If buying a life insurance policy is one the many items on your to-do list for 2021, you may already be feeling a little overwhelmed and not sure where to start. One way to begin to understand what you require from your policy is to think about your priorities. Some of the main factors to consider are why you need the coverage, how much coverage you will need, what can you afford and whether you want your policy to purely provide a payout for your loved ones in the event of your death, or you wish to add an investment element to your policy too.
This all involves doing a little research before you buy and acquainting yourself with the different types of coverage and the pros and cons of each type. If you do decide that a policy with an investment element is the right choice for you, you may also want to use a guide to research your understanding of selling your policies for cash at a later date to release funds for retirement, care or medical expenses.
Some companies offer to buy your policy outright so it’s important that you understand the implications when you opt for a cash payout from a viatical.
Choosing Your Life Insurance Policy
With the advent of comparison sites, it’s never been easier to buy home, car and life insurance online. But what do you need to know to compare policies – whether that’s policies from the same company or those from different providers? First, you should make sure that you are comparing the same type of policy, such as whole life, term or universal life. Second, ask yourself the following questions:
• Premiums – are they guaranteed level, do they increase over the policy term or are they flexible?
• Fees – are the fees built into the premium or are they an extra charge?
• Medical Exam – will you be required to undergo a medical exam before acceptance?
• Approval Process – is it simplified issue where you will be asked questions about your health but will not be required to take a medical examination, guaranteed issue where it is available for any eligible applicant without regards to your health status, or is it fully underwritten which will take into account the information on your application, your medical history combined with background checks, prescription database information, DMV records, credit history and more?
• Term Life Policies – is the term length you require available? Can you convert it to a whole life policy in the future and if so, how?
• Cash Value – does it accumulate, and if it does, how?
• Riders – is what you’re looking for available? Riders are a way to customize your coverage and make the policy fit your specific individual needs. Can they be added at any time during the policy term or do they need to be added at the outset?
Comparing Your Options
When comparing quotes from different providers, you may wonder why premiums vary even for what appears to be the same amount of coverage. Always bear in mind that no two policies are ever the same. Each company will use its own algorithms and underwrite the coverage in its own way. Some companies may also build in common benefits into their basic premium while others may charge extra for those benefits via optional riders.