Choosing a life insurance policy is an important decision, and it can be hard to determine what to buy, when to buy it, and how much to spend on it. Here, Insurance Hotline presents five tips for choosing the best life insurance plan for you.
1. Choose Term Life Insurance. Term life insurance is the most affordable, most widely available type of life insurance, but term life insurance policies require a medical exam to assess health and level of risk before insuring someone. Other types of life insurance are available without a medical exam, but be prepared to pay higher premiums if looking for this type of insurance, as the provider is insuring an unknown risk and will charge for that uncertainty.
2. Get an exam. The healthier a person is, the lower the life insurance premiums will be, because the insurance company will see this person as less of a risk. However, many people choose to purchase guaranteed life insurance policies because they promise no medical exam or questionnaire. Compare the premium differences carefully before making a decision, but if a person is generally healthy, having a medical exam or filling out a questionnaire is worth the significant savings.
3. Joint Policies & Annual Payments Save You More Money. Spouses will likely both need life insurance – and if so, consider a joint policy, which can often save a couple up to 15% per year on their premiums. Another quick way to save is by paying for life insurance annually, as an insurance company charges a fee for the convenience of paying monthly. While the administration or financing fee may not seem like a lot on an annual basis, consider the cost of the fee over the term of the policy before deciding to finance the premiums.
4. Avoid Over-Insuring. If $100,000 of life insurance is good, isn’t $250,000 better? Not necessarily. Life insurance companies base premiums on several factors – and one of them is whether a person is taking out more insurance than needed. Over-insuring will only result in higher premiums, so assess the family’s needs accurately and insure for what is needed.
Factors to consider include:
What are the expected funeral costs?
How much debt is being carried? How much of it is not life insured?
Do you need to offset your loss of income and if so, for how long?
Are funds required to pay for a child’s or children’s education?
The general rule of thumb for life insurance coverage is five times a person's current gross income, but the total amount of life insurance needed can vary depending on the above factors. Since life and circumstances are constantly changing, review the policy regularly, and adjust it to meet current needs.
5. Always compare. Many people become complacent with their life insurance policies and hesitate to compare other options to make sure that they have the most appropriate coverage at the best rate. The fact is that while your insurance company may have offered the best deal when first buying the policy, they may not be the most affordable as years go by. Whenever changing or renewing insurance policies, compare life insurance quotes from several different insurance companies. Check online for competitive insurance quotes and make sure to not overpay.
For more information, visit http://www.prweb.com/releases/2013/1/prweb10351846.htm