Looking for a life insurance policy that covers all the bases can be confusing. With limited information most people have about life insurance policies, opting for one that’s reliable, and at the same time, offers mental peace, becomes a difficult choice.
One of the primary goals of a life insurance policy is to ease the financial burden on your loved ones in the future. And by keeping a few key factors in mind, you can identify several policies that help achieve this goal.
In this guide, I will explain how you can choose the best life insurance policy. But before I get to that, let’s analyze some famous types that most people opt for.
So, without further ado, let’s get started.
4 Popular Types of Life Insurance Policies
Based on your objectives, life insurance policies can be divided into:
- Whole Life Insurance: This requires you to pay fixed premiums, which are often higher than what your loved ones receive after its maturity. However, the upside of a whole life insurance policy is the fact that your loved ones receive a certain percentage of premiums you paid for the rest of their lives.
- Universal Life Insurance: This is similar to the whole life insurance policy, with one key difference. You can adjust your premiums and benefits in case your financial situation changes. If your overall cash values cover the insurance amount, then you can even skip the monthly premiums.
- Variable Universal Life Insurance: Your family receives a fixed benefit in this type of life insurance policy. However, premiums might change over time as they’re highly dependent on the performance of your investment, which is generally a mutual fund. Also, to receive the benefits, you might need to maintain a minimum balance in your account.
- Final Expense Insurance: This type of life insurance only benefits your family when you leave behind an outstanding debt, have unpaid medical bills, or cover the funeral costs.
How to Choose the Best Life Insurance Policy
Before you start your research, keep in mind that there’s no one-size-fits-all life insurance policy because every household’s objective can be unique. However, the good news is that with so many life insurance policies today, it’s possible to find the best one that fulfills your requirements.
Also, speaking from experience, ensure that your internet connection is up to par before starting your research.
Finding a sound life insurance policy can be a time-consuming and tedious process. You might need to download a lot of documents or attend online meetings with consultants to explore different plans offered by an insurance company.
For these reasons, I recommend you switch to a faster connection. Luckily, my connection, WOW! Internet, was reliable and fast enough to make this process a walk in the park.
Now, let’s find out how you can choose the best life insurance policy:
Analyze Your Needs
Your research should always start by assessing your financial needs. Determine how much you want to leave behind for your family so that they spend the rest of their lives without worrying about the financials.
However, it might sound easier, but there are a few more things you must keep in mind.
Firstly, never choose a life insurance plan without considering your current financial health. It’s possible that you might choose a whole life insurance plan, only to find out that you might not be able to keep up with the monthly premiums.
Secondly, assess the real worth of your assets. For instance, if you have a car, own a business or a house, or have anything of value, consider its worth as you may also leave it behind for your family. In such a case, choosing a high-end life insurance policy with costly monthly premiums might not be a reasonable choice.
Assess the Future Expenses
The goal of a life insurance policy should be to save your family from any financial troubles in the future. And, without taking into account the future expenses, you might not be able to choose the best plan.
Now, the future expenses can vary from household to household. While your goal might be to send your children to college, some people want to buy a new house in the next ten years. In any case, consider the major expenses that you believe will occur in the next few years.
Determine the Time Duration
The time duration of a life insurance policy determines the period you believe your family might need the financial support.Most insurance companies allow customers to decide the duration of an insurance policy.
However, insurance policies like whole life or universal whole life offer a certain percentage of your monthly premiums to your family for the rest of their lives.
So, even if you believe that your family won’t require any financial help in the future, such insurance policies ensure that they have a safety net in case anything goes wrong.
To conclude, I’d say that choosing the best life insurance policy can be instrumental in securing the future of your family. So, when you search for different policies, keep your current financials and future needs in mind to make the right decision.