Investing in a life insurance can be the right step towards securing your family’s future. However, finding the right policy can be overwhelming as various factors need to be considered. An estimate suggests that close to 52 percent adults in the country have enrolled for a life insurance. If you are considering taking this important step towards financial security, consider these factors before choosing a life insurance policy.
Steps for choosing the right policy
Most people will need a life insurance. But since financial and personal circumstances vary so significantly among people, there are many factors to consider.
- Reasons for choosing a life insurance
Life insurance policies are a type of safety net. They are required if your family might face financial hardships in unforeseen events that lead to loss of income. A person may choose a policy due to various reasons. Some aspects to keep in mind are as follows — If you were to lose your income unexpectedly, would your family face financial difficulty? Do you wish to pay for a dependent’s day-care, tuition, or retirement costs? Although a person might have savings, they might not be sufficient to cover the family for decades. That’s where a life insurance policy can be beneficial. - Amount of life insurance needed
The amount you pay for life insurance in USA depends on factors like personal or household income, prospective beneficiaries, among others. A person’s daily expenses can also affect how much you pay for a policy. One should discuss such issues with a trusted financial advisor. He/she may help you choose a policy that aligns with your future financial goals.
Type of life insurance
Once you have decided the amount of insurance, it is important to choose the type. There are mainly two types of life insurance: Term life insurance and permanent life insurance. Term life insurance has a limited coverage period between 1-30 years. It is the least expensive insurance option with guaranteed mortality benefit.
Permanent life insurance policies, on the other hand, are lifelong, as long as the premium is paid. Its mortality benefit is paid to the beneficiaries in the event of the insured’s untimely passing.
Other types of permanent insurance that have a similar framework include whole life insurance, universal life insurance, and no-exam life insurance.
Need for insurance riders
Most life insurance policies come with additional benefits known as riders. Riders help in customizing coverage so that your specific needs can be met. If you wish to customize your coverage by adding riders, you’ll have to discuss this with your insurance agent. This is because availability, eligibility, and certain restrictions may differ across policies and insurance companies.
Choose from the best
Listed below are some of the best life insurance companies:
- Nationwide®
It is one of the best insurance providers that is known for very few customer complaints. Nationwide® has a wide range of policies and riders. They also offer “living benefits” on most policies. - MassMutual
It is rated A++ for financial stability by the credit rating company, AM Best. MassMutual has a good dividend-paying history. Eligible policyholders have received life insurance dividends every year since the company’s inception in 1869. Owners can also convert their term policies to any permanent policies available. - Protective
The life insurance company has joined with Banner to offer least expensive term policies with a coverage of up to 40 years, which is 10 years more than most insurance companies offer. Protective offers some policies without an exam. One disadvantage would be their low coverage amount for no-exam policies.
