What Kind of Life Insurance Policy is Right For You?

What kind of life insurance policy is right for you from North Carolina Lifestyle Blogger Adventures of Frugal Mom

No one likes thinking about life insurance, but purchasing a policy means your loved ones will not find themselves in a difficult financial situation if you were to die unexpectedly. A life insurance policy will provide you and the ones you leave behind with peace of mind in case you’re diagnosed with a terminal or debilitating illness. I will tell you when my dad died, we found out just how important having multiple policies with different companies really was. I honestly never really thought about life insurance until my dad died from cancer. When my sister Karen died, she didn’t have a lot of insurance and I don’t know if I was so overwrought with grief from losing her, or it was the pregnancy brain ( I was pregnant with my first daughter when she did) but I never really gave it a lot of thought. Now that my husband and I are getting older we have started to have those tough conversations about the future. So this has led me to investigate and learn more about life insurance policies.  So keep reading to find out what kind of life insurance policy is right for you? 

Types of Life Insurance

These are the most common options:

  1. Whole life. A whole life insurance policy is valid for your entire lifetime, provided you pay the premiums. Some advantages include a guaranteed payout for your loved ones, premiums that do not increase, and cash value (which means a portion of your life insurance builds up cash value you can borrow against).
  2. Universal life. Similar to whole life insurance, you can also build cash value with this type of policy. You receive interest on your cash value and most policies have a minimum guaranteed interest rate. Some policies let you choose from various investments within the policy, but such investments don’t come with a guaranteed interest rate.
  3. Term life. A term life insurance policy is a more affordable option. Although the term of the policy can vary, clients typically purchase coverage for twenty years. In most cases, term life insurance policies only include a death benefit. Most insurance providers will give you the possibility to renew your policy once it expires, but the premiums will be re-evaluated. You will want to call around and get some term life insurance quotes to find ones that you can afford. 

A term life insurance policy is your best option if you’re on a limited budget and want to secure a death benefit for your loved ones. However, a whole life insurance policy is a better investment in the long-term since your premiums never go up and you’ll always have the option to borrow against a portion of the cash value of your policy. 

Cost Factors

It’s important to understand the factors that affect the cost of life insurance before you buy a policy. The type of coverage you buy influences the cost of your premiums, but insurance providers also look at different factors to assess how much of a risk you represent for them.

These factors influence how your premiums are calculated:

  1. Your medical history, existing health conditions, and weight
  2. Your occupation and any risks associated with your profession
  3. Any risks associated with your hobbies. Dangerous hobbies include skydiving and more.
  4. Whether or not you smoke or drink
  5. Personal information such as your age, gender, and your family history

A no-exam policy is your best option if existing health conditions, like I do,  or bad habits such as smoking and drinking prevent you from securing affordable premiums. Typically, a no-exam policy costs more than other life insurance products, but it might be your best option.

 If you cannot find an affordable policy, look into making a few changes to your lifestyle so that insurance providers will see you as less of a risk. You could, for instance, lose a few pounds, start exercising or walking,  quit smoking, or take steps towards managing an existing health condition.

Also, it’s smart to take the time to compare rates and policy benefits from several companies.

Selecting a Life Insurance Provider

Besides choosing a policy that meets your needs, it’s also important to select a reputable life insurance provider.

 It’s best to buy a policy from a renowned insurance company that will still be around decades from now. Your insurance provider should offer good customer service and take the time to answer all your questions about their products. Checking reviews and reports published by consumers’ associations will also help you choose a provider. And it also helps if you have a relationship with your agent especially when dealing with insurance. I remember one time our home owner policy was going to be cancelled but our agent figured out a way to put it in a bundle with our car insurance and we were able to keep our home owner’s policy where it was. 

Comparing life insurance products, learning more about insurance providers, and requesting quotes will save you money and help you find a policy that’s right for you. This process takes time, but you’ll enjoy greater peace of mind once you’ve made your purchase.

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