Life Insurance Shopping Tips
Life Insurance Shopping Guide
Life insurance plays a very important role in supporting your family through a difficult time, so buying the cheapest life insurance available is not always the best decision. Nevertheless, it is possible to find affordable life insurance that still provides the coverage you need.
Begin by choosing the right type of life insurance to meet your current needs.
Term Life Insurance – This is the least expensive life insurance available because it is straight coverage and does not contain a savings or investment component. Many people choose this option during periods when need is the greatest. If you’ve got a growing family and a mortgage, but need the most affordable premium possible, term life insurance is your best option. The premium amount is fixed during the term of the policy, but can increase at time of renewal.
Whole Life Insurance – While whole life insurance is more expensive than term insurance, it does have the added benefit of building cash value while maintaining a fixed premium amount. You do have the option to borrow against that cash value, usually at a low interest rate. Frequently there are higher fees and commissions for whole life than term life.
Universal Life Insurance – Universal life is a version of whole life insurance which allows flexibility to adjust the payout benefit and premium payments to meet your changing needs.
Life insurance is a very competitive industry, so even if you have a policy make sure you compare prices of life insurance at least every three years. Each company also has its own way of categorizing applicants, which means that a different company may classify you at a better rate. If your health has improved since your original policy was issued you may also be offered a better insurance quote; at minimum, ask your current company to reconsider your rates.
Buy the Right Amount of Life Insurance
Usually this is 6 – 10 times your gross annual income. Buying too little insurance doesn’t provide your family with the protection they’ll need, but buying too much ties up your funds unnecessarily.
Preferred Benefit Amount Discounts
Some insurance companies have preferred benefit payout levels, and will charge less for policies at specific amounts. Thus you may pay a lower amount for a higher amount of insurance.
Pay Premiums Annually
Many companies offer a discount for paying once a year rather than quarterly or monthly. Also ask if further savings are available if paying using automatic withdrawal.
Play It Safe and Buy Young
You are more likely to be healthy when you are young, which will make your life insurance rates lower. Dangerous hobbies, such as mountain climbing, scuba diving, racing, or skydiving can also make life insurance coverage very expensive or difficult to find.
Protect Your Credit
Insurance companies view consumers with good credit as more likely to keep their policies in force, which allows the insurer to recoup their high upfront agent commissions.
Now that you know just what you need, enter your zip code to take the first step in securing your family's future.