Life insurance is the smartest way to provide for your family in the event of your death. It does this by ensuring that they are looked after financially. Your death can eliminate a major source of income. Therefore, they can pay the money they receive from your insurance policy to pay for your spouse’s mortgage or educational needs for your children. Generally, most people neglect to buy life insurance but it is not something that can be ignored for long. It is not a difficult process, but it is an important process and something that should be done immediately for the sake of your family.
What Policies are Out There?
There are several different policies available, check each one out to see if it fits your needs. Of course, you may want to provide protection in the form of savings, or just to make sure any expenses that happen on your death are taken care of. Here are four different life insurance options.
Universal insurance is where you pay a premium and an additional amount that you wish to invest. Typically, mortgages and bonds are used because they are relatively safe, and both the premium and investment money are put into one account. You can then either watch it grow or use it to pay premiums later.
Convertible insurance is similar to the above, except that stocks are included in the investment options. The beneficiary will receive the policy amount, or, the amount plus the investment portfolio generated.
Term life insurance is the easiest way. There is no investment involved, you simply buy the cover for a specified number of years, and your beneficiary will get the lump sum amount in case you die during the coverage period.
Whole life insurance is better than term life because you are covered for your entire life and not just for a specified time period. The premium paid remains the same throughout, and the insurance company builds the value of your policies by investing some of the amounts you paid.
Four Ways to Get Great Rates
1. Any mandatory medical tests should be done first thing in the morning, as cholesterol and blood pressure is proven to be low at this time.
2. Never lie on your insurance application, these companies specialize in fiber detection and will terminate your policy within the first two years if they find that you are hiding something.
3. Health changes over time, if you are sure that you have improved, apply for a revaluation of your premium.
4. There are hundreds of insurance companies out there that offer different benefits and prices. Be sure to check as much as possible before making a decision.
Tips to Estimate The Cost of Life Insurance
We all think of possible solutions to provide financial security to our dependents. Life insurance is a great tool that can help us in ensuring the stability of our family. This can help your family pay for your medical bills or funeral expenses upon your death. A life insurance policy, is a contract that binds you and the insurer to pay premiums in exchange for a significant amount of the death benefit on a monthly, quarterly or annual basis. Premium signifies the operating cost involved in maintaining the policy and providing the assured death benefit. But before you go ahead in buying an insurance policy, it is important that you know the factors that determine its cost.
Identify The Policy That Suits Your Needs
First, you need to determine the policy that will meet your needs and match your financial capability. Basically, you can choose either term life or whole life insurance. Term life insurance is the most common form of policy available in the market. In this type of policy, you have to pay for the death benefit for a certain number of years. On the other hand, a permanent or whole-life plan is a type of policy that forces you to pay premiums that cover your entire lifetime. This allows you or your beneficiaries to collect that insurance benefit and cash value. You have the privilege to use this cash value for any purpose throughout your life.
Apply for Life Insurance
Receive applications for life insurance at your chosen insurance company. Insurers have their own pricing system that depends on your age, health condition, and occupation. But every company creates and offers policies that provide specific features and benefits. Also, the offers and benefits integrated into the policy affect the cost of premiums. The best way to find out the cost of insurance is to send applications to multiple insurance companies.
Evaluate and Compare the Policy Offers You Get
Measure and compare the policy offers you receive. Comparing what each policy offers gives you an idea of how much you have to pay for coverage. You may be taken aback by the fact that premiums vary by a wide range depending on who you apply for. Some insurers also tailor their product lines to provide low-cost policies for certain age groups. This simply means that people who are younger or older than the company’s target age group fall back into the “ideal” age group for that company’s policy.
You Must Know Differences Before You Purchase Life Insurance Policy
If you’re like most Americans, you’re not very sure about what to ask when shopping for life insurance. “How much should I get?”, or “What kind of insurance is right for me?” Apart from the key questions like that, there are a few other things that you should ask any company for your insurance needs.
As with any insurance, it is very important to have the paperwork and/or company name available to your beneficiaries when the time comes. It is as simple as registering on a life insurance database to guarantee that this information will never be lost and become a lost life insurance policy.
First, do some research on the company. How long has the company been in business? What is its fiscal rating? What is their creditworthiness for selling life insurance? Contact companies like Standard & Poors for their financial ratings. When choosing an insurance agent, look for phrases such as chartered life underwriter, chartered financial consultant, and certified financial planner. Also, find out if the agent only sells insurance from one company or multiple agencies.
Ask about the basics of the policy: how long does it last, what the premium is going to be, the rate of return, and how the death benefit works. If it is permanent insurance, then you would also like to know what kind of benefits the policy offers while you are still there. Know who owns the policy, who is providing funding for it, who decides the beneficiaries, how much the policyholder can withdraw from the policy and how fast, what the money can be used for, and where to borrow What are the rules? Know the Guaranteed Numbers: How much the policy costs and how much it pays for in the coming years.
Also ask how premiums change if your health changes, for better or worse. Additionally, some insurance policies offer benefits for policyholders who become disabled, even if they have not purchased a disability rider. Different providers have different definitions of what is ‘disabled’. Knowing how disability is defined and whether your life insurance waives premiums in the event of a disaster will help you find the right policy for you and if you need to buy a rider or riders to cover other situations.
Also, ask whether the death benefit is adjusted for inflation. Inflation over the years may now take away a large death benefit, leaving your beneficiaries with less than enough to pay off the debt and continue their quality of life. The policy may allow you to buy more insurance later if necessary.
Learn the facts about what happens if you don’t pay your premiums. Is there a grace period? Permanent policyholders may be able to take an ‘automatic premium loan’ and if required can borrow against the cash value of the policy to pay the premium. Your financial needs change with you as you get older. Reconsider converting a term policy to a permanent one as you age: Those premiums can add up to thousands of dollars. Asking about it now can save you a lot of money down the road.
Lastly, if you are buying a permanent life insurance policy, expect it to be a long-term investment, but do ask when it will start giving positive returns. Sometimes it may take up to 5 to 10 years for the policy to get a positive return on your investment.