How to Buy Term Life Insurance

When debating what type of life insurance to purchase, you may consider term life insurance. This type of insurance is pure insurance coverage, as opposed to whole life insurance, which is insurance in combination with an investment. As a consequence, the premium for term insurance is considerably less than whole life for the the same death benefit. Term life insurance pays the policy’s face amount to a beneficiary when the insured person passes away. This article offers several suggestions for buying term life insurance.

Determine your life insurance needs. Life insurance is primarily used to pay off any personal debts and support your dependents in the event of your death. Dependents include children, spouses, and anyone else who depends on your income. If you have no dependents, however, you may have no need for a term life insurance plan.

There are still costs of funeral and burial to be paid, so you should have sufficient liquid assets to cover those costs if you choose not to purchase life insurance.

You may also be required by a lender to purchase life insurance.

Even stay-at-home parents needs life insurance. If they pass away, the remaining spouse will have to pay for child care.

Choose term over whole life insurance. Whole life policies basically combine savings accounts and insurance into one product. The payout (death benefit) is the same whether you buy term or whole life. The difference is that the cash value builds in the latter, which can then be borrowed or cashed out during the insured period.

For this reason, whole life policies are more expensive than term life insurance.

Many financial professionals advise against whole life policies, in their belief that you can get a better return on your money by investing it yourself, rather than giving it to the whole life insurer.

However, whole life coverage is a form of forced saving that can be beneficial for people who find it hard to save.

Many people avoid buying life insurance because they think they will not be able to afford it. However, term life insurance can be very affordable, particularly for a young, healthy person. Before you decide not to get life insurance, get a quote and find out how much the insurance you might need will cost. It will likely be less than you expected.

Consider the peace of mind you will receive from having insurance. If you are still undecided, consider that having insurance can ease your mind. You'll no longer be thinking about what would happen to your spouse and kids if something happened to you. Just make sure you get enough coverage to truly put your mind at ease.

Decide the term, or period of time, for which you want to buy the insurance coverage. This can range from 1 year to up to 30 years. Your preferred time period will depend largely on the future needs of your dependents.

For example, if you have children, take into consideration how many years your children will be living with you and under your immediate care. A working person with young children may want a term life insurance policy for 15 or 20 years, so that their children will be protected until they grow up.

Annual renewable term has the least expensive premium, but must be renewed each year at a higher rate (the older you get, the higher mortality rate).

In contrast, any level-term policy (in which the premium stays the same each year) has a savings element like whole life that allows premiums to be fixed. The benefits of longer term policies are the level payments and constant insurability.

Another consideration is how many years it will be until you can use your retirement fund.

Consider that with term life insurance, if you live past the length of the policy, and fail to renew it, you and your family members will not receive any money back.

Determine the dollar amount of coverage that you need when you look to buy term life insurance. You should have enough insurance to meet your needs. The goal is to provide enough money for your beneficiary to maintain the current lifestyle.

The standard rule of thumb is to have enough term life insurance coverage to replace 10 years of your annual income.

Search the Internet for a term life insurance policy using the term and dollar amount of coverage that you determined. You can easily receive a large number of rate quotes without having to talk to a salesperson. Check out the rates, coverage, and what features they have to offer. Your best plan should include features like:

The best claim settlement ratio,

Death benefits,

Affordable premiums,

Easy access (online, customer support), etc.

You should also check the fine print to see what exclusions apply to the plan. These exclusions, which could include suicide or war deaths, prevent beneficiaries from receiving a settlement in the event of the policyholder's death under these circumstances.

To find quotes, use online insurance brokers like Lifeinsure.com, FindMyInsurance.com, and Accuquote.com.

Call local insurance offices. If you don't want to search for policies online, you can also shop around locally. Consider calling a variety of insurance agents if you don’t normally qualify for a preferred rate. Preferred rates are given to those people who are determined to be in better-than-average health for their age and at low risk for premature death. This is determined by number of factors, including family medical history, the insurer's medical examination of the prospect, and others. Depending on the risks and how the company underwrites your condition, one company may charge you less than another for a term life insurance policy.

To find good insurance agents, get recommendations from friends and family. It's likely you know someone who has recently purchased term life insurance.

Avoid agents that try to sell you extra coverage on your policies or try to get you to switch to whole life insurance.

You may also be able to get life insurance through work, but should also do so if you have health problems that would prevent you from getting life insurance elsewhere. You may not be able to take your life insurance with you if you switch jobs.

Make sure the insurer is legitimate. Be sure to check the rating of the insurance company before you purchase any policy. There are independent agencies that regularly rate insurance companies. The following are the highest ratings available from these ratings agencies, whose ratings are available online:

TheStreet.com: A Rating.

Moody's: AAA.

Fitch: AAA.

Standard & Poor's: AAApi.

Try to obtain at least two ratings for any insurer you are thinking of buying coverage from. A company without perfect ratings is not necessarily disreputable, but you should always choose coverage from a higher-rated insurer when possible.

Buy the insurance policy when you are young and healthy. Premiums for term insurance are relatively inexpensive when you are under the age of 50 and in good health. While you should purchase the policy at a young age, it’s also recommended that you wait until you have children.

Term life insurance can cost as little as several hundred dollars per year for approximately $250,000 in coverage.

The amount that you pay in premiums each year will increase as you age. And term life policies are very hard to get after the age of 65.

People who take heart medication, are obese, have a high-risk job or smoke pay more than the rates of those in good health, also known as preferred rates.

Contact your insurance provider. Call your chosen provider or visit a local office to begin the insurance application process. The insurance agent will be able to help you identify a policy to suit your needs (if you haven't already chosen one) and can answer any questions you have. They will either arrange to have the remainder of the application mailed to you so that you can complete it or give the forms directly.

Go through the insurance application process. To apply, you'll have to fill out the application given or sent to you. Make sure all information is complete and correct. When you submit this form, you'll then have to submit medical information to be processed by the insurance provider. Finally, you'll receive an in-person medical exam from an insurance company representative. The agent will work with you to schedule a time and place for this exam. This exam is provided free of charge in most cases.

Receive your life insurance decision. After a few weeks of processing, you will receive a decision from the company regarding your insurance application. The decision will specify whether you qualify for coverage, the amount you qualify for, and what your premiums will cost. Keep in mind that this cost will not necessarily be what you were originally quoted.

Evaluate your term life insurance policy every few years. You may be able to save money on your premiums if your life situation has changed. You can also seek a higher coverage amount if your expenses or debts have risen.