When shopping for term life insurance, you want to find the right amount of insurance coverage at a reasonable price from a company you can trust. But for many people, getting started is the hardest part. That’s where the following Life Insurance Checklist can help.
1. What would you like your policy to accomplish?
Ask yourself what you want your life insurance to do. For example, do you want to have insurance coverage that:
o Pay for funeral arrangements?
o Pay the outstanding balance of a mortgage and other debts?
or compensate for the loss of your income? And if so, for how long?
o Contribute to the future education of their children?
o A combination of all or part of the above?
Knowing what you’d like to accomplish with your life insurance policy and roughly how much you need to accomplish these goals will help you determine how much life insurance you should consider purchasing. Online life insurance calculators are available to help you put a dollar value on the amount of coverage you need.
2. Who would you like to insure with the life insurance policy?
Most insurance companies offer a variety of life insurance products to fit your lifestyle and family needs. You can get an insurance policy on your own life, or you can get a policy on yourself and your spouse (called a joint life insurance policy). The most common joint life policy provides coverage when the first partner dies, leaving the life insurance benefit to the surviving spouse.
3. How long will you need life insurance?
It is not necessary to consult a psychic, although it does require that you calculate the timing of your life insurance needs. For example:
o When will your mortgage be paid off? The amortization period of your mortgage will often determine the length of your term life insurance policy.
o When will your children finish school? One day they will finish their education and it will not be necessary to have enough life insurance coverage to pay for their educational expenses.
o When do you plan to retire? He will have less income to replace at that time.
Knowing how long you’ll need life insurance coverage before you start shopping will ensure you’re comfortable with the life insurance product you end up purchasing. Online tools are available to help you determine which term of your life insurance policy is most recommended for people with similar lifestyles.
So now that you have the questions about how much, who and how long answered, you’re ready to buy.
1. Compare life insurance quotes from various companies:
It’s worth shopping around because life insurance rates can vary considerably depending on the product you choose, your age, and the amount of coverage you apply for. This is the easy part, because with the Internet you can easily compare life insurance quotes online at any time.
2. What life insurance rate has been quoted, standard or prime?
There are two basic groups of life insurance rates to be aware of when shopping for life insurance coverage: standard and preferred rates. Standard life insurance rates are the rates most Canadians qualify for, while about one-third of the population is eligible for preferential rates.
Preferred life insurance rates are generally offered to very healthy people and means you may pay a lower premium than most. Preferred rates are generally offered only once medical information and test results are known. It will depend on your blood pressure, cholesterol levels, height, weight, and family health history. But the preferential rates are worth it. They could save you up to 30-35% on your quoted premium.
When comparing prices, be sure to compare “standard to standard” or “preferred to preferred” life insurance rates. If you’re not sure, ask the broker. It would be disappointing to find out that you were quoted preferential rates at first, only to find out later that you don’t qualify for them.
3. Check the availability of the life insurance broker:
How easily can you communicate with the broker? What are your hours of operation? Whether through their website or over the phone, the life insurance broker should be easily accessible to you if you ever have questions or need to talk to them about a change in your life insurance needs. Look up toll-free phone numbers and extended hours of service as guides.
4. Review the medical information required to obtain the policy:
Generally, the more medical information you provide, the better the price. For a policy that asks few or no medical questions, you can bet the premium is higher for the same coverage than a plan that asks for more information. Depending on the company, your age, and the amount of coverage you want, you may be asked to provide blood and urine samples. To obtain the samples, a nurse will visit you at no cost to you.
5. Consider the financial strength and stability of a life insurer:
A company’s financial stability is something to consider if you plan to make a long-term purchase like life insurance. There are organizations, such as AM Best, that evaluate insurers and provide a rating on their stability and strength.
6. Ask about renewal options and requirements:
Once the initial premium is set, it is usually guaranteed for the life of the policy (often 10 or 20 years). But what happens when the policy expires? Most policies are renewable until you’re 70 or 75, so be sure to ask your broker if you’ll need to take a medical exam to renew your policy. While your premiums will be higher at renewal, find out if they’ll also be guaranteed to stay level during the second policy period.
7. Confirm that the policy can be canceled without penalty:
Most term life insurance policies can be canceled at any time without penalty. Be sure to check with your broker to see if the life insurance company has unusual cancellation policies.
8. Consider conversion options and policy restrictions:
As your life changes, so do your life insurance needs, and you may want the option to convert your coverage one day.
Converting a term life insurance policy means transferring all or part of the policy’s death benefit to a permanent life policy without a medical certificate. For example, let’s say you originally purchased a term policy to protect a mortgage and a child. Once the mortgage is paid off and the child grows up, you may want to convert the policy to one that provides a new premium level for the rest of your life and a death benefit that is guaranteed not to expire as you age. .
When you buy your life insurance policy, find out if there are any limitations on your age at the time of conversion. In most cases, you have the option to convert until you are 60 or 65 years old. Also, make sure you have several choices of the type of policies you can move into, the more the better.
Final Tip: Choose a Life Insurance Broker You Trust:
While it doesn’t necessarily affect the type of policy you choose to purchase, a good relationship with your broker is essential to feeling comfortable with the life insurance policy you purchase and the information you’ve received.