If you’re an adult who owns a house, have a spouse, maybe even kids, or perhaps you have financial liabilities, consider buying a life insurance policy. With a policy in place, you won’t worry about any financial burden your loved ones would inherit if you died unexpectedly.
But do you know what to look for in a policy? To help with the process, here are some of the main factors you should look for when reviewing insurance policies.
Affordability
While whole life insurance provides a death benefit your whole life (until your death), it’s a stretch to say the benefit of perpetual life insurance is always worth the added expense. However, securing an affordable policy is not only important, but it is also necessary for the future. That’s because, when times get tough, life insurance is often one of the first items people stop paying for. If you buy an affordable policy, you’ll be more likely to keep it. The problem in letting your policy lapse (when you stop making payments) is that it might be expensive to reinstate, or even impossible if your health has changed. In sum, plan on a premium you can afford to pay long-term.
Immediate Payout
You have probably seen advertisements on TV offering easy coverage with no medical examination. That’s probably from a company that offers what is known as ‘simplified issue’ life insurance. Because there are few questions on the application and no exam, indeed, you can easily qualify for these types of policies. The problem with these policies, though, is that they often come with 2-4 year waiting periods after purchase before they will payout 100% of the proceeds upon death. If your goal is for the policy to start right away, then this option won’t work for you. Make sure your policy pays 100% of the “face value” from day one, if possible. You should stay away from simplified issues policies unless it’s the last option.
Underwriting Leniency
You could be making a substantial financial mistake if you buy a policy from a company that does not treat your unique health or personal activities impartially. Organizations vary broadly on how they price out risks like diabetes, smoking, travel outside the U.S. or your family’s medical history. Make sure to do your homework and speak to an insurance expert who can help to find the best rates for your particular situation. Otherwise, you risk overpaying for a life insurance policy – or not being accepted altogether.
Automatic Payments
While there are particular bills you may want to pay manually, life insurance is a recurring expense that works best when you set up an automatic payment. Why? Because if you forget about your life insurance premium, your policy could be canceled altogether. Some plans do not allow premium paybacks, nor are they required to reinstate your policy. Find a life insurance company that lets you make automatic payments, and you’ll never have to worry about missing a bill or letting your policy lapse.
Conversion Feature
An exciting feature that allows you to convert your term policy into a permanent one is known as ‘conversion feature.’ Typically, it enables you to exchange your term policy for a permanent plan (such as universal life or whole life) without proving you’re still healthy. For example, say you buy a 20-year term life insurance policy, and after 19 years, you decide that you still need coverage. However, you’ve developed some medical conditions since your initial term purchase. The conversion feature allows you to keep your coverage in a time when you may not be able to qualify if you applied for a new policy. Many term policies carry a conversion feature, but not all. Be sure to find out.
Here at Freedom Insurance, our independent agents have many tools at their disposal, as well as extensive knowledge of insurance laws and insurance markets. We can quickly compare rates and scope of coverage, make it easy to shop for several policies at once, as well as help you uncover hidden savings.
Call us or contact online to discuss your insurance needs with one of our independent agents.
