Having a life insurance policy in place will keep you from losing your sleep. This is because you don’t have to worry about your loved ones’ financial standing, in case of your sudden demise.
Numerous life insurance policies are available in the market and choosing the right one can be overwhelming. It would be best if you had a basic understanding of the different policies available, as each policy offers various benefits. Here are some of the factors you need to consider before you select a life insurance policy.
- Your Health:
The majority of the life insurance policies require a physical examination or ask you to provide answers to specific medical questions to find out about your health. On a global basis, the healthier a person is, the less expensive the insurance policy coverage will be.
Smoking is a huge negative factor when it comes to life insurance pricing. If you mention nicotine on the list, your policy cost will be quite high. Life insurance companies correlate a person’s health with their age. Hence, the older you are, the less healthy you are generally considered to be and vice versa.
- Duration of Need:
Life insurance policies are usually designed to cover two types of durations. That is, either to last a lifetime, which includes universal life and whole life policies or for a specified period known as term life policies.
Do you need a policy that would protect you for a specific time frame? For instance, you purchased a house recently on a 40-year mortgage and wished to secure it with a life insurance policy. Even during unforeseen happenings, your mortgage balance will be fully secured if you take up a 40-year term insurance policy.
However, suppose you’re looking for life insurance that will work as an income replacement for your spouse or as burial expenses after your demise. In that case, it’s advisable to opt for permanent insurance coverage.
- Budget Capacity:
Term life insurance policies are comparatively less expensive than permanent life insurance coverage. This is because term policy coverages remain only for a specific time frame and do not have any cash value built up within the policy.
For the term insurance policies, you get to select a particular time frame such as 10, 15, 20, or 40 years during which your life gets the protection. When that particular term period evaporates, you can still maintain that specific policy if you need it. However, as your health declines dramatically with your age, a new policy rate will be calculated at a higher rate. When it comes to permanent insurance coverage, the policy is for your lifetime and will have the same fixed amount of premium throughout the policy.
Are you seriously budget-minded while selecting the policies? If so, you can opt for Simplified Issue Term Life Insurance, also known as starter life insurance. Here you choose the product that suits your budget and convenience. If you consult is a licensed insurance agent with your need’s analysis, they may ask you to go for more coverage, and starter life insurance is a great start.
The age factor is one of the crucial elements that help you determine which product to choose and what products are available. The younger you are, you will have more options to select from. You will find that individual life insurance products such as basic term life insurance offers you the eligibility to purchase only up to the age of 60.
While selecting the life insurance policy coverages, you can consider the above factors before making a final decision. You can also get the help of a life insurance agent to assess your needs and situation to make the right choice. Having life insurance coverage is better than not having one, as it gives you a sense of security.