Purchasing a life insurance policy is not a decision to be made lightly. You will need to be certain that you are getting the best deal that covers you properly. Since different policies and different companies vary in their coverage and premiums, you will need to research your options.
1. Read the entire policy carefully
You should never choose a life insurance policy based only on what you have been told. Take the time to review the paperwork carefully and ensure that you understand everything. If you have question, be sure to ask them. Your agent should be able to clarify anything.
2. Ask questions
Remember that the agent is there to sell you a policy, so it is up to you to ensure that you get everything clear before buying. Find out what the exclusions are and whether or not you will be able to renew the policy. Beware of an agent who answers questions flippantly. It is rare that anyone understands every policy well enough to answer every question without looking up information.
3. Check other policies
The first insurance policy you see is probably not the one you will buy. It is always a good idea to get a feel for what is available and to compare various types of life insurance offers before you make a final decision.
4. Consider your budget
When it comes to finding the right life insurance policy, your budget is going to have a big impact on what you select. Check the premiums and decide if they are realistic or not. If you end up paying too much in premiums, you may have to drop the policy later.
5. Term vs. whole life
In most cases, you should opt for term insurance, as it will save you money. The benefits of whole life insurance policies are rarely worth the extra money, though they may be better in some cases. Examine both options carefully and decide for yourself.
6. Keep your existing policy
Never cancel an insurance policy before you have another one in place. If something goes wrong, you really do not want to be left without insurance. In some cases, the policy you planned on getting may not be as great as you thought and you may revert back to the original instead.
7. Take a closer look at the riders
Most riders are expensive and unnecessary. While insurance agents are trained to upsell with additions to the policies they offer, most riders are just additional expense for very little benefit.
8. Ask how the adviser is being paid
Most insurance advisers receive one of three types of payment. They may get a fee per sale, a fee plus commission or they may get only a commission. If a commission is involved, keep in mind that the amount of the sale is going to matter far more than if the adviser receives a set fee.
9. Use an independent insurance broker
You should always comparison shop and an independent broker will help you compare multiple agencies. This allows you to make the best decision for your particular needs.
10. Consider the future
Will the life insurance be enough if your family grows? Think of your upcoming plans and factor future changes into the decision making process. You should also review your policy every few years to ensure it is still relevant.
Choosing a life insurance policy can be confusing, so do not rush things. If you need to research and ask questions, it is best to do it before you lock yourself into a policy. Take the time needed to make the best choice for you and your family.