their needs until adulthood. If you have more immediate concerns, such as replacing your income, a term policy may be the right choice. Or perhaps, if your family is financially stable, it may be wiser to invest in a permanent policy with its cash value feature. How To Decide What Policy Is Best