Choosing a Good Term Life Insurance Plan

Everybody needs insurance, and now-a-days, it seems as though the best bang for your buck is a term life insurance plan from a reputable company. As you know, when a person dies there are a number of expenses that must be taken care of, and if you don’t have some type of insurance in place,your family is going to have to take care of those expenses on their own!

Also, if you should die before you “earn enough money” to set-aside for your family, they might not have any money, and they’ll have to figure out a way to fend for themselves. And I don’t think that is a position that you would want your loved ones in.

No one wants to know that their family isn’t going to be provided for, so everyone knows it is important to have a life policy. However, you have to buy the right type of life insurance that will work for your particular situation and your needs.

More and more people are rejecting whole life policies these days and are leaning towards A term Iife insurance plan for reasons that just make sense for them. One of the main reasons people choose term life is because a term life insurance plan is a pure death benefit, its main function is to provide coverage of financial responsibilities for the insured.

It includes such responsibilities as personal, consumer debt; college education for dependents; and mortgage payments. A good term life insurance plan is chosen more often over a whole life plan simply because it’s so darn inexpensive! There are many affordable plans on the market that are touted by some of the highest rated major carriers in the industry. Just ask for as many quotes as you can stand perusing and start your quest today.

Know About Different Life Insurance Plans

Today, almost everybody owns a life insurance policy. It could be for various reasons like investment purposes or for tax benefits, but the key point is that it provides complete peace of mind. With insurance plans, one does not have to worry about their family’s future security in their absence. These plans provide financial security to the surviving family members after the death of the insured.

Insurance is a must for anybody who has financial dependents. The age bracket to buy a insurance plan is approximately from 18 – 75 years of age. Most of the banks have a minimum and a maximum amount of money to be assured.

Types of Life Insurance Plans

Broadly, the two main types of insurance policies are term insurance and whole life insurance. Term Insurance Plans are the most basic and simplest plans. These plans provide a cover for risks only for a short period of time. After the term comes to an end, you can renew the plan but chances are that the premiums will rise. These plans are economical.

On the other hand, whole life insurance plans are expensive but these policies continue for as long as the insured lives. These plans are sometimes treated as investment options because one does not receive any money till the death of the insured.

Other plans include unit link life insurance plans that offer great investment options along with financial security. Usually, one has to pay two separate premiums – one for the life insurance and one for investment. These plans are beneficial as they provide financial solutions during your lifetime as well as after your lifetime to your family members.

There are retirement insurance plans available for senior citizens too. Insurance policies are extremely important for such people as these plans offer security and freedom to the surviving spouse. Child plans are another choice in insurance plans. These policies provide financial aid for your child’s education, marriage, etc. Another option are the health insurance policies. Health insurance policies provide a cover for medical expenses. These plans are suitable for people who suffer from health problems like diabetes, cancer, etc.

Riders in Life Insurance

Riders are the additional benefits that one can add to their life insurance policies. However, the premium amount increases with the inclusion of these riders. There are several types of riders in insurance plans offered by banks. The most popular of all are:

Critical Illness Benefit Rider: It offers financial aid in case the insured gets diagnosed with critical diseases like cancer, heart attacks, kidney failure, etc. Accidental Death and Disability Benefit Rider: In case the insured becomes disabled following an accident, this rider covers this risk.

Tax Benefits

Tax benefits as per the Income Tax Act, 1961 offer a deduction in the premium amounts, investments, dividends, etc. However, these benefits are subject to amendment regularly.

These Plans protect the needs and requirements of your loved ones in case of unfortunate events. It helps keep your family safe and secure even when you are not around.

Selecting a Life Insurance Plan

When shopping for life insurance, it seems that most people just look at getting the lowest possible rates for the most amount of coverage. There is nothing wrong with that. But why do some companies charge more or much more for what seems the same plan? And if rates are not the same for the same plans with all companies, why do some people want to pay more for the “same” coverage? Are they just not interested in saving money on their life insurance? Do they know something you do not know? Here are some possible reason.

Convertibility

If you are considering a term life insurance plan, then you should also consider the convertibility option. This option simply allows you to convert you term plan to a permanent life insurance without having to go through more medical underwriting. This is important as even though you may feel that term is all you need or can afford today, in 10 years or more, as your health or needs may change, convertibility may be the most important aspect of your policy. If your policy is not convertible, you may lose your coverage when you need it the most. In addition, the ability to convert your policy is not the only important part of this option. What can your policy be converted to? You need to make sure that your term life plan is convertible to a high quality permanent insurance plan. Many companies offer great whole life and universal life options to convert to. Unless, you are absolutely certain that you will only need your plan for a term period (as with some business loans) make sure to request more information on convertibility.

Term Guarantee Period

With term life insurance, you must make check that your rates are guaranteed for the full period. In other words, a ten year terms may be cheaper with company A than company B but company A may have the option to raise rates at some point before the 10 year is over while company B will guarantee rates for the full 10 years. What may have started as the cheapest rate may end up the most expensive.

Customer Service from the Insurance Company and the Agent

We feel that customer service is of prime importance. You need a company that will keep in touch with you regularly and inform you of new programs that may benefit you. They also need to inform you about your policy. Most people get a life insurance plan and file it away and if you would later ask them about the plan they have they either would say that they have no idea or worst, they think they know but are incorrect. A good company will be easily reachable and answer your questions in a simple manner and tell you about your present plan and possible options available.

Riders

You may not need them today but who knows what your needs will be tomorrow. Riders can be important from the start or at some point in the future. Make sure that you are ware of which riders are available and whether or not they can be added later. Some may include:

  • Guarantee Insurability Rider (allows you to add insurance later with no or limited underwriting)
  • Waiver of Premiums Rider (pays your premiums in case of disability – read definition carefully)
  • Inflation Rider (adjusts or allows you to adjust your policy face amount based on a percentage you pre-select)
  • Disability Income Rider (pays you a disability benefit in case of a covered disability – read definition carefully)
  • Spouse Rider (allows you to add a spouse to your policy – this may be an inexpensive way to cover a spouse)
  • Child Rider (allows you to add a child to your policy – maximum age is usually 21 to 25)
  • Return of Premiums Rider (returns some or all of the premiums you paid to the insurance company)
  • Accident Rider (pays a benefit in case of accidental death)

Value Added Benefits

Value added benefits that are often free can give your extra protection, discount on products you are already using or even such things as scholarships for children and grandchildren. If you are already paying for some of these benefits with other companies then you can save money as your new life insurance will give them to you for free. When buying certain products or using certain services, with some life insurance policies, these products or services can be greatly discounted. In the end, look at the added benefits some companies are just giving you and see if this “more” expensive insurance plan is actually cheaper for you to have.

Other things to consider

  • Cost to have a policy mailed
  • Cost to get a loan on your policy (if you have a cash value policy)
  • Interest rate charged on loan
  • Effect of loans or withdrawal on the death benefit
  • Cash value growth
  • Agent availability
  • Customer service agent availability
  • Company financial rating
  • What other plans besides life insurance do they or they agent offer? – This may be helpful later when you need other coverage and do not want to have to deal with a whole new set of people.

We hope this article has helped you understand why price really is not everything. Sometimes when you think you are saving on premiums, you are actually postponing much higher costs in time and money later. We are always happy to hear from you. Your suggestions and questions are most welcome. Be well!