Many people buy life insurance without knowing what to look for when purchasing. They know that they need a life insurance policy and will sign with any company with the most affordable life insurance costs.
We will discuss why life insurance is essential, the various life insurance policies available, and what to consider when choosing a life insurance company to help meet your life insurance needs.
Why Does Life Insurance Matter?
If you have never bought life insurance before, you are probably asking yourself, “Why do I need life insurance?” Well, life insurance means protection.
Life insurance offers protection for your family and loved ones after you pass away. An insurance policy will pay out a death benefit to your designated beneficiaries following your death to help cover the loss of your annual income.
An income replacement is beneficial because death can be costly. For example, your family will need to pay for your funeral expenses or any remaining debts like your mortgage. Life insurance coverage can provide your family with the money they need to bolster their financial strength and cover any unexpected costs.
What To Look For When Choosing A Life Insurance Company
Life insurance cost:
Captive or non-captive agents:
In the life insurance industry, agents can be either captive or non-captive. Captive means that the agents work for one specific company, whereas non-captive means that they can work for several, selling various policies like a broker. Most insurance companies with captive agents will be biased towards their products, no matter whether they are best suited for you or not. We recommend working with an insurance broker for a more unbiased service.
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Customer service:
Funeral insurance vs funeral bonds
What Policy Is Right For You?
There are various life insurance types available, each with its benefits. You will need to choose a life policy that best suits your lifestyle, financial plan, and comfort level. We recommend reaching out to an insurance company to speak to a broker to determine the best life insurance policy. In the meantime, compare the types of life insurance policies:
- Permanent life insurance: Permanent life insurance products offer lifetime coverage. Unlike term life coverage, you never have to worry about your coverage expiring. There are two main types of permanent insurance: whole life and universal life.
- Whole life insurance: Whole life offers coverage for the insured's entire life. Its cash value component grows at a guaranteed rate.
- Universal: Universal offers coverage for the insured's entire life, plus the accidental death benefit. Its cash value grows based on market performance.
- Indexed universal life insurance: Uses subaccounts to track the stock market's performance without investing directly in those securities.
- Variable universal life insurance: Variable invests directly into the securities, much like a mutual fund.
- Term life: Term life insurance coverage only covers you for an outlined term, typically ranging anywhere from 5-20 years of your life.