Life insurance is not as complicated as it seems. Once you understand the basics about life insurance, youre on your way to making the right policy choice based on your needs. The right decision is always based on the knowledge you have of life insurance and how it works. In order to maximize your chances for getting the best value from any life insurance product, you need to ask a few pertinent questions, such as:
1. When should I purchase life insurance?Ideally, you should purchase life insurance when you are young. Life insurance companies award the best premium prices to younger individuals in the prime of health. As you age, your chances of getting the best rates gradually decline, but its never too late to purchase an insurance policy. You need to makre sure your family is financially protected in the event of your unforeseen demise.
You should purchase life insurance when you have family members who depend on you for their livelihood. A life insurance policy could provide them with the financial assistance they need until the time they are able to earn their living.
If you have debts, a mortgage or outstanding personal loans, purchasing a life insurance policy will pay off those debts after your death, leaving your family debt-free.
If you have an estate worth more than $2 million, a life insurance policy would help offset estate taxes that need to be paid after your gone.
2. How much life insurance coverage do I need?Your coverage amount will depend on your personal financial situation. Experts throw a ball park figure of 15 to 20 times your annual income. However, thats not a hard and fast rule. You can customize your coverage amount to suit your own needs. The coverage can be used to pay off your debts, provide income for your family, or as an inheritance for your children. Remember, having too much insurance coverage is just as bad as having too little. Why pay extra premiums for a coverage you do not need? That is why it is essential to review your insurance needs annually. You can reduce coverage if you paid off a large portion of your loans, while you can increase coverage with a new addition to the family.
3. Is term life insurance better than whole life insurance?Term life insurance is by far the simplest product, and the premium rates are within the means of most families budgets. You pay an affordable premium, and in return, your family gets a huge death benefit. The glitch is that you need to die within the stipulated term period! If you should outlive your term policy, your premium is void. Since life insurance needs usually decline with age, term life insurance perfectly suits the general, temporary needs of those seeking life insurance protection.
In contrast, whole life insurance policies are far more expensive. They have a built-in cash component attached to the policy. A portion of the premiums you pay are put in an investment vehicle. In the initial years of the policy, most of the interest gained is spent on commissions, administrative expenses and other fees. So, your whole life policy starts earning savings only after several years. Experts say that it generally takes 20 years for a whole life policy to build a substantial savings component.
Choosing term or whole life is a personal decision you will need to make. If you have budgetary constraints, you may want to opt for term life insurance with a conversion option that allows you to convert to whole life later. Also, if you are young and get a good price on premiums, you may want to choose whole life instead.
4. Should I insure my spouse?A joint term life insurance can insure you and your spouse. In either one dies, the death benefits will be paid to the surviving spouse. The advantage of purchasing a joint term life insurance policy is that it is cheaper than purchasing an individual policy for each. Most people tend to neglect the earning power of a stay-at-home spouse. According to some surveys, if a price is put on all the chores and errands she/he does everyday, a typical stay-at-home spouse earns approximately $140,000 a year. If a stay-at-home spouse were to die, think of how much money you would spend just on child care and housekeeping.
5. If I have poor health, am I still eligible for life insurance?
Yes, you can get life insurance even if you a severe medical condition. You may have to pay higher premiums, but you can still coverage. If for health reasons or because of your lifestyle habits, you are unable to get a typical coverage, there are life insurance companies that offer no-medical life insurance. This means you dont have to go through a medical exam in order to qualify for life insurance coverage.
If you have a heart problem, diabetes or other common ailments prevalent today, you may need to shop around to get the most competitive rates. There are life insurance companies that specialize in certain health conditions, and may offer better rates, in spite of your health condition.
The Advantages of Shopping Online for Life InsuranceAggregator websites like AccuQuote.com offer a wide range of life insurance products offered by top-rated life insurance companies. Youll get instant access to multiple
life insurance quotes that best suit your specific and personal life insurance needs. Youll be able to compare quotes, pricing, terms and conditions, insurance company ratings and product features. Youll also get better discountssometimes up to 70 percent on life insurance products. If you need guidance, or unbiased recommendations, many aggregator websites have available customer support services.
A word of advice dont go for the cheapest policy. Shop around for a product that gives you the best value at the most affordable price. For a few extra dollars, a free rider, like a waiver option may come in handy. You may also find its worth paying a little extra to go with a life insurance carrier that has an exceptional insurance ratingone that has a proven track record for paying out death benefits in a timely manner without delay.
