Article 4 of 9 in Getting the Right Life Insurance Policy
If you are in the market for life insurance, you should take the time to figure out what type of life insurance plan you need, how much life insurance you need, and what you can afford to pay for life insurance. Once you know what you want out of your life insurance policy, you should get several quotes and compare them before you make a purchase. Obtaining a life insurance quote is as easy as a click of a mouse.
What Kind of Life Insurance You Need
There are several types of life insurance you can purchase. Permanent life insurance is for the rest of your life. For this reason, it is a little more expensive. However it can offer the best coverage. As long as you pay the premium, you will have insurance. It can also accrue value to be borrowed against in a time of need.
Term insurance is for a specific term or period. You might purchase this type of life insurance plan to cover a specific time period in your life, for instance when children are young. Most insurance companies offer term life insurance as 5-year, 10-year, 20-year or 30-year term. The insurance expires after the term. Term life is usually less expensive than permanent life, and is more flexible because you can adjust it to fit your changing insurance needs.
Which type of life insurance you purchase, depends on your needs and goals. Term life rates are usually cheaper than permanent life which allows you to either invest the savings or use them elsewhere in your budget. If you feel the need to have a constant insurance premium, or would like some of the additional uses of a permanent life insurance plan, then you will want to consider one. You will need to take your time and compare term and permanent life insurance before you make a decision.
Cost Index and Cost Disclosure
It is difficult to compare the cost of one life insurance policy against another. Simply comparing the premium payments is not sufficient. The features of the policies may be very different. To determine the true cost of a policy, you will need to make an adjustment for the time value of money. In other words, if you pay (or receive) money sometime in the future, it is not worth the same amount as money paid (or received) today. Any comparison should take this into account.
Most states have adopted the interest adjusted index method of cost disclosure recommended by the National Association of Insurance Commissioners (NAIC) for comparing the costs of life insurance policies. It adjusts the payments based on when they are received. This allows for better comparisons among policies. Insurance ledger statements now show two such indexes. One index considers the net payments. The other index, known as the net surrender cost index, compares the cost if the policy is surrendered. If you want a life insurance quote comparison on similar policies (for example, a whole life from one company against a whole life from a competitor) look at the indexes for the two policies. The one with the lower cost indexes is the less expensive of the two.
A cost disclosure form gives you a standardized measure of the cost of the insurance coverage. It takes into consideration the time value of money and allows you to compare the cost of this insurance against other plans. Make sure you get a cost disclosure form when you shop for life insurance quotes. The statements can be confusing, so ask an insurance agent if you have any questions.
How to Save Money
When you are getting your quotes, here are some tips for saving money on your life insurance:
TIP: It is easier to shop when you get several life insurance quotes online. Even if you want to work with an agent, online life insurance quotes can give you a good place to start.
Things to Consider When You Get a Quote
Before you get a life insurance quote, you have to determine how much life insurance you need. Your needs analysis will focus primarily on who, or what, you want to protect in the event of your death. If you have several young children and a wife and a house with a mortgage, you may need a lot of life insurance. However, if you live alone or your children are out of the house, then you will need less. Once you decide how much you need, then you can pursue your quote. Whether you get an online life insurance quote or a quote from an agent, you should get several life insurance quotes and compare them.
As you shop, you will notice differences between insurance companies. Some companies require no medical exam and others only require one for more than a certain dollar amount for insurance. Some do not use agents, and others rely on agents. When with no agent's commissions or no medical exams, companies still have marketing expenses. Even if a company advertises that it pays no commission to agents or does not require a medical exam, that does not always mean their products will be less expensive. There may be additional fees associated with the coverage, or the rates could be higher. Don't be convinced by ads! You still need to do your homework to find the company with the lowest premium and best life insurance coverage for you.
You can either contact the individual companies directly and speak with their agents, get several quotes online, or work with an independent agent who can help find life insurance for you. Do what is most comfortable for you! If your needs are complex, or you want guidance from a professional, then you should pair yourself with a reputable life insurance agent who will give you a free life insurance quote comparison. An agent can help you conduct a needs analysis, find several quotes, and help you compare them before you select the right policy for you. Click here to visit the Free Advice quote center and get assistance with your life insurance.
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