You may not be thinking about it at a certain age, but life insurance coverage is a very important safety net to invest in to afford your family and loved ones some peace of mind. However, just like the marketplace for other lines of insurance, you may feel overwhelmed by the options that are available to you. Here are a few things to keep in mind as you look at what’s on the table, from terminology to the factors that play into the cost of life insurance.
Term Life vs. Whole Life Insurance
There are a variety of insurance products on the market, but it’s important to know what you’re looking for when looking for the right life insurance policy. Providers like SBLI Life Insurance offer different options, starting with term life insurance. Term life coverage provides protection for a given period of time, guaranteeing payout as long as premiums are paid during that time period. Term life policies do not allow insured parties to borrow against the death benefit, the amount of money given to your beneficiary upon your passing.
However, whole life or permanent life insurance, while traditionally more expensive each month, provides coverage for a lifetime so long as the monthly premium is accounted for. The insured can also borrow against that amount of coverage to help take care of outstanding expenses in the here and now. Whole life and term life coverage usually require a medical exam to determine the risk associated with providing insurance to applicants. However, final expense policies do not require that exam, as they are simply designed to cover funeral expenses upon your passing.
What Impacts an Applicant’s Premiums?
Life insurance companies take into account numerous factors to determine how much you pay in monthly premiums. A physical exam is usually required for insurance products to assess your current health to determine where you rate as overall risk. Your medical history is taken into account to determine any history of illness or history of ailments within your family. Your habits are also taken into account. This may impact the amount of coverage that insurers may provide based on a given situation.
Tobacco users are often charged more for life insurance coverage because of the risk of illness that has been associated with smoking and secondhand smoke. Your hobbies and line of work are also under evaluation. If you engage in activities that are considered high-risk, insurance companies consider these behaviors to be a red flag, even in the safest of environments and conditions. Age can also impact premiums, which is why experts recommend purchasing a term life policy for a small amount of coverage at a young age and building up that policy over time.
Insurance Company Reputation
You are looking for financial peace of mind for your loved ones when you purchase a life insurance policy. In purchasing that peace of mind, you want to be sure you’re trusting an insurance company with a solid reputation for payout to beneficiaries. Be sure to explore the life insurance market while getting an understanding of the customer service offerings of each company and checking past reviews from applicants to that particular company.
In addition to just a personal reputation, you’ll want to evaluate an insurer’s financial data to know that they will be able to back up your guaranteed death benefit. Explore the financial ratings through AM Best, Standard & Poor’s, and the Better Business Bureau to get an understanding of where a life insurance provider ranks amongst its competitors. There are plenty of options throughout the insurance industry, but you want to make sure that the life insurance policy you sign on for is filling your needs and the needs of your beneficiaries upon your passing.