A Guide to Choosing the Right Life Insurance Policy

Despite the many options available out there, choosing a life insurance policy may be easier than you think. Each type of policy is designed for a purpose, making it easier to select the right plan once you have your objectives figured out. Here’s a look at some crucial points to consider when selecting a life insurance plan.

What Is Life Insurance?

Life insurance is a contract in which an individual undertakes to pay premiums to an insurer in exchange for the insurer’s guarantee to pay a designated amount of money to a named beneficiary upon the individual’s death.

Is It Wise to Get life Insurance?

Getting life insurance is a financially prudent decision that demonstrates your love and care for the dear ones that depend on you for upkeep. The policy is worth the investment as it guarantees your family or chosen beneficiary a preferred standard of living after you pass away.

You should get a life insurance policy for reasons such as:

  • Paying for your funeral costs, pending medical bills, and outstanding debts like mortgages and student loans
  • Supporting your family’s upkeep after you die
  • Funding your children’s college education

Different Types of Life Insurance

The three main types of life insurance policies are:

  1. Whole life-A type of permanent life insurance that covers you for your entire lifetime or up to a specified maturity age, if you continue paying the premiums. It has fixed premiums and a cash value component.
  2. Term life-Covers a designated length of time (10-30 years), is convertible, but has no cash value.
  3. Universal life-A permanent life policy with adjustable premiums and investment options.

7 Tips for Choosing a Life Insurance Policy

To select the right life insurance policy, consider factors such as:

  1. Duration of need– If you need lifetime protection, choose permanent life. Select term life if you only need to secure your mortgage or any other debt for a pre-known length of time.
  2. Affordability– Your budget determines whether to buy term life insurance for 10, 20, or 30 years. Permanent life may have higher annual costs, but its net cost is appreciably lower over the long term.
  3. How much you can invest-Choosing a permanent policy with accumulated cash value is a good idea if you have the funds to invest. It may cost higher per year, but you can tap into its investment component, such as by borrowing against the accrued interest.
  4. Your age-Insurance products are usually cheaper for younger people. Also, you may not be eligible for plans like term life insurance at the age of 60.
  5. Gender-According to statistics, women tend to live longer than men, qualifying them for lower life insurance premiums.
  6. Your health– The healthier you are, the cheaper your insurance policy will be. For example, an individual affected by predisposing factors for disease, such as smoking, is likely to pay higher premiums than a healthier policyholder. Age is also a factor here, considering that older people tend to be more prone to diseases than younger ones.

How Much Life Insurance Do You Need?

The amount of life insurance you need depends on your objectives for buying it. Do you wish to secure your family’s financial needs for say, 2, 4, or 10 years after you die? The answer to this question can influence the death benefit to seek out when you’re buying a life insurance plan. In your coverage estimates, you may also incorporate factors like funeral costs, debts, mortgages, car loans, college funds for your kids, and family income.

Keep these points in mind when choosing a life insurance policy to get the best plan for your budget and your family’s financial needs. If you need assistance in selecting the right coverage, contact the experts at The Reardon Agency today. We are here to help you with all your coverage requirements.

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