Pinpointing the best life insurance policy can be a challenge for any buyer due to the wide variety of life insurance policies. But there’s no reason to go it alone. Financial advisors and experienced life insurance agents with a background in helping you make the right decisions About your financial goals and budget.
Here are some important things to keep in mind when shopping for the best life insurance policy.
Look at financial strength ratings
A strong financial strength rating means you can be confident that the insurance company will be able to pay claims in the future. Additionally, financially stronger insurers are less likely to increase in-house policy costs and premiums in response to challenging financial times.
Financial strength ratings are available from agencies such as Standard & Poor’s and AM Best, and are usually found on the insurance company’s website. All of our best life insurance companies have Advanced (A to A) or Excellent (A- to A) financial strength ratings.
Choose life insurance as part of a larger financial plan
Life insurance helps your loved ones cover expenses and achieve financial goals after your death. Reviewing your financial goals with a financial advisor can help ensure you get a life insurance policy that will help you achieve them. For example, term life insurance may be well suited to ensure If a parent dies, your child has money for college. But if you want to supplement your retirement income, a cash value policy may be a better choice.
Work with an Experienced Life Insurance Agent
Life insurance quotes are based on factors such as your age, gender, lifestyle (such as smoking) and health. All factors are important, but health has a huge impact on the rates and types of life insurance you qualify for and which insurance companies will have the best life Provide you with an insurance quote.
An experienced independent agent or financial advisor can save you a lot of time and frustration by identifying the insurance company most likely to give you a good rate based on your health and other factors.
Don’t Assume Insurers Offer Competitive Rates for Everyone
Each life insurance company has its own rules for determining the rates it offers. Therefore, your premiums can vary greatly by insurance company. The rate of accumulation of cash value and the policy charges for cash value policies also vary from company to company.
Insist on including cost disclosures for universal life insurance in any proposal
Life insurance quotes reflect what you’ll need to pay, but they don’t always tell you the policy’s internal costs, such as expenses and fees.
Universal life insurance policies have premiums like any other life insurance policy, but they also have other costs in the form of policy fees. When purchasing this type of policy, be sure to ask the insurance company about the premium and any other costs that may be associated with the policy.
Barry Flagg, founder of Veralytic, warns: “Current regulations in some states and for some products allow insurers to ‘quote’ low premiums while charging high costs—without disclosing that you may have to pay extra later to avoid Mistake.”
Figure Out If You Want Life Insurance Riders
If you can’t seem to find the perfect life insurance policy, you may want to look at the life insurance riders offered by your insurance company.
Life insurance riders allow you to customize your policy by adding additional coverage. Common riders include benefits you can use during your lifetime, such as accelerated death benefits, long-term care, and premium waivers in case of disability.
Some riders are included with certain types of life insurance policies at no extra charge, such as accelerated death benefit riders. If you are interested in customizing and expanding your coverage, please consult your life insurance agent to explain your add-on options.
Life insurance for military members
Military members have life insurance options just for them:
- Active duty members of the Army Navy Air Force Space Corps Marine Corps or Coast Guard or who meet other eligibility requirements are eligible for Military Group Life Insurance (SGLI).
- Veterans with an SGLI prior to retirement are eligible for Veterans Group Life Insurance (VGLI).
The Fallen Families Support Act, passed in October 2022, increases coverage for SGLI and VGLI from $400,000 to $500,000.
Military members who decide to supplement their SGLI or VGLI can do so through a private insurance company such as USAA.
Types of Life Insurance
There are two main types of life insurance: term life and permanent life.
Term life insurance
Term life insurance A policy for which you choose the length of coverage, such as 10, 15, 20 or 30 years. If you die within that period, your beneficiaries will receive a death benefit. If you exceed the term and do not renew the policy (at a higher cost), there is no death benefit.
Term life insurance is suitable for those who want to cover specific financial issues (such as income replacement) while they are working.
Permanent life insurance
Permanent life insurance Ideal for those who want to receive a death benefit no matter when they die. Permanent life insurance policies also have a cash value component that accumulates funds on a tax-deferred basis. Permanent life insurance is usually much more expensive than term life insurance.
People who choose permanent life insurance usually have specific goals in mind, such as supporting financial dependents to fund an heir trust or building cash value to supplement retirement savings.
Permanent life insurance can be broken down into major subtypes:
Whole life insurance
Whole life insurance Is predictable because the premium rate for cash value growth rate and the amount of death benefit is fixed and guaranteed.
Universal life insurance
This type offers greater flexibility, and you can adjust premium payments and death benefits within certain parameters. Growth in cash value will depend on the performance of the insurance company and the investment assets underlying the policy. Types of universal life insurance are Fixed Rate Universal Guaranteed Universal Indexed Universal or Variable Universal.
Permanent life insurance policies can be difficult to understand from quotes or hypothetical illustrations. Simply comparing life insurance quotes or some projections of cash value doesn’t reveal whether the policy is worth the money. Veralytic’s Flagg advises to “dig deep.” For example, a life insurance agent or financial advisor can request a Veralytic report to see how the policy you are considering compares to industry benchmarks.
“Ultimately, the premium you have to pay and/or the cash value growth you will see depends on what the insurer actually charges and how the investments perform. You want to be sure that your internal policy costs are competitive and that the investments within the policy are right for you risks of Tolerance,” Flagg warned.
Variable life insurance
Variable life insurance Offers the flexibility not found in whole life insurance, but with a safety net so your death benefit never falls below a certain amount.
This flexibility includes deciding where to invest your cash value. The investments you choose play a vital role in the success of your policy, and if you want to play an active role in life insurance, this is the one to choose. Unlike a variable universal policy, a variable life insurance policy Provides a safety net so that your death benefit does not fall below a specific dollar figure.
A variable life insurance policy does not allow you to change the premium, which also makes it different from variable universal life insurance.
Similar to other types of permanent life insurance, variable life policies provide cash values that you can draw upon while you are alive. You need to make sure your policy maintains at least a minimum level of cash value, or your policy may lapse.
No-exam life insurance
Life insurance companies sometimes offer policies without a life insurance medical exam. These test-free life insurance policies do not require an exam, but you may be asked to answer health-related questions.
Types of life insurance policies include:
- Accelerated underwriting: Life insurance companies primarily use information and algorithms from third-party sources to set your rates. The insurance company will review your prescription drug history, criminal record and driving record to assess your risk. With this information, the insurance company Will set your life insurance rates.
- Guaranteed issue life insurance : No medical examination, no health problems, you can’t be refused.
- Simplified issue life insurance : There is no physical exam, but you may have to answer some health questions.
Guaranteed and simplified issuance policies can cost significantly more than fully covered policies, but they are a quick way to get life insurance and may be the only option for seniors and those with health problems.
Other types of life insurance
Other types of life insurance include:
- Burial insurance: Also known as funeral insurance or final expenses insurance, funeral insurance policies typically have a small death benefit to cover final expenses, such as $10,000. They are usually whole life policies and cost a lot to be covered.
- Survivorship life insurance: Also known as second death life insurance, a survivor life insurance policy provides coverage for husbands and wives. Death benefits are not paid until both are dead.
- Mortgage life insurance: A mortgage life insurance policy pays off your mortgage if the policyholder dies. Payments are made directly to the mortgage lender.
- Supplemental life insurance : Supplemental life insurance is a no-cost or low-cost group policy that may be offered by an employer or a group. If the supplemental policy is tied to an employer, you could lose that coverage if you quit your job or get fired.