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How to Compare and Choose the Right Life Insurance Policy

By on October 7, 2020 0 738 Views

Most people put off purchasing life insurance because they are simply unsure of how to go about the process. Added to this, life insurance has a reputation for being expensive – although it really doesn’t have to be. Here, we’ve broken down the process to help you compare and buy the right life insurance cover. 

Choose Whether You Want Term Insurance or Whole Life Insurance

The two main types of life insurance policies are term insurance and whole life insurance. The biggest difference between these two plans is that term insurance offers you coverage for a specific number of years, while whole life insurance offers you coverage for the rest of your life. Whole life insurance plans also build cash value, so you can borrow money against it. A simple term insurance plan will suffice for most people. 

How Much Coverage Should You Opt For?

The amount of coverage you should get depends on your financial situation and commitments. For instance, if you have a mortgage, the coverage amount should be sufficient to cover the outstanding loan balance. If you have young children, the coverage should be enough to cover their expenses and put them through college (if you intend to pay for their college tuition). A good rule-of-thumb is to opt for coverage that equals at least 10 to 15 times your annual income, if not more. Of course, you’ll need to consider your savings and investments, and debts when choosing the coverage. 

How Long Should the Policy Last?

A term insurance policy usually lasts between 5 years and 30 years. A whole life insurance policy lasts for the remainder of your life. If you are buying a term insurance policy, it should last until your longest financial obligation is complete. 

How to Shop Around for Life Insurance?

You can compare the premiums charged by different life insurance companies either by doing your research online or getting in touch with an independent insurance agent. Keep in mind that it’s important to check if the insurance agent seems reliable. Watch out for agents who will try to upsell you a particular policy solely so they get a commission from your sale. 

Once you find a policy that seems like a good fit, you can go ahead and purchase the plan. While some insurance companies may allow you to apply for the policy online, some will require you to come into their office. Make sure to keep all your documents handy when you visit the insurance provider. 

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