Life Insurance Buyer's Guide: Get Coverage That Fits Your Needs

It is the desire of every individual to guard the financial health of his loved ones. Anybody would want to make sure that his family is secured financially even after he has left earth. This security can be ensured by any person, even one without wealth to leave as inheritance to his loved ones. With life insurance, a person is assured that his family or beneficiaries will receive an amount of cash after he dies or when he becomes critically ill.

Every person has different insurance needs and abilities to pay; therefore, every person would need to buy an insurance fitting to both his requirements and budget. In order to get the best insurance deal, it is important for a person to understand the basic facets of life insurance and the roles they play in the contract.

What is Life Insurance?

As you already know, life insurance is a contract between an insurer and a policyholder. In this contract, the insurer agrees to pay the beneficiaries of the policyholder an amount of cash at the death of the insured or at a time when he acquires a terminal illness. On the other hand, the policyholder is obligated to pay the insurer an agreed amount called insurance premium. This premium can be paid in monthly intervals or in lump sums.

What are Your Insurance Needs?

You are buying insurance because you want to secure the financial strength of your family when you cannot be around to work and find money for them. For this reason, you are advised to know your needs before shopping for an insurance policy. Your insurance policy should be able to render these needs and you should be able to pay the premiums to enjoy the benefits of your insurance.

In thinking about your insurance needs, here are questions that can help you decide which ones should be prioritized and considered.

- How much of your family’s money do you provide? If you die early, would your family be able to get by everyday? Do you have someone who relies on you financially?

- Do you have children who still need to continue their education? Do you want to assure them they will finish their college degree even after you die?

- Do you have debts that need to be paid? Can your family handle paying these debts in the event of your death?

- Do you have state taxes to pay at the time of your demise?

- Would inflation affect the financial strength and future needs of your family?

Once you know your needs, you can choose from among the many kinds of life insurance which best suits your requirements. A match between your insurance policy, insurance requirements and ability to pay should be upheld.

What are The Kinds of Life Insurance?

You should always know the kinds of life insurance before deciding to purchase one. Although all of these serve the same purpose – that is to cover your life, the regulations and policies vary from one kind to another. Some kinds of life insurance cover your whole life while others cover only a specified period of your lifetime. There are a few that accumulate value while there are others that don’t.

1. Whole life insurance – this kind of insurance offers you protection for the whole of your lifetime as long as you pay the correct premiums.

2. Universal life insurance – this kind of insurance is based on cash value. The insurance policy stipulates that any premium payments above insurance costs shall be credited to cash value which earns interest.

3. Term life insurance – this kind of insurance is the cheapest life insurance you can avail. It can cover you for a year or so. It is renewable, but you cannot claim the premiums you paid once the contract has expired. This insurance does not build up cash value.

4. Cash value life insurance – this kind of insurance is similar to universal life insurance because it builds up cash value. In this policy, the premiums are higher at the start of the contract. All of the excess premiums that are not used in paying cost of insurance are invested in the company and paid interest.

How to Find The Best Insurance Company?

After having finally figured out your needs and what kind of insurance policy is best for you, you should start looking for an insurance company that will give best value to your money. Almost every insurance company offers the same benefits, but the premiums you have to pay vary. In order to assure that your money is invested in the right place, try comparing companies that offer similar policies by answering the following questions:

- Which company offers the lowest monthly premiums?

- Do the premiums vary every year? Do benefits change?

- Which part of the benefits and policies are not guaranteed?

By looking into different considerations, you can filter the pros and cons offered by each insurance company. If you are not sure about your own evaluation, you can always ask the help of an insurance agent or specialist to help you invest in the right insurer.

What to Do if a Company Turns You Down?

When a person applies for life insurance, there are times in which companies will turn them down. Should this happen to a person, they need to first ask the reason as to why they were turned down. In many cases, this is due to their health or something along these lines. If you have been denied, your first option is to check with another company to see if they will accept you. This can be done numerous times until you find a company that is going to accept you. If there are no companies that will accept you that are considered to be average life insurance companies, you do have another option.

There are insurance policies out there that are going to be for those that cannot get approved with other companies. These policies are usually going to be higher premiums, yet this is the price of having life insurance that is for those that other companies have denied. However, it is an expense that the person cannot do without since this type of insurance is something that benefits the more in the long run.