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6 Things You Should Know About Life Insurance

Life insurance sounds like a simple concept on the surface. You and the insurer are gambling on your life in order to protect your loved ones. The insurer assumes you will continue to prosper and pay the premiums while you are hedging your bets in case you meet an untimely end. Hopefully, the insurance company will win! But there are a few bits of knowledge that can help you choose the best policy.

Term or Perm?

First, do you want term or perm (whole life)? Term insurance covers you for a pre-determined length of time while “perm” is insurance for a lifetime. Once the time runs out on term insurance you either have to renew or drop the insurance and there is no peripheral benefit. If you choose perm, the policy will build up equity that you can borrow against, much like your home’s mortgage. Perm is more expensive than term and while you may have an emergency when you need to borrow money, there are better sources to obtain such funds from such as a credit union or your bank.

Take Advantage of Good Health!

Secondly, the healthier you are the less you will pay in premiums and the more coverage you can buy. Someone with a pre-existing medical condition such as diabetes, high blood pressure, etc., will pay more than a person with no health issues. This is because the insurer is more likely to have to pay the full value of the policy. It pays to shop around if you have any issues that compromise your health.

However, do not lie on your application! Some insurers require a thorough physical but even if they don’t and your death results from a condition that you weren’t honest about, your policy will not pay off.

Did you know that your bad habits cost you money even when you buy life insurance? Insurers know that smoking will probably shorten your life and they won’t collect as many premiums from you as from someone who doesn’t smoke. That means they’ll charge you more-if they’ll cover you at all. The same reasoning applies to your weight and to your hobbies; a weekend skydiver can pay more than others or not be able to get insurance at all.

Fourthly, buy insurance when you are younger. The older you are, the more life insurance will cost.

Review and Compare

Fifth, be sure to review your coverage every year. Did a beneficiary die or did you start a family? Did you buy a new house or an investment property? You may have decided to sell your house and rent rather than own; all these things affect the amount of coverage that you need.

The sixth important thing to know is that shopping around will not only save you money but could get you a better policy. Use the internet for online quotes so that you can compare the data in quiet and privacy. Look at coverage amounts and see if more coverage would actually cost you less. Online quotes are the best tool you have to get a good policy at a great price.

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