How To Choose The Right Life Insurance Policy

How to choose the right life insurance policy for you

Choosing a life insurance policy for you is a task that should not be taken lightly especially if you have dependents that rely heavily on you to survive. You will need to carefully consider what and who it needs to cover. For instance, do you need a single policy to cover yourself as the main earner in the house or are you looking for the best life insurance for families for coverage for every member of your family? In addition, you will have to look at the duration of cover needed and the insurance amount. Yes, the task of choosing the right life coverage policy is a tedious one! However, this task can be made a lot simpler if you understand which policy is ideal for you and why. Continue reading to know five crucial factors that you should keep in mind while shopping for life insurance plans online. Here is my post on how to choose the right life insurance policy.

Insurance Amount – how to choose the right life insurance policy

While there are various formulas that will help you understand the right insured amount for life insurance policies, a simple and accurate way to calculate which amount works for you is to calculate all your debts, mortgages and other financial obligations and multiply this amount by two times.

Being marginally over insured is always better than being marginally underinsured provided you can afford to pay the premiums for the chosen amount.

Keep in mind that certain life insurance providers might have a maximum insurable limit for people with certain professions.

Clearing your doubts by reading the contract and any terms attached to the life insurance plan is always recommended.

Cost Of Premiums

The cost of premiums for life coverage plans depend on a lot of variable factors that are not limited to, the age of the insured individual, the insured sum, the gender of the potential policyholder, the current health condition of the policyholder, any pre-existing medical ailments, any genetic markers and family ailments and the lifestyle of the potential policyholder.

The premiums you pay to the insurance provider are also subject to other factors such as if additional value-added features are purchased.

At times, insurance providers offer attractive prices for adding an additional member such as a spouse to the policy. Some insurers might also offer good deals on additional coverage such as funeral expenses plans.

Shopping around by comparing 5 or more insurers will help you understand which life insurance plan is ideal for you. Price comparison websites that are designed to compare multiple plans often help you complete the comparison task with ease. You can also read these Colonial Penn life insurance reviews, as well as reviews for any other company you are interested in, and see what real customers have to say about a particular provider.

A word of caution to be noted, you should always choose a policy that suits your budget, as purchasing a policy that is very expensive will do you no good if you fail to make payments, as this, in turn, will lead to a lapsed policy. Looking at a range of policy reviews such as selectquote reviews and understanding your budget before purchasing the policy and choosing a plan that offers you added bonuses such as loyalty points, reward points, cash-backs, and instant discounts is a recommended plan of action.

Guaranteed Acceptance Policies

The most common reasons insurance providers refuse to renew life coverage plans include a change in the health status of the policyholder, a change of profession, losing a job, a sudden disability, a new habit such as smoking or a new life choice such as getting married.

Some insurers might also refuse to renew plans if you fail the medical tests for nicotine detection and health issues.

The norm is that guaranteed acceptance policies cost higher than policies that are subject to being renewed upon the sole discretion of the insurer. Guaranteed acceptance plans are an ideal choice for people aged 40 years or above, and for people with pre-existing medical conditions.

Guaranteed plans are also ideal for those policyholders who do not wish to change insurance providers in the future and want to be prepared for sudden changes that can affect the insurer’s decision to renew the policy.

This being said, the insurer has the right to cancel such plans, if the policyholder fails to make regular payments towards the premiums.

In addition, hiding facts such as pre-existing health conditions on the application and not informing the insurer of additional health issues once the policy is active might lead to a cancelled policy.

Stepped or Level Premiums

Choosing a plan with the right type of premium payment is very important as not all shines is gold, sometimes it’s just attractive yet manipulative marketing strategies. Stepped premiums seem attractive at first; however, these premiums slowly increase with time.

Level premiums, on the other hand, might cost more but they allow for you to know exactly how much to keep aside for premiums every month and they do not shock you later.

Moreover, purchasing a policy with the inflation option might result in higher premiums that increase with time and this is not recommended for people on a fixed budget.

Most insurers also give lower premium quotes to policyholders who decide to pay the premiums every month rather than every 3 to 6 months. Paying your premiums on time can also lead to added benefits such as future discounts when the plan is due for renewal.

Maximum Age of Insured Person

If you are seeking a policy for you that allow you to get life insurance coverage until the end, then opting for plans without an expiry of age clause can be helpful.

Such policies are perfect for people who are above 50 years old however, they cost a tad more than policies that expire when the policyholder is 70 to 80 years old however they are worth the peace of mind.

The norm is that these policies are given until the policyholder is 99 years old, which indirectly implies that there is no cut off age for renewing the policy as the insured person gets older.

The Final Decision on how to choose the right life insurance policy

Life insurance policies that can be tailor-made to suit your every requirement are a blessing for policyholders who are willing to spend a bit extra, however, if you are on a budget then choosing a policy with transparent terms and money saving options is a good way to go.

Purchasing life coverage plans online is ideal for not only people who would like to save an extra penny, but is also perfect for policyholders who want to compare, review, and then make an informed decision based on the research you have done.

I hope this post on how to choose the right life insurance policy has helped you. You should also check out life’s milestones and the ones where you will need good insurance cover.

Award-winning writer, blogger, social media consultant and charity campaigner. Social Media Manager for BritMums, the UK's largest parent blogging network Freelance clients include Firefly Communications and Save the Children UK. Works with brands on marketing projects. Examples include Visit Orlando, Give As You Live, Coca-Cola and Kodak. Cambridge Law graduate with many years experience working across three sectors in advice, media relations, events, training and project management. Available for hire at affordable rates.

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