With so many similar policies from which to choose, the process of shopping for life insurance can be overwhelming. It also tends to be highly personal. To secure the best possible deal for themselves and their beneficiaries, the savvy life insurance shopper carefully considers his or her family’s needs and purchases protection accordingly. First-time buyers should keep several things in mind when searching for coverage.
Do You Need Term Life or Whole Life Insurance?
First, there are two major varieties of life insurance: term life and whole life. As their names suggest, the former covers policyholders for a predetermined period of time while the latter remains in force indefinitely. Since they often expire without paying out benefits, term life policies tend to be far cheaper than whole life products. On the other hand, whole life policies have cash values that steadily increase over time and may be accessed in part or in full after a grace period. Keep in mind, you can convert your term life insurance policy into a permanent one.
Watch out for “Red Flags”
Life insurance shoppers should avoid policies that come with undue restrictions. While most insurers build protections against fraud and accidental death into their policies, some attach additional conditions that may preclude the distribution of death benefits. Policies that don’t cover certain causes of death or have an unusually long initial probationary period should be avoided.
Likewise, insurance shoppers with tight budget constraints should be wary of variable-premium policies. These products can be attractive in the short term, offering lower premiums than their “level term” counterparts for the first five or six years of coverage. This arrangement may be perfectly adequate for customers searching for short-term protection. However, policies that maintain a constant rate over their entire term tend to be more cost-effective in the out-years.
Confused life insurance shoppers have at their disposal an array of in-depth resources designed to explain these products in greater detail. For instance, the National Association of Insurance Commissioners puts out a regularly-updated buying guide for first-time shoppers.
Get Help from a Third Party
A broker can help a shopper make the best decision when it comes time to chose an insurance policy. With so many factors that can affect the cost of the insurance policy, an insurance broker can help tailor your search to your situation.
Meanwhile, many insurance providers offer free online interactive tools known as “life insurance calculators” that determine proper coverage amounts based upon salient circumstances and the individual needs of the insured. Folks wary of allowing an insurer with a vested interest in up-selling coverage to calculate the size of their policy may choose from any number of third-party calculators.
Hi, this is Liran Hirschkorn from ChooseTerm.com. Today I want to talk to
you about some news in the life insurance industry and some tips to help
you out. Specifically talking about protecting your life insurance
What do I mean by that? Over the last month, some major life insurance
companies like AIG, Nationwide, they’ve made agreements with states to pay
millions of dollars out to the states to find life insurance beneficiaries.
What’s happened is people have gone out, they’ve gotten life insurance
policies, but, their beneficiaries never knew about it. They died, money
went to nobody and the life insurance companies don’t find the
beneficiaries and money is not paid out.
The states sued the insurance companies and they’ve made some agreements
so, that life insurance companies are going to make more of an effort to
find the beneficiaries on policies by looking up death records in states,
versus social security numbers; so that people can actually get the death
benefits they are suppose to. Obviously, that’s why we buy life insurance,
to protect our families and provide a death benefit for someone in case of
What can you do to make sure this doesn’t happen to you? That when you buy
a life insurance policy you know and you want the peace of mind that your
beneficiaries are going to be able to get that death benefit when you pass.
Here are a few things that you can do.
Put your beneficiaries’ social security number on the application. This
way, if they don’t know about it the insurance company has an easier time
finding your beneficiary if their social security number is on the
application. Hopefully, that’s a last resort. The other thing you can do is
you can keep your policy in a safe place. This way, when the time comes and
you pass your beneficiaries have an easy time in finding your life
Hopefully, you have a file cabinet that’s fireproof in your house where you
put all your important documents. If you have a will you should have your
life insurance policies there, you should have your bank account
information there. You should have everything in one place to make the life
of your beneficiaries easier when it comes time to handle your estate and
collect benefits and take care of everything after you pass.
If you don’t have a fireproof safe perhaps you have a safety deposit box
maybe you should have a copy in your safety deposit box and a copy at home
if you want to keep things really safe. But, keep your life insurance
documents in a safe place. That’s going to help your beneficiaries find the
If you have right now kind of a junk drawer of important documents
scattered, a lot of people have that, file them away, keep them in a safe
place, maybe you can even scan them onto your computer under personal
folder, back it up on a hard drive. Do things to make your beneficiaries’
life easier when you pass so that they can collect on that death benefit.
The last thing you can do is tell your beneficiaries about the policy. A
lot of people don’t want to tell their kids that there’s this large sum of
money that’s going to come to them when you pass, I can understand that.
You don’t have to tell your kids or your spouse. If you don’t feel
comfortable telling them I have a million dollar life insurance policy but, you should
tell them I have a policy. You don’t need to tell them the dollar amount.
But tell your children, tell your beneficiaries that there’s a policy out
there so that they can find it when you do pass when the time comes; and
they can have an easy time to collect the death benefit proceeds.
Hopefully, this helps you out when you get a life insurance policy. Keep
everything in a safe place, tell your beneficiaries about it, keep their
social security numbers on the policy even if the carrier doesn’t require
it. That will give you more peace of mind and will make the life of your
beneficiaries easier and give them the funds that they need when you do
pass, to maintain the lifestyle that you wanted them to maintain by getting
a life insurance policy.
This is Liran Hirschkorn from ChooseTerm.com. You can visit our website
ChooseTerm.com to get a quote. Thank you.