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Looking for a new life insurance policy? If you aren't already familiar with the details and terminology of the industry, you begin with a significant disadvantage. Easy fixes to that disadvantage include diligent research and targeted discussions with an experienced life insurance broker.
Don't be discouraged by the overwhelming abundance of information on how modern life insurance policies work. Follow these 5 key selection tips, and you can find your ideal policy in a minimal amount of time.
1. Set Your Life Insurance Goals FIRST
The first step in finding the right policy is to set clear goals of what you want the insurance to accomplish. Remember that life insurance is, at bottom, all about relationships. You could get started today with a small policy and bolster it later on when your goals become clearer, but you can't find the ideal policy until you first define it.
Most people take out life insurance to add financial security should they pass away at an "untimely time." Others want their family to have the death benefit regardless of when they pass away. Still, others build their policy to protect a mortgage, a small business, estate planning, or retirement income.
2. Acquire Basic Insurance Terminology
To understand which policy is better for you in your situation, you have to grasp basic life insurance terminology. This can be bewildering at first, but a little effort, and you can master it - which is the key that opens the door to evaluating policy features and customizing your plan to your exact needs.
"Premium" is pretty straightforward, but you also have to delve into "cash value," "dividends," "annuity," "participating" versus "non-participating" policies, "underwriting process," and more.
3. Learn About Different Policy Types
The most basic division of life insurance policies is between term life and whole life. But that is just the tip of the iceberg - for there are a dozen or more specific policy types to consider, each one of which can be hyper-customized to your precise needs.
And even when you know the "type" of policy you want, there is still the question of how "big" of a policy to buy. You will need to calculate the appropriate benefit size by multiplying your annual income by the number of years the beneficiary would likely rely on the benefit. You can also use online life insurance calculators, add up the likely expenses that would need to be covered, and mull it over with an experienced agent.
4. Ask Yourself How Long You Need Coverage
Not everyone needs life insurance coverage permanently. If you want a permanent, guaranteed death benefit for your beneficiary, then you need a whole life or universal life policy. Otherwise, look for a form of term life.
You can buy a new term life policy each year, but continually renewing it like that would raise your premiums each year too. So figure out if you need coverage for 5, 10, 15, or 20 years and then stick with that.
5. Be Very Careful About Which Insurer You Choose
Choosing an insurer is as important as choosing a policy when it comes to life insurance. You must find a reputable, reliable company that you KNOW will be there to faithfully payout should the time come. If you get an interest-bearing policy, make sure the insurer invests all funds prudently.
To learn more about how to select your best life insurance and insurer, or for a free quote, contact Summerlin Benefits Consulting today!