How do I compare life insurance policies?
To find a comprehensive life insurance policy at the best rates, look into how coverage amounts affect your premiums, the flexibility of your policy options and additional riders or features specific to the providers you’re interested in. Life insurance rates.
To simplify the process of comparing different policies, ask yourself:
How much coverage should I get?
Given the general unpredictability of life, there’s no one universal answer for how much coverage you should buy. Experts will tell you to start with a multiple of your annual income — up to 10 times your salary. Generally, you want to determine an amount that will cover immediate and ongoing costs after you die, so that your family and other dependents can support their current way of life.
How much life insurance do you need?
Answer three questions to see the coverage we recommend.
4 ways to work out how much coverage you need
When determining how much coverage is enough to protect your family, consider your debts, living expenses and lifestyle. Also plan for how your loved ones will pay for your funeral, burial and related expenses.
What affects my life insurance premiums?
To calculate your policy’s premiums, life insurance providers engage a complicated review of your age, health and lifestyle called underwriting. They often run these details through proprietary algorithms and analytical tools to determine the level of risk in taking you on as a policyholder.
How a life insurance provider rates you within each category varies, but most consider:
Your age. Age is the No. 1 factor that determines your premiums. Generally, the younger you are, the less of a risk you present to the insurer — and the lower premiums you’ll pay.
Your gender. Women generally live longer than men. Because this means a policy will likely be longer, they tend to have lower premiums than men.
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Your health history. If you have a history of medical conditions, an insurer might consider you a risk for future, more serious issues, bumping up your premium accordingly. If you can prove to the insurer that you’re managing any existing condition, it might help you lock in a lower rate.
Your occupation and lifestyle. If you work in a dangerous field or embrace life like a daredevil, potential insurers may consider you a person with high potential for death. Because most insurers will assume an inevitable policy payout, your premium will undoubtedly be high.
Your relationship with alcohol and nicotine. Drinking and smoking are risks to your health, and you could end up paying double the life insurance premium for those with less risky habits.
Your family’s medical history. If you come from a line of relatives with serous health issues, especially hereditary conditions, insurers might conclude that you will too, resulting in higher premiums.
Your driving record. Today, many insurers consider your actions behind the wheel when determining costs. If you’ve racked up driving violations or serious convictions, you might pay higher rates.
Should I buy insurance through a broker or directly from an insurer?
You have options when shopping for a life insurance policy. Today, you’ll find brokers that work with a range of companies to help you find the best prices in their network on the coverage you need, but they may not offer the personalized service you’ll find with a direct agent.
Both broker and agents work on behalf of providers to sell you a life insurance policy. It all comes down weighing each against what you’re looking for.
I’ve already got life insurance in my retirement plan. Is it enough?
Many retirement plans provide members with a default level of coverage that you can increased, decreased or cancel altogether. If your employer matches contributions through a 401(k), your plan most likely includes default coverage.
To know whether your 401(k)’s coverage is sufficient for your situation, consider the benefits and drawbacks of investing through your retirement plan.
Am I eligible for coverage if …
I am a non-US resident? Yes. A number of insurers are willing to provide life insurance to nonresidents, especially if you’re in the US for work or family. You must apply for the policy in the US and be willing to take a medical exam.
I am over 70? Yes. Most insurers provide life insurance to applicants up to age 75, and a few offer coverage for applicants up to age 80 or even 90. If you’re eligible, the insurer may reduce the level of coverage you’re able to receive.
I have a pre-existing condition? It depends on the nature of your condition and any treatment you’re receiving to maintain it. Insurers either exclude the condition from coverage, request more details about your condition or automatically accept it. Eligibility and requirements differ among providers, so you might want to speak directly with an agent about products that meet your needs.
I work in a high-risk job? Yes. But it’s likely you’ll pay a higher premium for coverage than an office worker will. If you’re in a high-risk industry, talk with an insurance expert about your chances of finding an insurer willing to offer competitive coverage for your occupation.
How to get quality protection that won’t break the bank
When it comes to life insurance, you don’t want to overpay. But you also want a policy that leaves your family underinsured when they need it most. Here’s how to make sure you’re getting adequate coverage within your budget.
Can life insurance fit into my budget?
You may find it surprising how little a life insurance policy can cost monthly when compared with other expenses. Budgeting for life insurance is often easier than some of the other expenses you might be shelling out monthly:
How do annuities work?
An annuity is long-term investment tool designed to pay out your death benefit as regular income to you or your beneficiary, rather than as a lump sum. Life insurance annuities earn interest at either fixed or variable with either immediate or deferred disbursal.
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Fixed annuities earn interest a rate that’s fixed at the time you purchase your policy. While a variable annuity earns interest at a rate that depends on the market, which makes it more like an investment that increases or decreases over time. Your money is distributed into a subaccount that’s managed by a pool of investors, and what you’re paid depends on how well your investment does.
When it comes to how quickly you’ll get paid, you can either set up an immediate annuity that pays right away or a deferred annuity that disperses cash at a later date that you agree on.
Keep in mind that your annuity is valid only as long as your insurer is in business. When you’re looking for a policy, shop with highly rated companies.
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