How to Buy Life Insurance Wisely

There is no denying the fact that everyone needs life insurance. However, when you take into consideration all the various factors, it is often very difficult to reach a well-informed conclusion about which policy would be the best for you, which insurance company to choose, how much coverage to opt for and what premiums to pay. Thus, to buy life insurance wisely, here is a checklist of questions you need to answer before committing to anything:

1. What type of policy do you need? – Here the main choice lies between a term life policy and whole life insurance. You will need to understand the pros and cons associated with both types of policies before making a choice. For example, term covers you for a set period or term and death benefits are paid out only if you die within the specified term. Premiums are usually inexpensive and therefore this is a popular choice for many. Whole life on the other hand offers coverage for your entire life. The premiums are higher as they also include a cash value component that is linked to investments and the market. Whole life insurance is considered by many to be a vehicle for savings as well as insurance.
2. How much coverage do you need? – You will need to enlist all your assets and income versus your debts and expenses. The death benefits left to your beneficiaries should be adequate enough to allow them to deal with any financial obligations and maintain the same standard of living as when you were alive.
3. Is it necessary to undergo a medical exam? – When you are purchasing an individual insurance policy, you need to think about whether you are in good enough health to avoid the hassles of a medical exam and opt for a No Exam Policy. In comparison, a regular policy, which demands a medical exam might be necessary for those who are older or with any chronic health conditions.
4. Is there any way you can lower your life insurance premium? – There are several ways you can reduce your life insurance policy premiums. These could include quitting smoking to avail of lower non-smoker rates or losing weight and moving to a preferred premium category. Find out from your insurance company what proactive steps can be taken to make a difference to your final amount.
5. Have you comparison shopped? – Thanks to the Internet, you can receive multiple quotes from a number of insurance companies before you make a final decision. With the click of a mouse, you can have in front of you a list of different companies, premiums, coverage amounts and types of policies you are eligible for. In case you are purchasing your insurance policy from an agent, it is all the more imperative to shop around to ensure that you are not getting a biased view.
6. Will it take long to qualify for your policy? – Very few people actually consider how long it will take before they actually qualify for a policy. The work is not all done once you decide on which policy you want. There is an underwriting process involved, which may result in you not being eligible for a particular rate or policy or just increase the time till your policy is in effect. Ask your insurance company beforehand how long this process will take. You need to know if there is a medical exam involved, when you should schedule it, when your application would be accepted and when do you need to start making payments so that you can plan in advance and not be caught unawares.
7. Is your insurance company safe? – Your insurance policy will cover you for a specific amount of years and you should be as sure as possible that the company issuing the policy lasts till then. There have been too many horror stories of companies closing down due to financial problems and leaving their customers high and dry. In order to lower the possibilities of this happening, check out the reliability of your insurance company. You can do this by checking the company’s ratings at www.thestreet.com, www.ambest.com, or www.moodys.com. Companies with a rating of A+ or higher are fairly high in terms of security and reliability.