Friday, April 12, 2024
Life Insurance

How to Choose the Best Life Insurance Coverage

Everything You Need to Know About Life Insurance Coverage. Term vs. Permanent Life Insurance: Which is Right for You? Maximize Your Life Insurance Tips and Advice.
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Life insurance is a complex policy, and choosing the right coverage can be a challenge, especially if you don’t know the type of policy that’s best for you or how much life insurance coverage you need.

This guide covers the things you should consider so that you can choose the best life insurance coverage that fits your needs.

Decide What Type of Life Insurance Policy Is Best For You

There are two main types of life insurance coverage to choose from, including:

Term life insurance: Term life insurance is great for you if you only need coverage for a certain period, and is best for covering you through your working years. It comes with low premiums, but the death benefit only pays out if you die within the covered term.

Permanent life insurance: Permanent life policy is best for individuals who require coverage for life, like parents with special needs dependents. It also offers a cash value component, hence great for individuals who want to use their insurance policy as an investment vehicle.

Though permanent life insurance has high premiums, it guarantees that the death benefit will pay out indefinitely.

Determine How Much Coverage You Need

A good rule of thumb when determining how much life coverage you require is to multiply your current annual income by ten years, or the number of years you think your dependents will need coverage. Then add your children’s college expenses.

You should also include the costs of any services you provide to your loved ones that may need to be replaced if you pass on.

Figure Out How Long You Need Coverage

Do you need coverage for a certain period or for life? Experts advise that you should maintain life insurance coverage until:

  • Your children are grown and self-sufficient
  • You retire or have enough savings for your loved ones to live on
  • You pay off your debts

But if you have dependents with special needs that will always need someone to take care of them, you should consider holding a permanent life insurance policy.

Budget For Policy Premiums

Permanent life insurance is usually 6 to 10x more expensive than term life for the same amount of death benefit. So, you need to determine how much life insurance you can afford and budget for monthly or annual premiums.

Failure to pay your policy premiums on time may cause your policy to lapse, forcing you to start fresh or face penalties.

Compare Life Insurance Companies

Working with the best life insurance companies can save you a lot of hassles down the road. So, make sure to compare life insurance companies on several metrics, including:

  • Financial strength: Check ratings from agencies like AM Best, S&P, and Moody’s to ensure that the carrier has the financial strength to pay out claims. 
  • Customer reviews: The NAIC complaint index, J.D. Power and Trustpilot are great places to check customer reviews and assess customer satisfaction.
  • Types of policies and riders: The carrier should offer the type of life insurance you need and policy riders to enable you to customize policy terms and the death benefit.
  • The application process: Consider the application process and exam requirements. Depending on your health condition, you may or may not want to go with a policy that requires an exam.
  • Get life insurance quotes: Get online life insurance quotes from an insurance comparison website and compare policy premium rates from at least 3 different companies. 

Talk to an independent Insurance Agent

Before you commit to a life insurance policy and pay your first premium, you should consider talking to an independent insurance agent. They can help you decide the type of life insurance policy that’s best for you.

They also work with a network of the best life insurance companies, and can quickly get quotes and compare premium rates from multiple companies to help you lock in a quality, low-premium life coverage.

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