If you’re researching term life insurance online you’re probably visiting multiple sites and getting quotes. You’re trying to figure out if you should quote yourself at standard or preferred rates, which companies are high quality companies, which policies require an exam, and other questions that can make the whole process highly confusing. Here are some things to ask when choosing a term life insurance policy so that you know exactly what kind of policy you’re getting.
Does the rate stay the same or increase over time?
If you’re getting a term policy, make sure it is a level term policy. This means that the price of the policy will stay the same throughout the term length. That means if you buy a 20 year level term policy the price should stay the same for the entire 20 year term. Look out for small print that says your rate increases every 5 years.
Is it convertible?
You may never decide to go from a term policy to a permanent policy but you never know – having the option is worthwhile. Why? Because if your health deteriorates you may decide to convert the policy to a permanent policy since it will be difficult to get insurance when your term expires.
Find out if the policy is convertible, but don’t stop there. You need to know if it’s convertible in the first 10 years, 20 years, or not at all. You should also find out if it’s convertible to a universal policy or whole life. The more choices you have the better.
Is there a waiting period?
Some life insurance policies have a waiting period before 100% of the death benefit is in effect. These policies should only be used if you can’t get approved for a regular policy. Unless you are considered “high risk” don’t pursue this option.
I’ve never heard of this life insurance company?
It’s possible that you haven’t heard of the life insurance company that has the best rate. That doesn’t mean that they aren’t a good company. Find out the company’s A.M Best Rating. Any company with an A or A+ rating is financially sound. Look for companies that have been in business for at least 50 years.
Is there a medical exam required?
You can typically get up to $250,000 or even up to $350,000 of life insurance without an exam. Find out if you are being quoted for a policy with or without an exam. While no exam policies don’t require a paramedic to make a house call and take a blood and urine sample their cost is typically higher than policies that require an exam. Compare your options and decide which is better for you.