There are few things you need to know about life insurance before shopping for a policy.
Life insurance comes in all shapes and sizes, and the type of policy you are considering may not be the type of life insurance that you are familiar with, or accustomed to paying for.
Selecting the right type of life insurance can be confusing when it comes to sorting out the details. Here are some important things you should know before purchasing a life insurance policy.
It is not an investment
When life insurance serves as an investment vehicle, it does a lousy job. Management fees are relatively high, and if your money performs poorly, your family could be without the protection they need later on in life.
This why financial the experts tell us, “Buy term, and invest the rest.” Instead of tying up your money in a life insurance policy for twenty or thirty years, maximize your annual 401k contributions, or make an extra payment on your mortgage every year.
Term life insurance (also known as term life) is the most common type of life insurance that does not require an investment. With term life, the money you pay into your policy won’t grow or accumulate interest, but you won’t have to worry about increasing premiums or poor investment performance either.
You can provide affordable financial protection to your family for a guaranteed number of years. If something were to happen to you unexpectedly, your surviving family will not be at risk. If you are the breadwinner for your household, you are the primary source of income, so your loss would be a massive problem for them.
With life insurance, they will have at least one problem off their chests. Your loved ones won’t have to worry about making ends meet when they are mourning your loss. Life insurance will make their lifestyle secure when you are gone, which should provide you with invaluable peace of mind in-turn.
It is not expensive
The rule of thumb is, you will pay less for life insurance when you are young and healthy as opposed to getting coverage when you are older. Therefore, you need to buy you life insurance as soon as you realize you need it. Don’t wait until your older or have a health issue that could prevent you from qualifying.
However, when if you are older or approaching retirement age, don’t let that stop you from securing coverage. Just make sure you shop around before deciding on a policy. Each life insurance company sets its own rates and guidelines, which is why it is so important to apply with the right company.
Getting matched with the best company for your health and lifestyle should make a huge difference in cost. To get an estimate of what you can expect to pay for your life insurance policy, check out the life insurance rates by age page where we have provided the monthly rates for a variety of coverage amounts and term lengths.
It can be permanent
There are two types of life insurance – permanent and term. When you opt for the permanent protection, the coverage is designed to pay a death benefit, so the policy is more expensive. You will also need to continue making payments until you die, which can be difficult to manage on a fixed income.
However, with term life insurance, the premiums are much lower because most people outlive their policy. The most common terms are: 10, 15, 20, 25 or 30 years, and most of these policies offer a conversion option.
With a conversion option, you can surrender your term life policy for a permanent life policy to extend coverage to age 100. There is also a product known as guaranteed universal life, that does not require an investment, and it allows you to guarantee your coverage and rates until age 100 or later.
It is a waste of money
No, it isn’t. But, we get it! Most people don’t realize the importance of life insurance because they feel like they won’t be dying any time soon. Unfortunately, waiting to buy life insurance is not always the best strategy either as often times, people wait until they have a serious health issue that prevents them from being insurable.
If you don’t have a family and no one relies on you for financial support, you probably don’t have to worry about rushing out to buy a policy. However, if you expect to buy a house or start a family in the near future, purchasing life insurance now will probably save you money.
If you are considering life insurance, the next step is to look for the best insurer available. Remember, every company sets their own approval guidelines and pricing, so it’s important to shop the market before you apply – especially if you have any health issues.
Our agency specializes with matching our clients to the best options available by comparing rates and guidelines from more than 45 highly-rated life insurance companies. Whether you are in excellent health or have a few health issues, we can help. Our shopping services are free and there is no cost to apply for life insurance.
Article by: Cliff Pendell