You should always take time to compare life insurance quotes before you ever submit a life insurance application.
When you receive a very inexpensive quote, it may be very tempting to stop your search for life insurance and apply for the quote your life insurance agent has given you. While it is tempting, this is the last thing you want to do if you want a policy that will provide you and your family with the protection you need. You should never consider price above all else when you are purchasing something as important as life insurance. Review these valuable tips on what to consider when you are comparing your life insurance quotes and make an informed purchase. Read also: Things you Really Need to Know about Senior Life Insurance.
Understanding the Difference Between Term and Permanent Life Insurance
It is extremely important to understand the difference between term and permanent life insurance when you are requesting quotes from any life insurance company. It is easy to automatically rule out expensive premiums when you think that the coverage is entirely the same. Term and permanent insurance work very differently from one another, the type of policy you decide to invest in will depend on your budget, your needs, and even your age. Read a straightforward explanation of each type of life insurance contract so that you can decide which type of policy is more practical for you.
Term Life Insurance
Term insurance is the less expensive option and is most common for individuals looking for life insurance on a budget. While term insurance is less expensive initially, it can become much more expensive in the later years of your life. The insurer will extend coverage for a fixed period of time. This fixed period of time is referred to as the term. Once the term expires after a period of 1 to 30 years, the insured may have the option to medically qualify to renew their policy for a higher premium. As you might expect, the premiums remain very low while the insured is young and then increase substantially later in life. Read also: Seniors Can Now Pay Less for Life Insurance.
Permanent Life Insurance
Permanent life insurance is flexible and often referred as buying a house as opposed to renting. When you buy a permanent life insurance policy, you own the policy for the remainder of your life. Premiums will remain at a fixed amount for the duration of the policy and the policy owner will earn cash values on some of the premiums that are paid. As the policyholder earns cash values, they have the option to buy more insurance or withdrawal the cash. While these policies do have their benefits, premiums can be as much as 4 times higher for a permanent plan.
What to Consider When You Compare Life Insurance Quotes
Now that you know the difference between each type of plan, you should know what to consider after you receive multiple quotes for an appropriate plan. Here are the most important factors to consider:
Death Benefit
The entire reason you are investing in life insurance is so that you have peace of mind that a death benefit will be paid to your beneficiaries if you pass away. If you are not sure how much insurance you should purchase, you may want to fill out a life insurance assessment tool and see how much is recommended based on your debt, your expenses, and your income. Once you have a fair amount, you will need to make sure all of the quotes you receive are for this amount or more. Read also: Savvy Term Life Insurance Shopping.
Term
If you have opted for a term life insurance plan, make sure you consider the duration of the term before you select a policy. The longer the term, the larger the premiums will be. With this being said, if you choose to renew your policy 10 years down the line your premiums will go up substantially. You must also keep in mind that you may be diagnosed with a medical condition that will disqualify you from renewing your policy. This is why many people opt for the longest term possible (30 years).
Riders
Most reputable insurance companies will offer riders that you can add to your plan for added protection. These riders can be very important. Here are some of the most popular riders to look for:
- Accidental Death Benefit: Beneficiaries will be paid if insured dies as a result of an accident.
- Waiver of Premium: The owner does not have to pay the premiums if the insured becomes disabled.
- Accelerated Death Benefit: If the insured is diagnosed with a terminal illness or a life threatening injury, they can collect some of the death benefit while they are living.
As you can see, there are a number of factors to consider when you compare life insurance quotes. Make sure you set aside the proper amount of time and do your homework so that you can make the best investment. Read also: Your Guide to Understanding Life Insurance Quotes for Young Adults.