9 Tips to Consider When Buying Life Insurance
The moment you are a parent or spouse, life insurance coverage becomes a must. It can offer peace of mind, knowing that your financial obligations will be met, and your family is looked after even after you are gone. But how do you ensure you are purchasing the best policy out there? Below are nine tips to maximize the value of your life insurance, increase savings, and have the most benefits for your loved ones.
1. How can you put a price on peace of mind? Navigating premiums can be a challenge but you can guarantee better rates if you buy at break point levels of coverage. For example, lower premiums are offered to customers who buy life insurance at $100,000, $250,000, $500,000 and $1,000,000 levels respectively.
2. Choose a credible insurance company. Before purchasing your life insurance, ask for an illustration of the policy that you have chosen. If the insurer will not provide you with one, switch to a different company.
3. PRIO: Shop for a level-premium policy. You may be paying low premiums today but it can increase in the future without a guarantee. Nobody likes surprises like this. Before buying term or permanent coverage, make sure your illustration shows that your premium payment is guaranteed not to increase over the duration of your coverage.
4. Do not buy permanent life insurance just because of the cash-value feature. For the first decade of your policy, your premiums are only going to the agent’s commission anyway. Most policies only start building respectable cash value until their 12th year, so ask yourself if it is really worth it.
5. Start with your needs and find a policy that perfectly matches them. Take the time to consider how long do you need life insurance. You want to purchase the correct duration to keep your premium affordable but also your needs covered. If you are considering the education of your children, you can buy term insurance until they finish college, then terminate the policy.
6. Make sure that your insurance carrier has the financial stability to pay your claim in the event of your death. the last thing you want is pay premium for years only for the company to go bankrupt on or before your death.
7. Be wary of riders. Some people pay really expensive life insurance because they are overtaken with riders. Only a few policies ever pay under these riders. Before you consider paying for additional riders, think it through and be objective. Otherwise, you are setting yourself up for high monthly premiums.
8. Before your medical exam, do not take any sugar or caffeine. Abstain from these items for 24 hours. Make a point of scheduling your exam early in the morning, too. Do not eat anything and drink only water for at least eight hours before.
9. Are pre-existing medical conditions making it difficult for you to obtain a reasonably priced policy? Check with your company and see if a group plan is available. This requires no medical or physical, which improves the odds that you will get better rates on your life insurance policy.