How to Choose Life Insurance

Purchasing life insurance is an important part of your financial plan. But it can feel like an overwhelming process. In this article, we will go oversteps on how to choose life insurance.

Figuring Out What You Need

The first thing you need to choose about life insurance is how much coverage you will need. There are a few questions you should ask yourself to help figure this out.

1. How Much Coverage Do I Need?

                The death benefit of your insurance policy will be based on a few different factors. First, you need to determine how many years of your income you want to replace. Second, you need to calculate the value of services you provide to your family that they would need to pay someone to replace. Second, you need to calculate the value of services you provide to your family that they would need to pay someone to replace. Third, you will want to determine if you want your insurance policy to help cover college or retirement funds for your spouse. Adding these all together should give you a good idea of how large of a death benefit you need. Be sure to also consider inflation.

2. How Long Do I Need Coverage?

                Some people like to be covered for their whole lives; others just want to be covered until they retire. You should at least keep coverage until all your debts are paid off and you have sufficient savings to provide for your family.

3. How Much Can I Afford?

How much coverage you need and how much you can afford may be two different amounts. Getting the policy, you want may involved trimming your budget or lowering your death benefit.

4. What Riders Are Important to Me?

                Riders are provisions that add extra benefits onto your policy for an additional cost. For example, if you are disabled there is a rider that will stop the need for premium payments. Since these do increase the cost it is important that you evaluate how valuable they are to you.

Comparing Life Insurance Companies

After you determine how much insurance you need, you need to do research on what company you want to use. These are a few questions you should ask to find the best company possible.

1. How Financially Strong is the Company?

You want to choose a company that will be around long enough to pay out your death benefit. This means the company needs to be financially stable. You can check the strength rating of insurance companies by visiting AM Best.

2. How Many Customer Complaints Are There?

                You want to work with a company that has few customer complaints. The National Association of Insurance Commissioners have a complaint index that can help you find a good rate company. You will want to choose a company with an index score of less than 1.00.

3. What is Customer Satisfaction?

                JD Power conducts life insurance studies that measure customer satisfaction in many areas. Check this out to find an insurance company with a high rating.

4. What Types of Policies Are Available?

                Not every company offers every type of policy. So you will want to find a company that offers the type of policy you want with the death benefit you need.

5. What Riders Are Available?

                You will want to identify what riders are of interest to you. Then you can shop insurance companies to find which ones offer the best prices.

6. What is the Application Process?

                Some companies offer same day policies that are issued without an exam. This may sound appealing, but you may want to consider taking a policy with an exam. If you are in good health, you may be eligible for discounted premium rates.

7. Have I Gotten Quotes?

It is important to shop between many different companies. You can compare prices using a website or an insurance agent.

8. How Long is the Free Look Period?

A free look period is a time frame during which you can cancel your policy for a full refund. This usually varies from 10 to 30 days. It gives you time to examine policy details and make sure they align with your situation.

You Can Learn How to Choose Life Insurance

With the proper research you can learn how to choose life insurance. Meet with a qualified insurance agent who can further help you through the process.

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