Choosing the best life insurance company is a snap!
If you are driving down the highway trying to find a specific destination. You will have two main goals you will want to accomplish. This will be finding your destination as quickly and as easily as possible. You will not want to spend anymore time driving than you have to. This is similar when shopping for the best life insurance companies to choose from
Also, you surely don’t want to encounter any unnecessary stress or aggravation along the way. This concept is exactly the same when searching for the best life insurance companies and policy designs. If you use an effective approach, the results will be exactly the same.
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Purchasing the best life insurance policy will require help from an experienced independent insurance agent. There is far too much involved to try to do this by yourself. Why would you even want to when there is no cost to have an agent help you. A captive agent like State Farm sells only one company. Captive agents limit your ability to shop the market which is virtually the same as driving with handcuffs on.
This will never work when looking for the very best life insurance rates. An independent agent uses most all of the most competitive carriers available. This way you are always assured of getting the lowest premiums. Getting the best life insurance policy is easy when you have an expert helping you.
Why do you actually need life insurance?
If your income suddenly stops from your untimely passing. Who is going to suffer from this terrible event? You will probably say it will be your spouse and your children of course. The bank that holds your mortgage will also suffer but they will simply pass the burden off on you dependents.
This holds true for your car payments, credit cards and anything else you have a financial obligation with. When the smoke clears, your dependents will be responsible for your debts. Finance companies are never very forgiving when it comes to unpaid loans.When you look at the full picture, you will see a huge financial mess. Your dependents will be caught right in the middle.
This will usually change your dependents lifestyle forever. Many people roll along without life insurance and just let their dependents walk that financial tightrope. They commonly use the concept that, “why should I worry about it, I will be dead”. I actually hear people say this all the time!
- Determining face amounts: Most life insurance experts recommend that you purchase enough life insurance to replace approximately seven to ten years of your income. The most important factor is can you afford to buy this much life insurance without breaking the bank. This will depend on how old you are when you buy your life insurance. If you have any medical conditions that can increase your rates.
- Special Care Dependents: You have any dependents that need special care due to medical issues either physical or mental. You should allow for more coverage to compensate for their extra needs.
- Large Families: If you have a larger size family with more than four children. You should compensate for this with additional coverage with a number such as $100,000 per child.
- Employer Coverage: Quite a few people have some life insurance through their employer. You cannot actually count on this type of life insurance because nobody has any guaranteed job security. If you do have life insurance through work. Just make sure you are covered properly on your own personal policy. Your employers life insurance could go up in a puff of smoke if you are terminated. This could also happen if you are laid off or your employer has a benefit cut-back which is very common
- Excessive debt: Some people have excessive debt above and beyond normal financial liabilities. This can stem from a home which is above their safe financial means. Also a larger than normal car payment can cause additional financial worries. Many times the average person will not consider this when he buys life insurance. Having that new Mercedes-Benz in the driveway is great if you can comfortably afford it.
Term life insurance:
There are two main types of life insurance to consider. These are low cost term life insurance products and permanent life insurance. Affordable term life insurance will be your best bet and it has the lowest rates by far. Just keep in mind that term is actually a temporary form of life insurance.
These plan designs have term periods of 10, 15, 20, 25, and 30 years. The Banner Life insurance company has recently came out with a 35 and a 40 year term product. This is great news for many of the younger people. This increase in the term period can help you find the best life insurance policy.
Always keep in mind that term life insurance has to be purchased with the correct term period. If you purchase too short of a term period you could find yourself without coverage when you still need it. It happens with many people each and every year from not planning correctly. You can also include universal life into your life insurance package for lifelong coverage benefits. Term insurance can also be converted to universal life at a specific time in the policy.
Universal life insurance:
Many times people will need life insurance for over 30 years which was normally the limit for term life insurance. There are actually two types of permanent life insurance product which are universal life and whole life. Whole life is not very practical due to the high cost.
Also, many of the companies have dropped it from their product line. The universal life insurance products are the best way to go if looking for life insurance that will last for the rest of your life.
No Medical Exam vs. medically underwritten policies
No medical exam life insurance for the most part means no medical exam required. In other words this means no para-med nurse coming over to pay you a visit. You still have to complete a medical questionnaire to apply and be approved. If there are any major health concerns listed on your application, the no medical exam part is history.
You would then have to complete a paramed exam to allow the insurance company to properly examine how much of a risk they are taking. If you are in good health, no medical exam policies are fine but they will always cost more in the long run. The most common version of these policies are final expense life insurance, guaranteed issue and simplified issue.
Full underwritten policies on the other hand are conventional types of life insurance that offer the lowest premiums as a rule. These types of policies require a medical exam performed by a nurse in your home or place of employment. They offer the lowest rates because the life insurance companies can learn more about your lifestyle and health history.
The life insurance companies can offer you the best life insurance policy at the lowest rates possible. Most people by far choose the full underwritten policy designs so they can receive the lowest premiums.
Other insurance products to consider:
- Simplified issue life insurance: The simplified issue product line can be built on a universal life or a whole life chassis. This type of policy will usually waive the medical exam but still requires a detailed medical questionnaire. The average limit for face amounts will be $250,000 but some companies will go to as high as $350,000. These policies will cost more than fully medically underwritten policies.
- Variable universal life: A variable universal life policy allows you to decide exactly how you want your cash value to be invested. You can make this decision on your own or have a financial professional help you with this. Just like investing in stock, you can actually lose some or all of your cash value with the variable version.
Some people need less coverage than others
- High Incomes: People with higher incomes and live within their means are a perfect example. Most Americans today life above their financial means and go from paycheck to paycheck. The upper income people tend to use more caution when spending money. They also tend to be more careful when using credit.
- Single people: Single people or married couples that have no children usually do not need as much life insurance. Especially if both spouses work and have steady incomes.
- No mortgage: If your home is paid off or you have a very small mortgage. This can have a major impact on the size of the face amount you need.
- Large Savings: Folks that have a considerable savings built up can go will a lower face amount also.
- Family heirs: Some people will be natural heirs to their parents estate which can create less of a need for life insurance. If an individual parents own property such as a home or business, this can make all the difference. The parents may also have their own life insurance that will pay a considerable face amount. All these factors will enable the son or daughter to purchase a much lower death benefits than other people will.
Life insurance policy for special purposes
- Divorce settlements: People going through a divorce can be ordered by the domestic relations judge to purchase life insurance. Applying for life insurance for a divorce settlement is just like normally purchasing life insurance. The only exception may be the court will order you to produce a life insurance policy quickly. This is where no medical exam life insurance can be beneficial. The no exam policies can have a very short turn around period as soon as 24 hours. Most of the reasons life insurance is requested is for children and their financial future.
- Commercial investments: Many times people that are buying a business or commercial real estate will be required to purchase life insurance. This can also for for partnerships with a first to die clause or key employee life insurance.
- Mortgage insurance: Periodically people that take out a loan to purchase a home will be requested to produce mortgage insurance. This will pay off the mortgage if the homeowner dies within the term of the mortgage.
- Buy/Sell agreements: Many times when an individual purchases a business, a buy/sell agreement is written up that would also require life insurance. This is more a a specialized type policy but is used regularly for mainly commercial purposes.
- Estate taxes: When people in higher income classes pass, their dependents will be required to pay an estate tax. This is where life insurance can be used to pay off the estate taxes so they are left with the full inheritance.
Riders can be beneficial in most cases but usually come as an added expense. Let’s take a look at some of the more common riders and you can see if they would be an advantage to you.
- Return of premium riders can enable you to receive all the premiums paid in if you outlive the policy term. For example, if you bought a 20 year term policy. You paid a grand total of $18,500 over the 20 year term period. The 20 years comes and goes and you are still alive. You will receive a check from the insurance company for the full amount you paid in. These policies have increased premiums so the life insurance companies can afford to do this.
- Accidental death benefit riders can increase your death benefit if you are killed in the outcome of an accident. Some companies offer these riders with an even more increase if you are killed on a common carrier. This would includes trains, airplanes and ships.
- Waiver of premiums riders can keep your coverage in force if you become disabled and cannot afford to pay your premiums.
- Accelerated death benefit riders can trigger your coverage under certain cases early if you are diagnosed with a terminal condition.
Always take the medical exam!
Don’t choose the no medical exam life insurance route just because you don’t like to take physical exams. The exam you will receive from an insurance company para-med nurse will only take about 15-20 minutes. This can save you thousands of dollars during the course of your paying premiums every year. I don’t like to take exams either but if there is a financial savings to be had, I will definitely take one.
The longer you wait, the higher the quoting rates go up. Buy your life insurance as soon as possible and lock in your rates. People are famous for procrastinating and this only can cost you money every month or year you wait.
Purchase low cost term life insurance
Your best bet will be affordable term life insurance 95% of the time, unless you need coverage for the rest of your life. If you decide you need permanent insurance, you can purchase universal life which will be much more cost effective than whole life insurance. You can also combine term and universal life together for a great money saving life insurance package.
Don’t waste your time with multiple agents!
All life insurance rates are regulated by law in every state of the US. If there is one concept you need to understand, insurance brokers and agents cannot discount rates. Life insurance prices are regulated by your states Department of Insurance. If an agent shows you rates from Prudential or American General for example.
These exact same rates will be shown by every other insurance agent in the nation with no exceptions. Even purchasing directly from the company will result in the same exact rates. If you find an agent or broker you like, stick with him or otherwise you will be simply wasting your valuable time and getting confused.
I really hope this information is going to make you a smarter consumer in your quest for life insurance. Reach out to a licensed independent agent that specializes in life insurance and get the professional help you need. A good agent can make the whole process easy and straightforward. We will be happy to answer any of your questions you may have about life insurance and how to apply for the best life insurance policy for your needs and budget.
All the best,
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