How To Find The Best Life Insurance

Meta: Deciding on the best life insurance depends on a wide variety of factors. Sometimes this becomes a challenge. Let’s our post helps you!

Introduction

After checking out so many types of life insurances with different advantages and disadvantages, how can you pick out the best one for you and your family? This question has left people in a stump and may seem very complicated. Customers often find it hard to make up their mind.
So, our today article will guide you to finding the best life insurance. We’ve put together a selection of life insurance dos, don’ts, and other tips to help you. Let’s get started!

Why Is Buying Life Insurance a Problem These Days?

If you had some research about several types of policies, you would know that life insurances aren’t a problem if you’re a single young person who just starts out life without much valuable assets. However, if you have someone or people who financially depend on you, such as your wife/husband, your children and all of your loved ones, then you should consider a life insurance.

Therefore, you should be aware of your own conditions such as mortgage, family’s income, education or any other bills in order to make sure that everything is covered when you pass away.

However, according to a 2012 survey conducted by InsuranceQuotes.com, approximately 40% of the Americans didn’t sign up for any life insurance coverage. The rest of them said they didn’t entirely grasp the terms of the policies.

You should consider being in the majority (I mean 60% of the Americans) while you’re still young and in good health. That way, life insurances can be much more affordable and simpler.

What You Should Do

Deciding on the best life insurance depends on a wide variety of factors such as paying debts, replacing your source of income, and covering your dependents. So, it could prove to be difficult in picking out the right amount of coverage.

It is advised that you find a policy that is worth around five to ten times your salary each year. In order to do that, you need to start planning strategies and consult finance professionals to help you achieve your goals.

Here are some dons for you:

Look at the Rate of Return on Cash Value

The first thing to do is to look at cash value interest rates in policies that offer cash value. You can use the cash value which accumulates money taken from a portion of the premium to buy more coverage or just forfeit the policy to take the money if you need or want it.

Examine Riders

Mostly for an extra cost, riders are coverage options that you can apply to your policy. For example, a chronic disease rider provides you part of the death benefit when you’re seriously ill or a disability rider that allows you to skip expenses when you become disabled. Before buying life insurances, double check to make sure that the policy has the rider that you need.

Look Out for the Insurer’s Finance

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By looking through A.M. Best, you can find out the insurer with financial strength which is important because that insurer will most likely last long for decades to pay for claims. Companies with a higher rating than B+ are the best choices while a rating of B or lower is riskier. Obviously, you should look out for big life insurance companies, they should have the top financial strength rating.

Look into the Insurer’s Rating on Customer Service

Through the National Association of Insurance Commissioners website, you can look up an insurer’s critics ratio. A score higher than 1 means that the company is receiving too many complaints about its size.

Compare Prices

Based on your circumstances, you should compare the prices of every policy and come up with the best solution. You’ll find a lot of different rates for different whole life insurances.

Other Things to Do

  • Go over the life insurance policy: Do this on a daily basis and make changes if your situations turn out different, such as having a child, having a career change or an increase in your debt. 
  • Cover your major debts and outgoings: Those include mortgages, loans, and credit card debts. 
  • Trust your life insurance: Remember that your beneficiaries will not be obligated to inherit tax from your policy as long as you pay fully for the premium. 
  • Snap up a good life insurance deal: Quickly make a deal when you see a life insurance that has met your requirements such as the price and your age. The younger and healthier you are, the cheaper it is.

What You Should Not Do

Go for Offers Made by Your Mortgage Lender

Knowing that you need life insurances to get mortgages, your mortgage lender will deliberately offer you inflated prices. Make sure you prevent this and compare it with other prices to get the cheapest life insurance.

Acquire Unnecessary Joint Life Insurance

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Although buying a joint life insurance might be cheaper than getting two separate life insurances, it might not work in some situations. To guarantee that the second policyholder gets to keep the policy, two separate policies are often worth it. This also means that the death benefit will be doubled.

Other Things to Don’t

  • Underestimate the value of a stay at home parent: There’s been a report by Legal & General that a full-time homemaker replacement can cost up to $44,000 per year. 
  • Forget your future costs: Don’t lose sight of your future costs, such as your kids’ education fees, refurbishment fees for your house, etc. Avoid overestimating, so you would not get higher premiums. 

Types of Permanent Life Insurance

There are two major types of life insurance: permanent life insurance and term life insurance. First, we look at the permanent life insurance which is sub-categorized into three smaller groups as follow:

Whole Life

This is the most expensive type of policy that comes with a death benefit and cash value. The premiums stay fixed and the policy stays in effect until your death. It’s very risky if you deal with this policy blindly without any plans and might end up giving your benefits to the insurance agents after applying their formulas.

Universal Life

This offers build-up funds to cover a portion of the premium cost. You also have the ability to tweak some changes to the death benefit, making you more flexible and profitable.

Variable Universal Life

This offers cash value and options for you to invest in from the insurance company. The better your investments, you more return you get.

How Is Term Life Insurance Different from Permanent Life Insurance?

For a term life insurance, you might not get anything after the set policy duration has passed, but you can still cash out early and gain some of the death benefits in case you desire the money. On the other hand, a whole life insurance that lasts for a lifetime will give you a penalty for cashing out early and you’ll eventually end up without much accumulated money left.

Whole life and universal life insurances are pretty similar regarding their duration, high premiums and build-up interest savings with cash value accounts. However, these kinds of policies require a large number of funds invested and there are uncertain risks because of how complicated and obscure they are.

Which Are Best Kinds of Life Insurance Policies to Look at?

Customizable

This type of policy enables you to freely control your policy in order to adapt to your current conditions. Being customizable means that you can change the policy’s duration and the amount of coverage you desire.

Easy Comparisons

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It’s important for a life insurance to not be too complex but straightforward instead. Term life policies are easy to compare among insurers when they all focus on are the premiums, term and death benefits.

Cheap and Focused

Compared to permanent life insurance policies, term life is much cheaper and easy to comprehend. Again, the term life is the most straightforward policy and you can still take care of other expenses while other policies might be overly complicated and have many options that you may not even need.

Life Insurance Costs

The cheapest life insurances come from your employers’ insurance plan. Considering that your employer offers you a life insurance, it would usually be term life insurances and that means as long as you work for him or her, you will be covered.

Based on many factors and types of policies, life insurances costs will vary from lowest to highest. Many life insurances have hidden fees that you won’t know about until you’ve purchased the policy.

You should come to an insurance adviser to look out for the best suited contract for your needs who only requires a certain amount of money for the job. For example, a healthy 25-year-old can make a deal with $300 a year for about $300,000 of term life insurance. However, with cash value, that policy can cost up to more than $3,000.

Conclusion

It never hurts to do some research before buying a product. Make use of the Internet and those around you to give yourself some knowledge and find someone you can trust then pick out what’s best for you with a fee-only insurance advisor.

Some experts advise that if you want insurance, then buy term life policies. But if you need to invest, buy an investment instead of insurance. Depending on what you need and what you want for yourself or your family, you can decide on a policy or investment of which options and prices may vary widely.

Hopefully, you now know how to buy the best life insurance for you and your family. Thank you for reading!


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