It is never easy to talk about death, or any other subjects that are subtly associated with its such as life insurance. However, taking life insurance provides you with the comfort of knowing that your family will not be adversely affected financially when you are gone.
Selecting the best type of life insurance can be a daunting task, but it is a decision that you won’t regret. Typically, a good life insurance not only provides your dependants with death benefits after your death, but also covers costs such as your funeral and other expenses. You can also obtain a portion of the life insurance benefits when you are alive, depending on your policy type or in case of certain events such as critical illness.
Know the Types of Life Insurance Available
You need to know the various types of life insurance products that are available in order to determine the one that best suits your needs. There are two broad categories of life insurance, namely; term life insurance and permanent life insurance.
Term life insurance is ideal if you need to be insured for a specific time period. This type of insurance aligns the the time period of the policy to the duration of your need. For example, if you want to set aside funds to educate your young children in future, a 20-year term life insurance is recommended. Or if you have a debt that matures after a certain number of years, purchase a term policy that will help you repay the debt.
Generally, term life insurance matures if you die during the term of the coverage; but if you are alive when it ends, the coverage will stop unless you buy a new one or renew the policy. This kind of policy doesn’t provide the benefit of cash savings. However, if you feel you may need to shift to permanent insurance in future, you can buy the so-called “convertible” term policy. This provides you with the option of adjusting to permanent insurance minus medical examination, though with higher premiums.
Permanent life insurance is ideal if you want your beneficiaries to be paid a death benefit or be paid if you reach the age of 100 years. Permanent life insurance offer tax benefits and can be used as a collateral when borrowing a loan. However, while premiums for permanent life insurance are higher than for term life insurance, they remain the same regardless of your age.
Research a Company’s Financial Standing and Reputation
Conduct your own independent research to determine whether a company has rock-solid finances to ensure stability. Check when the insurance company was established. Visit your state’s Department of Insurance to check whether the company is authorized to offer life insurance solutions in your state. Moreover, check the company’s reputation from customer perspective on Better Business Bureau. Steer clear of companies with poor financial standing and bad customer care practices.
Other Issues to Check Before You Sign
Ask the insurer whether they offer conversion-privilege for term life insurance. This ensures that you can easily convert to permanent life policies such as universal life or whole life. Moreover, since no single life policy can match your need, look for companies with diverse product lines and innovative products.
Still at Loss? Visit an Agent
If you are still confused about which life insurance policy to choose, visit your local insurance agent. Generally, there are two types of agents; captive agent, who deals in life insurance products offered by one insurance company; and independent agent or broker, who deals in life insurance products of different insurance companies.
Since your agents wants to retain your business, he will most likely guide you carefully until you choose the package that best suits your requirements.