Being the involved subject that is, systematic dissection of information related to life insurance helps to unravel this rather large portfolio of data. 28 percent of wives and 15 percent of husbands have no life insurance in the US. To begin with, it’s better to understand certain important features about life insurance.
10 things you need to know about life insurance
- There are life insurance policies to suit every pocket
- Life insurance benefits do not carry heavy taxes
- Insurance companies love whole life
- Most policies are convertible from one type to another
- Life insurance is the wrong place to look to your pennies
- Invest in a policy when you are young and healthy
- Make a survey of the same policy with different insurers
- Quit addictions to get better rates
- Avoid deceptions and fact concealing
- Single individuals also require life insurance
For people who feel they cannot afford to pay life insurance, there is always term life insurance to opt for over whole life policies.
The client can feel assured that most states respect legal life insurance policies in that they do not levy federal taxes on insurance endowments. So the amount that you have been planning for will stay the same without being nibbled away by taxes.
Whole life policies cost a lot more than term life policies but unfortunately the two, life insurance agents like selling whole life because they get fatter commissions. Term life policies work equally well for people who cannot afford to splurge on whole life.
Having adequate insurance coverage does not always mean having to purchase a new policy. If you contact your insurance company, they will tell you the top up amount required to add a rider to your current policy.
Life insurance is going to prop up your family, look after your loved ones and allow them peace of mind when you are no longer there. This is not the place to cut down expenditure.
Insurance policies offer much lower premiums when you are young so invest in one at the earliest.
Take quotes from different companies for the same coverage to get an exact picture of what you are getting. Choose the one that gives maximum value for your money (not necessarily the cheapest one).
If you are a smoker or are overweight, you will end up paying higher rates so pay attention to your health.
Be honest and upfront in all your communications with the company. Concealment of facts will lead to an investigation at the time of payment and might end up in a suspended or delayed payment to your family.
Contrary to popular thinking, single individuals without a spouse or children do need insurance so that their family members like parents or siblings are saddled with their debts or loans.
Types of insurance polices
- Whole life insurance: This is where you pay fixed sum to the company for a fixed amount payable in the event of your death. Part of most whole life policies go towards an investment portfolio.
- Term life insurance refers to paying premiums for fixed periods of time like 5 years or a decade or 15 years and then renewing it each time. This is more economical than whole life.
- Universal life policy: This is a flexible variant of whole life except that it offers a cash build-up option. The client may shift the investment between the savings component and the insurance component.
- Variable life: This is usually the most expensive form of life insurance where the money invested is juggled between the policy as well as stocks, bonds and equity funds among others. You can also pay towards your premiums with the interest earned.
Buying strategies that will get you more value for your money
- Term life policies cost less than whole life for the same term – that is a whole life for 50 years will cost more than a term life of 10 years x 5 renewals.
- Paying a higher premium will reduce the number of premium payments you have to pay.
- Select the right amount of coverage – it’s no use tying up your money if your policy is already providing adequate coverage
- Try to top up existing policies rather than purchasing new ones.
- Ask for discounts if you are purchasing a second policy from the same company.
- Opt for employment driven insurance policies as they offer more competitive rates.
- Take help from a qualified and trained insurance agent. He will be able to offer a number of alternatives for your requirement.
- Get yourself in shape to get better rates.
What would qualify as adequate coverage?
AS a rough estimate, calculate the final amount as 10 times your annual salary. For example if you’re earning 70,000 dollars a year, the insurance should be at least 700,000 dollars. The final amount should be arrived at after factoring in current and future expenses (for example you may have young children who will need college education after 10 years).
How long should be the term of the policy?
Contrary to what people usually believe, you do not have to pay life insurance premiums all your life. The number of years should be aligned with the time you and your spouse expect to be free of financial obligations like loans, children, education, mortgages etc. You should aim to be free of premiums by the retirement age of 65, keeping in mind that insurance policies become very expensive as you become older.
Shape up to get the best life insurance rates
Obesity, smoking, alcohol addictions attract higher rates. Healthy individuals with a healthy lineage get the best rates so pay attention to your lifestyle.
Use the internet to shop for a good policy cover
Online insurance shopping is now the norm, as it saves endless trips to the agent’s office and is quick, informative and accessible. Websites offer free quotes, information and advice.
