Summit Insurance Advisors
by Michael Harbron on Nov 25, 2019
Finding the right life insurance policy can be overwhelming for some. There are dozens of policy details and financial considerations to keep in mind as you wade down this path, but the folks at Summit Insurance Advisors are here to help you make sense of this often-confusing process. Choosing a policy all comes down to understanding your needs, including the needs of those you may leave behind. Let’s take a look at what goes into a life insurance policy, so you can make the right decision for you and your loved ones.
Understanding Your Needs
Before you start comparing different life insurance policies, you need to understand why you’re taking out a policy in the first place. Consider your family’s finances and try to imagine where everyone will be 10, 20 or even 30 years down the line. Typically, a person will invest in life insurance as a way of protecting their loved ones financially if they were to pass away unexpectedly. The policy benefit would then be used to pay for their child’s education, pay off the family’s mortgage, or create a retirement nest egg for their spouse.
Consider your current health status and how much your family will need if you were to pass away. You should have a specific number in mind in terms of the policy benefit, or the total amount that will be paid to the beneficiary in the event of your death.
Term vs. Whole Life Insurance
One of the biggest decisions you’ll need to make is between term life insurance and whole life insurance. Term life insurance means the policy will only be in effect for a certain number of years, such as 10, 20, or 30 years. If you pay your premiums on time and you pass away before the policy expires, your family will receive the full policy benefit. Yet, if you pay your premiums on time and you’re still alive when the policy expires, you and the insurance company will walk away.
Whole life insurance means the policy will last your entire life, so you don’t have to worry about the policy expiring before you pass away. However, whole life insurance will be much more expensive than term life insurance.
The truth is that term life insurance tends to be the most popular choice among consumers. The premiums are more affordable, but it does leave room for the possibility that the policy will expire before you pass away, which would leave your family with nothing. You can extend the terms of the policy to make sure your family receives a benefit.
If you’d rather have more peace of mind and you can afford to pay more in premiums, whole life insurance may be the best way to go, especially if you plan on living past 100. But, if you’re nearing the end of your life, you may end up paying more for a policy that would have been just as effective as term life insurance.
Comparing Your Options
Once you’ve factored in these considerations, start shopping around for a policy that meets your family’s needs. If you’re still on the fence between term and whole life insurance, compare different quotes to learn more about what these kinds of policies entail.
The insurance provider should have a strong reputation in the insurance industry. You should feel confident that the company will still be around when the policy expires. Consider insuring your life insurance policy for added protection. This means another insurance company will insure your policy in case the original provider fails to hold up their end of the bargain.
Working with a Fee-Only Insurance Consultant
When shopping for life insurance, it’s best to find a fee-only insurance consultant or adviser. This means the person will only collect a fee in exchange for their services. If your advisor or consult expects to collect a commission in exchange for their services, they may not have your best interests at heart. They may steer you towards policies and add-ons that you don’t really need just to get a higher commission. Look for fee-only advisors that compare policies from multiple companies and providers, so you can shop around for the best deal.
Double-Checking the Fine Print
Before you sign on the dotted line, spend some time checking the fine print. You should know your life insurance policy inside and out before you commit, including what happens if you don’t pay your premiums on time, whether the terms of the policy can change over time, and how the beneficiary will go about collecting the policy benefit. Your family will depend on this policy in the event of your death, so make sure all the details are in order.
The sooner you invest in a policy, the more affordable your premiums will be. Lock in a lower rate and start shopping for life insurance today.
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