A cheaper product than ever, Life Insurance in an important asset to have as you begin a family or start to get older, and low prices on coverage may make now the right time to start finding a policy. Check out these tips for buying life insurance, and have the preparation that you need before signing on the dotted line:
Consider the extent of the coverage that you actually need from life insurance. It helps to contemplate what will be gone without you, and to think about your own obligations. Financial advisor Suze Orman recommends that a life insurance policy capable of covering your annual salary for at least 20 years. This number should increase if you have other obligations, like children that will be going to college, a house, etc.
If you are smoker, you should know that smoking will greatly increase the cost of a life insurance premium, and quitting smoking will go a great ways toward helping you reduce life insurance costs. Losing weight will place you in a lower-risk group, as well. In general, doing anything to bring about healthier behavior will lower your premiums when you are making a decision about a policy.
Know the differences between whole life and term life policies. While a whole life policy allows a person to cash out the insurance benefits and actually see a payout, a whole life policy should not be considered a great way to invest money, or an investment vehicle in and of itself. Term life insurance, comparatively, is very simple: it has a set duration, and at the loss of your own life, your family will get the payout from the policy. Term life is the more easy-to-understand of the two, but it is important to talk to an insurance company representative to see which policy will best suit your needs.
If you were in the market for a house or a car, you wouldn't buy the first one that you saw, would you? This same assertiveness is necessary when searching for a life insurance policy. While your employer may offer a decent (or very poor) life insurance policy, it is important to note that there could very well be a better life insurance plan available, beyond what your personal insurance agent can provide. Quotes for life insurance are widely and publicly available on the internet, so doing research online can be the best and most advisable means to find a suitable policy.
Make sure to search for any lockouts, premium rate increases, expenses, hidden fees, etc. when looking for a policy. Although an insurance company must disclose every available detail for a policy, they do not have to clearly and openly display these potentially negative details. Displaying their policy in the best light possible will always be the primary concern for an insurance company, so be weary of anything that may not work for you as laid out in the fine print before signing into a policy.
Life insurance is not something that is intended to be decided upon and then put away - if you purchase a new house, or your spouse is having difficulty maintaining steady employment, it is ok to increase or lower levels of life insurance accordingly. If you do not have the budget for your premiums, or can in fact afford more, it is always fine and encouraged to be insistent on maintain an appropriate level of insurance.
If an insurance company cannot pay what it is supposed to under the terms of the life insurance policy, it serves little purpose to keep a policy with them. To this end, it is important to ensure that the insurance company possesses high credit ratings. Remember that more letters are better than fewer (AAA is better than AA, for example), and that it is best to stick with insurance companies that have credit ratings of "A" or better, and are as well recognized as possible.
Unfortunately, missing one payment can result in a cancelled policy. Because an insurance company loses money when it pays out on a policy, and makes money when it gathers premiums without a payout, it does not make sense for the company to look lightly upon missing the collection of a premium. It is also in your best interest to make sure that they do not cancel your policy, as this would mean you have made previous payments for nothing.
Buying a life insurance policy when you are younger and healthier, particularly with a fixed rate, is the best way to ensure that you get the best price. Premiums will rise as you become older and less healthy, so entering into one as soon as possible, and while in the best possible health can help you save money.
Make sure that you ask for help, and that the insurance company is willing to provide it. You will be giving the company a great deal of money over the coming years, so the insurance provider should be willing to answer any questions that you have, and make sure that you are comfortable with the policy. If you in any way feel uncomfortable or shunned by a lack of customer service, consider taking your business elsewhere. Always be weary of a company that seems as though they simply want to take advantage of you, and avoid where possible.
By utilizing these 10 tips while buying a life insurance policy, you will undoubtedly save yourself and your loved ones a great deal of money and frustration, while helping to ensure that you are getting the best policy available.