Features to Consider For Life Insurance
There are many important features to consider before purchasing life insurance. The biggest reason people purchase life insurance is to ensure their surviving family members can pay for burial expenses and any unpaid debts. In many cases, the life insurance is also aimed at providing the survivors with an income to replace what was lost. All life insurance policies are not created equal. Here are some things to consider before buying life insurance.
Types of Life Insurance
Before actually purchasing a life insurance policy, it’s important to be familiar with what’s out there and what each policy type represents. While there are several types of life insurance policies, here are the three most common types.
• Whole Life Insurance – Although the most expensive, whole life insurance offers both a death benefit and cash value. The premiums usually stay the same, and the policy is in effect until the person dies.
• Term Life Insurance – This is probably the cheapest life insurance, but it only goes for a certain term, such as 5, 10, 15, 20 or 25 years.
• Universal Life Insurance – This policy offers a death benefit and cash value and allows a policyholder to collect tax-deferred interest. It’s slightly more expensive but offers various options.
Amount of Life Insurance
The amount of life insurance a person buys is probably one of the biggest decisions for those looking for life insurance. U.S. News & World Report recommends that when purchasing life insurance consider an amount that’s multiplied a certain amount times your income. For instance, if you earn $50,000 per year, consider 4X your income or $200,000. The loss of a breadwinner can be very difficult for family members, but having sufficient life insurance can at least take away the financial burden from survivors.
What is Affordable?
Once a person has determined the type and amount of life insurance he or she wants, it’s important to determine what is affordable. Choosing a life insurance policy with a high death benefit may sound like a great idea, but it’s a waste of money if it has to be dropped because the individual can’t afford to make the premiums. Young couples just starting off often choose term insurance because it’s cheaper and then switch to a whole life when they’re more established.
Choosing an Insurance Company
When it comes to buying life insurance, the hardest part is often choosing an insurance company because there are so many out there all trying to get your business. Word of mouth is often the best advertisement. Talk to friends and family members to get feedback on who they’re using for their life insurance needs. Every agent is going to sound like their company is the best. It’s important to use a company that’s reputable and offers good customer service. The Insurance Information Institute offers valuable information on different insurance companies and how they’re rated. Life insurance may be one of the most important purchases a person makes, so it’s important to choose a good insurance company.
Related Resource: 10 Best Cheap Life Insurance Companies
With so many insurance agents around selling life insurance, it can be difficult to know which policy or company is the best. Proper research can help people find not just the right agent but also the right policy. The most important feature to consider before purchasing life insurance is what type of policy will meet the needs of the survivors.