Choosing life insurance can be difficult because of the many factors and options involved. Tips for finding the right life insurance include carefully evaluating the individuals needs, comparing features and providers to find the best fit and considering both current and future life situations and goals. Most people should also reevaluate their coverage periodically to ensure that they still have the right type and level of coverage.
When choosing life insurance, it is best to consider needs and lifestyle choices. For example, a working parent of three dependent children who still owes the majority of the balance on her home will have vastly different needs than an older individual with no dependents and no outstanding debts. The parent will want to purchase enough insurance to cover the mortgage and to provide support for the children, if possible. The single individual's primary concern likely will be with providing for her own final expenses.
There are many policy options to consider when choosing life insurance. Term life policies usually carry lower premium amounts, especially when purchased by younger people. Whole life policies, however, offer the advantage of premiums that do not increase with age. Some policies earn interest and some allow policy holders to borrow against interest earned or even against principle.
Numerous other options should also be considered. One such consideration is terminal illness payment, in which a percentage of the life insurance can be cashed out by the insured to cover expenses associated with a terminal illness. Another is mortgage repayment, in which the policy automatically pays off the outstanding amount of a mortgage on a home. Yet another common option is accidental death coverage, in which payouts are increased if the insured dies in an accident.
It is generally a good idea to consult several providers before choosing life insurance. People who have existing homeowner's or auto insurance policies might receive a discount if they purchase life insurance through the same companies. Additionally, many employers provide a certain level of term life insurance and may also allow the employee to purchase additional coverage at group rates.
Someone choosing life insurance should also consider future goals. If the person has children now, she may need more insurance while the children are still dependent and less after the kids leave home. One strategy might be to purchase a whole life policy for the amount she thinks she will always want and to supplement it with term insurance while her children still depend on her.
In any case, purchasers should carefully evaluate all the options. They should also consider discussing the purchase with an insurance professional or a financial adviser. Life insurance coverage should be evaluated periodically to determine if it is still appropriate to the insured's lifestyle and goals.
