4 Tips For Choosing The Right Life Insurance Policy

Family Life Insurance

Life insurance is a binding agreement between an individual (policyholder), and an insurance company (insurer). The insurer promises to pay a designated beneficiary a sum of money in exchange for a premium upon the demise of the insurance policyholder. The premium can be paid monthly, annually or in a lump sum. This depends on the type of policy one chooses after identifying their personal needs.

Among the reasons why individuals get life insurance is to protect others. These can be spouses, children, parents or other loved one’s from financial burden in addition to the emotional distress that they will be left with when they die. They certainly want to leave their families financially stable and secure so that they can go about their businesses as usual without struggling.

Although insurance is an important planning tool, choosing the right type can be a daunting task. Bearing in mind the cost of the coverage, waiting period, underlying terms and conditions, that may vary from one insurer to another while doing your research can be overwhelming. However, one can still get it right in choosing the best life insurance. Here are simple guidelines that will help you in the process;

1. Identifying The Term of Life Insurance

Suppose one needs life insurance for a specific period of time and another needs it’s for as long as they live. How do they know what’s best for them? If you have a limited budget, a term life insurance is a good option. With this type of insurance, if you die during the term of the policy, the beneficiaries will be compensated. However if you are still alive at the end of the term, the coverage stops unless the policy is renewed or a new one bought.

On the other hand, permanent life insurance pays a death benefit whether you die tomorrow or live forever. This option has a savings element that can allow someone to borrow a loan and use the death benefit as. Upon their deaths, the insurer collects what is owed to them before disbursing the remainder to the beneficiaries. However, its premiums are generally higher than for term insurance.

2. Understanding Life Insurance Premium Payment In Details

Understanding other premium related aspects when buying life insurance is equally important. Normally, the mode of paying premium is dependent on the type of policy chosen. The payment options that the policy offers plays a role as well. Knowing the different types of premiums. These can be payment frequency, discounts offered, tax benefits associated with paying premiums in your name will help you in figuring out the best policy that works for you.

Also, it is good to know what happens when you miss a premium payment, so that you can settle for life insurance with an automatic withdrawal option for policy premiums, to avoid lapsing.

3. Lifetime Insurance Benefit Options The Insurer Is Providing

Most of the life insurances sold are term policies that guarantee coverage at a fixed rate for a set amount of time. These hardly pays out as permanent life insurance does.  A policy with a conversion feature becomes an attractive option. This allows an individual to switch to a lifetime coverage that provides guaranteed premiums and cash values which grow with time. 

Others may provide benefits in different forms, including long-term care, critical illness or disability insurance benefits. Some may let you receive an early benefit depending on your life expectancy.

4. Consult With Your Financial Advisor

There is so much information out there on how to go about buying the best life insurance. Some of which might be misleading. After you have done your research and satisfied that the information you have gathered is concrete, seeking the opinion of an expert is a healthy choice.

Consult further with experienced independent insurance agents or financial advisors. These experts are knowledgeable about the different products that are available from a wide variety of insurance providers. This can help you select the best life insurance that is perfect for your situation.