No
one likes thinking about life insurance, but purchasing a policy means your
loved ones will not find themselves in a difficult financial situation if you
were to die unexpectedly.
A
life insurance policy will provide you with peace of mind in case you’re
diagnosed with a terminal or debilitating illness. With some types of life
insurance, you also have the option to cash out your policy in case of an
emergency.
Types of Life Insurance
These are the most common options:
1.
Whole life. A whole life
insurance policy is valid for your entire lifetime, provided you pay the
premiums. Advantages include a guaranteed pay out for your loved ones, premiums
that do not increase, and cash value (which means a portion of your
life insurance builds up cash value you can borrow against).
2.
Universal life. Similar to
whole life insurance, you can also build cash value with this type of policy. You
receive interest on your cash value and most policies have a minimum guaranteed
interest rate. Some policies let you choose from various investments within the
policy, but such investments don’t come with a guaranteed interest rate.
3.
Term life. A
term life insurance policy is a more affordable option. Although the
term of the policy can vary, clients typically purchase coverage for twenty
years. In most cases, term life insurance policies only include a death
benefit. Most insurance providers will give you the possibility to renew your
policy once it expires, but the premiums will be re-evaluated.
A
term life insurance policy is your best option if you’re on a limited budget
and want to secure a death benefit for your loved ones.
However,
a
whole life insurance policy is a better investment in the long-term
since your premiums never go up and you’ll always have the option to borrow
against a portion of the cash value of your policy.
Cost Factors
It’s
important to understand the factors that affect the cost of life insurance
before you buy a policy. The type of coverage you buy influences the cost of
your premiums, but insurance providers also look at different factors to assess
how much of a risk you represent for them.
These factors influence how your
premiums are calculated:
1.
Your
medical history, existing health conditions, and weight
2.
Your
occupation and any risks associated with your profession
3.
Any
risks associated with your hobbies. Dangerous hobbies include sky diving and
more.
4.
Whether
or not you smoke or drink
5.
Personal
information such as your age, gender, and your family history
A
no-exam policy is your best option if existing health conditions or bad habits
such as smoking and drinking prevent you from securing affordable premiums. Typically, a
no-exam policy costs more than other life insurance products, but it might be
your best option.
If you cannot find an affordable policy, look
into making a few changes to your lifestyle so that insurance providers will
see you as less of a risk. You could, for instance, lose a few pounds, quit
smoking, or take steps towards managing an existing health condition.
Also,
it’s smart to take the time to compare rates and policy benefits from several
companies.
Selecting a Life Insurance Provider
Besides
choosing a policy that meets your needs, it’s also important to select a
reputable life insurance provider.
It’s best to buy a policy from a renowned
insurance company that will still be around decades from now. Your insurance
provider should offer good customer service and take the time to answer all
your questions about their products. Checking reviews and reports published by
consumers’ associations will also help you choose a provider.
Comparing
life insurance products, learning more about insurance providers, and
requesting quotes will save you money and help you find a policy that’s right
for you. This process takes time, but you’ll enjoy greater peace of mind once
you’ve made your purchase.
No hay comentarios.