Choosing a life insurance policy can be confusing. Not only do you need to determine the best type of policy, but the right amount of coverage as well. Here are a few tips to make buying life insurance less intimidating.
1. Consider your situation. A single person with no one to provide for doesn’t require the same amount of protection as someone with three children. If you are a spouse or parent, you will probably want to purchase enough life insurance to replace the loss of income that your death would cause. This allows your loved ones to eliminate debt, pay for college and cover other expenses that may arise.
2. Understand the most common types of insurance. Term life insurance offers protection for a predetermined amount of time. Monthly premiums are usually lower than those of whole insurance policies. Many term polices can be converted to whole life insurance at the end of the term period. This is a plus because it means you will be insurable even if you develop medical problems after purchasing the original policy.
Whole life insurance remains in effect throughout your lifetime as long as premiums are paid. The premiums remain the same for the life of the policy, but are often more expensive than term life premiums. The policies also accumulate cash value that can be borrowed against over time.
3. Get quotes from several reputable companies. Shop around to determine which company offers the best price for the insurance that meets your needs. You can obtain quotes online or by speaking to company representatives.
4. Keep your budget in mind. It can be tempting to overextend yourself to meet an insurance premium that seems like a good deal. Keep in mind that if you can’t afford the policy when money gets tight, you’ll be left with no coverage at all.
5. Beware of overzealous insurance agents. If an agent tries to push a particular policy or refuses to listen to your concerns, it’s probably time to look elsewhere. Keep in mind that many agents are paid on commission so they don’t necessarily have your best interests in mind.
Buying life insurance doesn’t have to be a nerve-wrecking process. Arm yourself with information before you make a decision so that your ultimate choice will be the best one for you and your loved ones.
Most life insurance policies require that people undergo a physical examination. These exams aren’t necessarily that extensive, but they will require that the insurance seeker give at least a urine sample and a blood sample. The insurance companies will be interested to know if potential policy holders have illicit drugs in their systems or high blood sugar or cholesterol content.
The results of the exam may show that the future policy holder is susceptible to diseases such as diabetes and heart disease. These people may have a shortened life span because of their health concerns and if the situation is bad enough, the life insurance company will deny this particular person a policy. The other possibility is that the insurance company offers a policy but the policy holder must pay a high price.
People seeking term life insurance quotes may be aware that there is the possibility of some negative results being discovered in their medical exams. Before this can happen, they may be able to improve the state of their health by exercising to lower their weight. They can visit their doctors for help lowering their blood sugar levels. If their results fall within normal limits, the insurance company will charge rates that they charge their healthy clients.
People also have the option of purchasing no medical exam life insurance. As the name suggests, they will not have to submit to a physical examination, and their negative results will not be known within the insurance industry; when one insurance company turns down an applicant because of bad medical results, the people at this company share this fact with other insurance companies to prevent fraud. People will pay a little more for their life insurance without a medical exam, but it will keep them from being turned down and not being able to purchase life insurance from another company.
If people are smokers or they have a dangerous habit such as race car driving, they may want to consider stopping those behaviors. Smokers can qualify for a non-smoker’s rates with some insurance companies, but their exam results may need to show that everything is within normal limits. The best way to ensure that people can receive life insurance without having to pay sky-high rates is to cease the dangerous activity.
To keep their families out of financial difficulties if they should pass away early, people need to purchase life insurance. Because life insurance has the potential to be expensive, those who prepare before they apply receive the lowest rates.
No one should buy any product without at least some idea of what they want and what they’re getting, and life insurance is no exception. While you may benefit from the advice of a broker or sales representative, it is always a good idea to know something on your own in order evaluate their suggestions. Here are three things you will want to consider when buying life insurance:
1. Know Your Needs
When you come right down to it, no one understands your financial needs better than you. To figure out how much insurance you will need, add together your debts plus what it would take to replace up to a year of income. You should also add in the cost of an item no one likes to think about (but which your family will have to) and that’s your estimated funeral costs. The resulting sum will allow you to avoid getting suckered into purchasing an exorbitant policy.
2. Term Insurance Versus Permanent Insurance.
A term insurance policy is one that provides you with protection only and does not offer a savings component. If this is your first insurance policy purchase, you probably will be able to cover all your financial needs with term life insurance, which is also usually cheaper. Because permanent insurance such as whole life give the insurance companies better profit margins, your sales representative may try to steer you in that direction. You can always upgrade later, so start out with something simple and inexpensive and then adjust your policy according to changing circumstances as time passes.
3. Shop Around
You wouldn’t buy a major purchase like a house or a car without comparison shopping and you should take insurance just as seriously. Before committing to anything, see what others will offer for the same coverage, as prices can vary surprisingly from one insurance company to another. There is simply no substitute for doing your homework and such things as what type of riders, exclusions and other bells and whistles are on the policy make an enormous difference in how much your premiums will be.
Buying insurance shouldn’t be complicated, and if it seems complex and hard to understand that should be a major warning sign to slow down and do more research before signing anything. With a little commonsense caution getting the insurance you need at a price you can afford shouldn’t be a problem.
It is important that spouses and parents consider buying life insurance for a number of good reasons. As the family often depends on the income that such persons may generate, life insurance comes to the family’s rescue in case of an unexpected death. Life insurance protection can be used for paying a mortgage, putting a child through college or in estate planning.
Figure Out How Much Coverage is Needed
To start, you will need to figure out how much money you would like to leave to your family at the time of your death. The total sum of money is called a death benefit. An easy way to figure out how much money you should leave is to determine your total annual salary and multiply it by 8. However, this is just a ballpark figure, as each person will have to decide what the individual needs of their family are. Once you’ve decided on the total amount of the death benefit, a life insurance agent or broker will present you with different policy choices.
Term life insurance is the most cost-effective form of life insurance. It provides coverage during a specific period of time. In the case of premature death, term life insurance helps holders pay off mortgages and other debts. Many choose this as a good form of starter life insurance and later decide to convert it to a whole life insurance policy. The younger the insurance policy holder is when he takes out the policy, the less expensive his insurance rates will be.
Whole Life Insurance
Also known as permanent insurance, whole life insurance protects its holders throughout their life as long as the premiums are regularly paid. Unlike term life insurance, whole life insurance policies build cash value. This allows whole life insurance holders to take out policy loans. Some use these loans to fund their children’s education or obtain supplemental retirement income. However, these loans accrue interest and reduce the death benefit if they aren’t paid off. Each person should talk with a life insurance agent to decide what the right coverage is for her family.
Check with an Independent Broker
Instead of going with an insurance firm, more life insurance options may be available by consulting with an independent broker. Independent brokers have access to many life insurance products and plans, whereas an individual firm only has their individual company’s products to offer.
Buying a life insurance is one of the most important things a person can do, yet it remains a widely misunderstood process. There is a policy that is fit for everyone, no matter their current situation or state of life, it’s just about finding the right agent and choosing the policy that meets every need. Sometimes thought of as an overwhelming process, getting life insurance is easier than one may realize. Here are some helpful tips for finding the right insurance.
1. Decide Why You Need It
The information most people see for life insurance is found in a minute-long commercial. These commercials are often geared towards one of two categories: Those with young families and the senior crowd. While it’s important for these two demographics to have some assurance that everything would be okay in the event of a loss, there is still a large percent of individuals that belong to neither of these categories.
There are many people without immediate family or blood relatives that others depend on. Some individuals have boyfriends, girlfriends, brothers, sisters, friends or neighbors that would be effected in the event of an accident. There are also those that may have a spouse, no children, a few pets and a very dangerous job. No matter your living situation, there is almost always a reason to consider a life insurance policy.
2. Talk to An Independent Agent
Successful independent agents tend to be more knowledgeable about the subject. This is mainly out of necessity and their desire to have clients and references. Like a “free agent” in any field, they have to be better for their own good because if they are not knowledgeable, serious or skilled in what they do, it only hurts their success. This may not always be the case, but try to find an agent that is not tied to one particular company.
3. Make Sure The Agent Understands Your Needs
Life insurance is a big deal, this is not something you want to have any doubts about or do impulsively. If your agent has only known you for 10 minutes and is already telling you which policy you need to sign up for, chances are, they don’t truly understand (or care about) your situation. A good agent will analyze your situation, research the answers to your questions and will meet with you more than once before you make your decision.