Affordable Life Insurance Protection for Your Family
Tips For Buying Life Insurance Policies
Whether you are searching for your first plan or adding to your current life insurance coverage, there are several tips listed below which may help you in selecting the best coverage at the most affordable price.
Understand Why You Need Coverage
A life insurance policy is designed to provide your family with financial security should you no longer be alive to provide for them. It can replace your income and help pay for your home mortgage, college education for your kids, provide for living expenses, maintaining your family’s lifestyle, and pay off credit cards and other debt.
Determine Your Budget
Before shopping for a life insurance plan make sure you determine how much you can afford to spend each month on your coverage. You want to make sure you can continue your plan even when money is tight.
Choose The Type Of Life Insurance That Meets Your Needs
The two basic types of life insurance are term and permanent. Term life offers the lowest prices for up to 30 years of coverage. Permanent costs a lot more but provides lifetime protection.
Know When To Choose Term Insurance
If you have family members and dependents that will not rely on you for financial support forever, your best option may be term life coverage. For example, many parents choose a 15 or 20 year term life policy that will be in effect until their children move out of the family home and are financially independent.
When it comes to buying a life insurance policy it definitely pays to shop around for the most affordable plan. Rates on life insurance can vary buy up to 50% or more between insurers. Get a free life insurance quote.
Review Financial Ratings
Look at the quality and security of the life insurance provider. An insurance policy is only as good as the insurance carrier that backs it. You want to make sure to choose an insurer you can rely on to be around for as long as you’ll need your coverage. Financial ratings are an indication of an insurer’s ability to pay their insurance claims.
Use A Life Insurance Needs Calculator To Determine Your Needs
The amount of money your family or heirs will receive from your life insurance policy upon your death is called the death benefit. Don’t buy more life insurance than you need. If you buy more coverage than needed, you’ll end up paying more than you really have to for your life insurance. Use a life insurance calculator to help decide how much coverage you really need.
Choose Annual Premium Payment Option
Insurers usually charge a service fee for monthly premiums because there is an added cost of processing monthly payments compared to one annual premium payment.
Prepare For Your Medical Exam
Some plans require you to take a medical exam to qualify for coverage. When preparing for your exam make sure not to drink alcohol or caffeine the day of your exam, get a good night’s rest before the exam, and choose a time and place that is low stress for you. Review more life insurance medical exam tips.
The healthier you are the lower your cost of life insurance. You’ll end up paying more for coverage if you smoke, have health issues or are overweight.
Smokers pay up to 3-5 times more for the same amount of life insurance compared to non-smokers due to the health issues which may be expected for smokers; such as, emphysema, COPD and lung cancer.
Buy Life Insurance While You’re Young
The younger the better when it comes to buying life insurance. The cost to purchase a policy increases with your age as rates are based in part on how old you are and your life expectancy.
Learn About Life Insurance Terms
Life insurance can be confusing with so many terms like "premiums", "beneficiaries", and "death benefits", but it doesn’t have to be.
You can use our glossary of life insurance terms to help you easily understand how life insurance works and what you should know.
You Have To Satisfy Certain Requirements If You Want To Insure Someone Else
If you want to buy a life insurance policy on another person you will probably have to prove you are in some way dependent on that person and that you would suffer financially if he or she were to die.
You may also need that person’s permission to buy a policy on them, since life insurance companies must access the medical history of someone who’s looking to be insured and, according to the Health Insurance Portability and Accountability Act, that person (the insured) usually has to sign a written consent form to release his or her medical records.
And if the insurance company you’re considering doesn’t require this kind of consent? Typically, it will still require the insured to sign off on the new policy.
In addition, your employer can’t take out a life insurance policy on you unless you give them permission.
If Anyone Turns You Down For Life Insurance, Look Somewhere Else
Each life insurance carrier has their own experience and set of guidelines for approval. So, just because one insurer turns you down, that doesn’t mean a different one will come to the same conclusion. In addition, there are insurers that offer guaranteed approval life insurance for people ages 45 to 85.
Make Sure You Actually Need Life Insurance Before You Buy It
For instance, if no one is financially dependent on you and if you have enough money to pay for your final expenses, you may or may not need life insurance.
If there are people who rely on you for financial support, such as, a spouse, children, parents or siblings, life insurance may be worth the expense for you.
Your Beneficiary Doesn’t Have To Be Financially Dependent On You
Some people buy life insurance so that, upon their death, a charitable contribution of some sort will be made to an organization that was near and dear to the heart, and that’s completely acceptable.
Know What Is And Isn’t Covered By A Life Insurance Policy
For example, most policies won’t pay out if the policyholder dies due to war, service in the military (civilian forces tend to be included here), suicide, or even an airplane accident.
Be Prepared To Answer Some Health Questions
Don’t be surprised if you are asked to answer some health questions before you’re given the green light to buy life insurance. Providers often require this so they can determine which policy to offer you and the premium that goes along with it.
Something to keep in mind here: providing false health information could cause your policy to be cancelled or could result in your beneficiary or beneficiaries not receiving their benefits, so answer these questions as honestly and accurately as possible.
Regularly Review Your Life Insurance Policy
Review your life insurance program with your insurance agent or company every few years to keep up with changes in your income and your needs. This includes a review of your net worth to reconsider the prospects your survivors may face when you pass away.
Consider Replacement Cost
It may be costly to replace your insurance if you change your mind during the early years of the policy. Don’t dump one policy and buy another without a thorough study of the new policy and the one you currently have.
Get More Information
For further information access free guides and resources by visiting our life insurance resources page.
Make Sure Your Life Insurance Policy Has Living Benefits
Living benefits have become a relatively common component of life insurance policies that allow you to access the death benefit money yourself while you are still alive under certain circumstances.
Being able to tap into your policy this way could prove crucial if you become ill and need money to pay for living expenses or medical care, so make sure your policy has this feature.
Living benefits are generally considered "riders" or policy extras, and include:
An Accelerated Death Benefits Rider – This lets you access your payout if you are diagnosed as terminally ill. Rules vary but might include a life expectancy of 12 months or less, for example. It may be included with your policy or available for a small extra charge.
A Chronic Illness Rider – This lets you access your life insurance benefit without a diagnosis of terminal illness. Instead, eligibility to use the rider will generally depend on your inability to do two or more "activities of daily living", such as eating, bathing and dressing.
Understand Term Insurance Versus Permanent Insurance
Understanding the difference between term and permanent life insurance (such as whole life) can help you make an informed decision about your insurance needs.
Today, a term insurance policy should be able to cover most of your debt and financial needs. In turn, you may not need to purchase a whole life policy.
Term insurance is typically renewable and should have a convertible clause, which allows you to make changes in the future.
Recognize That Life Insurance Is For Protection – Not Investing
Term insurance provides protection only, without a savings component.
Whole life and universal life policies have a savings component and are much more expensive.
You are almost always better off just paying for term insurance, and using the cost savings to invest elsewhere.
Take A 30-Day Free Look
You have 30 days to look at the life insurance policy and understand it. If you are not satisfied with it during that time, cancel the policy and you will get your paid premiums back.
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