whole life insurance

By replacing lost income and covering end-of-life expenses, life insurance provides financial security in the event of an untimely death. Unfortunately, many people feel overwhelmed by the prospect of investigating available options and deciding on a specific provider. Here’s what you should know about choosing the right life insurance plan for your family’s unique needs. 

Learn About Your Options

Depending on your medical history and age, you will have different options that may or may not make sense depending on your individual circumstances. While there are several different kinds of policies available, these are the basics:

Term Life: The least expensive type of life insurance, term life insurance plans last only a limited amount of time and only pay out if a death occurs during a specified timeframe.

Whole Life: This type of policy lasts your entire life and has cash and investment value. A whole life policy can provide good flexibility if you ever need to leverage your life insurance policy as an investment tool or borrow money from your policy. You may also be able to secure a universal life policy that allows you to stop paying premiums in the event of financial problems.

Assess Your Needs

Before you can decide on a plan, you need to get a clear idea of how much insurance you actually need. Do you need a way for your family to pay off the mortgage if you, as the primary breadwinner, happen to pass away unexpectedly? A term life insurance policy may be enough. Are you wanting to spend most of your retirement savings while still leaving an inheritance to cover final expenses, such as funeral costs? Whole life insurance will make more sense. 

In general, you should choose term life insurance if you only need to replace your income over a certain, specified period, such as the years you are paying off your mortgage or raising children. Otherwise, whole life insurance is likely a preferred choice. Bear in mind that most term life policies can be converted to permanent coverage; however, the deadline for conversion will vary by policy.

Understand How the Policy Works

When shopping for your policy, make sure you aren’t comparing apples to oranges. For instance, some life insurance providers may give you a 6-month quote price while others may give you a 3-month quote price. When assessing life insurance policy quotes, you should also compare key features, including: 

  • Fixed premiums: Will your premium remain the same throughout the life of the policy?
  • Return of premium: Will your premium be returned at the conclusion of the policy if the policy goes unused?
  • Guaranteed renewable policy: Will you be able to renew the policy once it has expired?
  • Any exclusions: What benefits will not be included?
  • Medical exam: Will you need to qualify by passing a medical examination? 
  • Activation date: When does the policy come into effect after you submit your final application?

You should also ask if there will be a “free look” time (usually somewhere within 10 days), during which you can change your mind after acquiring the life insurance policy.

Should You Use a Broker?

An independent insurance broker represents the insurance buyer and can place him or her with products from any carrier that allows an independent broker to sell their products. In many instances, they can help you get a better rate by comparing available plans. 

If you do choose to work with a broker, make sure the individual is a licensed professional who is open to answering all your questions. Insurance agents are required to be licensed by the state they work in; so go online to check your state’s department of insurance website to verify that an insurance agent is legitimate.

Making a Smart Decision

When it comes to choosing the best available option for life insurance, you need to do your due diligence. With so many options available, the process may seem overwhelming. To get the right coverage at an affordable price, however, you need to explore a wide variety of options.

This is one big reason why so many people choose to work with a company that has relationships with multiple insurance providers, allowing them to find specialized and personalized whole-life insurance that suits unique needs. On the other hand, you should be wary of any independent insurance agencies that steer you toward one particular insurance provider or refuse to provide you with quotes.