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Life insurance offers protection for your family’s financial security. Many people buy themselves a life insurance policy that will protect their family. It’s also possible for people to purchase life insurance policies for someone else. For example, children can purchase policies for their parents and vice versa.
Life insurance coverage offers valuable financial protection. You need to find a policy that meets your coverage needs and fits your budget. Here are three tips that will help you find the right fit:
Understand policy options
Premium rates vary based on the kind of policy you choose. There are two broad categories of life insurance—temporary and permanent.
Temporary life insurance, or term life insurance, offers a death benefit payout if the insured passes away during the time frame the policy covers.
Policyholders can choose the length of the term and the death benefit amount. Some companies offer additional coverage options, called rides, that can be attached. These range from accelerated death benefit riders to return of premium riders. These additional riders add more value to the policy, which also affects the rates.
Permanent life insurance has its own two categories—whole life and universal life. Both kinds of permanent life insurance accrue cash value over time. The cash value can be used to purchase paid-up additions, pay premiums or be borrowed against.
Like term life insurance policies, policyholders can choose to add additional coverage with riders. Riders vary by company and affect the monthly premium.
Whole life policies typically have the highest premiums because the coverage is permanent, and there’s generally a guaranteed cash value growth rate. Most whole life policies come with high death benefit amounts. Policyholders can choose the amount when they sign up for the policy.
However, for those who need less coverage or only enough to cover funeral expenses, final expense insurance policies are a great option. Final expense insurance is designed for seniors. It’s a type of whole life insurance, but the death benefit amounts are much lower. Because the death benefit is only enough to cover funeral expenses, premiums tend to be lower.
There are a few kinds of universal life insurance policies. The biggest difference with these policies is how the funds are invested. The cash value of variable universal policies is invested in multiple accounts, including stocks and bonds. The cash value of indexed universal policies is invested in indexes, which are diversified investments.
Because there is no guarantee of how the cash value will grow in the investments, universal life insurance premium rates tend to be lower than whole life insurance premium rates.
Work with an independent agent
While the various types of life insurance are common among life insurance companies, not all companies carry every kind. It’s a good idea to know what kind of life insurance policy you want before starting to work with companies.
If you’re not sure what kind of life policy you want, work with a life insurance agent to ensure that you find an affordable policy that meets your coverage needs. A licensed agent can help you through the entire process of selecting and applying for a policy.
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Working with a licensed independent agent also has other advantages. The specific terms, riders and premium rates can vary by company. Independent agents sell policies from multiple companies, so they can help you compare similar policies across companies.
An independent agent can help you understand the underwriting process and find a policy that is a good fit for your situation. In addition to comparing coverage and terms across companies, an independent agent can help you compare premium rates.
Working with an independent agent makes the research process easier for you because you don’t have to reach out directly to companies. Instead, you can work with one person to find the best company and rate for you.
Use quote websites wisely
While some people like working with an agent, others may prefer to do independent research. Quote websites come in handy because they make it easy to quickly view your options.
There are many life insurance quote websites to choose from. So, how do you know if you’re working with a good company?
First, it’s important to understand what kind of quote website you’re using. Some websites, like Geico and Progressive, show quotes from multiple life insurance companies. These quotes allow visitors to compare their policy options across companies. However, these companies just show quotes and connect their visitors to companies.
Others, like Bestow, HavenLife and Ladder, only show quotes for the policies they offer. These companies help their clients through the application process, which is another benefit of working with them.
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Others, like Quotacy, show quotes from multiple life insurers and help their clients through the application and underwriting process. Quotacy agents even assist their clients in making updates to their policy after they purchase a policy.
Second, it’s important to know what kinds of policies the website shows. Many online tools focus solely on term life insurance. While this is a shared characteristic across many quote websites, each one has its unique features.
For example, Ladder stands out because its policies allow policyholders to adjust coverage during the term as their needs change.
In contrast, other quote websites show quotes for different kinds of permanent life insurance. This is true of many sites that only offer quotes, like Geico and Progressive. Websites that offer more comprehensive services, like Quotacy and Policygenius, also offer quotes for permanent life insurance policies.
Finding affordable life insurance
Life insurance offers valuable financial protection for your family. It can pay off remaining debt, cover funeral expenses and even replace income.
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While the protection offered is highly valuable, it’s important to find a plan that fits into your monthly budget. The first step is determining what your needs are and which kind of life policy best meets those needs. From there you can work with an independent life insurance agent and do your research into policies and premium rates offered by different life insurance companies.
This article originally appeared on Credit.com.
