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National Insurance Awareness Day | Five Things to Look for When Choosing a Life Insurance Policy Thumbnail

National Insurance Awareness Day | Five Things to Look for When Choosing a Life Insurance Policy

In honor of National Insurance Awareness Day on June 28th, it is worthwhile to know what to look for when choosing a life insurance policy. Leaving your loved one’s money when you pass is important, but you also want to be sure you are able to fit the premiums into your budget. Doing research while also working with a financial advisor can really help the process of obtaining a life insurance policy and maintaining it to get the most benefits for you and your family.

1. Policy Type

Term Life Insurance 

Term Life Insurance provides coverage during a selected “term” or periods of time. This could be 5, 10, 15, 20+ years. During the selected "term”, the insured pays a premium and their selected beneficiaries will receive a death benefit if the insured passes away. This type of life insurance is generally more affordable and ideal for people who have certain debts they would not want to pass off to their children. These types of debts could include student loans, car payments, a mortgage, or credit card balance. If the “term” ends, the insured stops making payments and they do not convert or renew the policy, they are no longer covered..

Whole Life Insurance  

This type of life insurance is generally more of an investment. Whole life insurance covers you from the day you sign up until the day you die. As time goes on, this policy establishes a cash value that can be cashed out or used as a loan once it has reached maturity. This is ideal for people who are looking for a more serious investment and who can pay more per month.

2. Personalized Pricing 

When selecting a life insurance policy, it is important to compare prices and shop around to see which policy type and provider work best for you. Pricing varies greatly based on the type of policy you get, where you get it from, and your unique circumstances. It is key to choose a policy that considers your health, travel history, smoking and other habits. The more extensive the policy gets, the more it can be tailored to you, meaning you may receive discounts for healthy habits and lifestyle choices. Some policies that look less into your lifestyle habits may come with higher premiums.

3. What Can You Afford

It is important to find a policy that fits well into your budget even when faced with hard financial times. The purpose of life insurance is to provide financial support to your loved ones after you pass. It should not cause you to struggle or deprive other aspects of your finances. Often, when people do enter tough financial times (divorce, losing a job), their life insurance policy is one of the first things they get rid of to cut down on expenses. It can be difficult to get another policy should you cancel it or let it lapse, especially if your health has declined. Keeping your policy affordable in the first place can help alleviate some troubles when faced with financial turmoil.

4. Option to Convert Policy 

Some term life insurance policies offer an option to convert the policy into a permanent one when the term is up. This could be something to consider when looking for policy that way you do have the choice to keep it when the term is up. This advantage allows you to not have to start your search all over again. This can be a great advantage if it has been a long time since you initially bought your policy as your health may not be as good as it once was, and you may face difficulties obtaining a new policy.

5. Living Benefits

To get the most out of your policy, it is important to consider policies that offer benefits while you are still living. Certain policies let you take out premiums you have already paid to help cover medical expenses or other care needed. It is important to remember that any money you take out will lessen the amount your beneficiaries will receive upon your passing. The money you put into a life insurance policy is to benefit your loved ones should you pass away so it may help alleviate some costs for them if you are still living and fall ill or become incapacitated.

Going the extra mile and doing research to get the right life insurance policy for you can reduce financial stress on your loved ones in the event you pass. It can be peaceful knowing your family will be well-cared for and now is the best time to start researching to ensure this happens. Talk to an advisor today to see how they can help you review your options.

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This content is developed from sources believed to be providing accurate information and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

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