Protecting your family is the single most important thing any individual can plan for during his or her life. Buying life insurance can be confusing, and a frustrating process. As an insurance agent, I am well aware of the details a customer must know to make the decision easier. In this article, I will offer practical advice on how to simply purchase life insurance.
Look for a company that has at least an AA-rating or above. Independent agencies such as Moody's and Standard & Poors rate insurance companies on financial strength., there's little or no difference in two companies with the same exact financial rating. You should feel comfortable with any company that has an AA or higher rating.
When it comes to pricing, don't be fooled into thinking that insurance agents determine prices and that you can negotiate. Insurance companies set prices and they depend on age, gender, health, smoking status, family history, activities such as scuba diving, auto racing, foreign travel, etc. Insurance agents are not allowed to offer customers any pricing discounts or incentives. Insurance companies offer different versions of the same product. Often you will see what appears to be the same product, but at a lower price. Normally, the reason for this is that the lower priced policy offers a weaker guarantee where the policy is not guaranteed for the full period. For example, a 10 year policy that is only guaranteed for the first 5 years.
When choosing a policy there are important details to consider such as selecting the guarantee period, determining whether or not the policy is convertible and if re-entry is available. The guarantee period determines how long the premium remains at a level rate. Once the guarantee period is over, the premium will increase. It is important to determine how long you will need the coverage and choose accordingly. Guarantee periods range from 1 to 30 years.
Most, not all, insurance companies will offer the ability to convert your term policy into a permanent policy during a given period of time. During this period, if you choose to convert your policy, you are not required to prove medical insurability. You will only be required to pay the new premium at your older age. The period of time you have to convert may be the guarantee period or less. It is important to check the policy description or ask your agent to make sure.
Re-entry refers to the point at which you want to extend or purchase a new policy with the same company. It is important to know if you will be required to take a new medical exam or simply pay the new premium. All companies have different rules and you should understand them before you make your choice.
Another important consideration is choosing your beneficiary. It is normally an easy decision when it comes to your spouse or partner, but not if there are minor children in your family. Minor children named as a primary or secondary beneficiary must have a guardian/custodian appointed to handle and distributions of funds according to state laws.
Choosing a life insurance policy does not have to be a difficult process. It also does not have to be done alone. Today, you have the choice of working with a local agent or shopping online. Internet websites such as CompleteLifeQuote.com allow you to search hundreds of products and offer you the final decision as to which one to apply for. The companies work with you to process your application and send your policy once approved. Customers can expect to save money this way simply because they are able to choose for themselves instead of having an agent push his/her company's products. I hope this article has shown you that making this important decision does not have to be a difficult process. Best of luck!
Mark F. Simmons
CFO, Complete Life Quote, Inc.