Before we start, what does best mean? Is it simply the lowest premium? Not really. Here are my five tips to find the best life insurance policy:
• The insurance company must be completely reliable.
• The insurance itself must fit your long term financial plan.
• Do you need benefits other than a death benefit?
• The insurance company must have “easy to access” support.
• The premium must be affordable.
Tip #1 – Find An Insurance Company That Is Financially Secure.
The single most important element of a life insurance policy is that the insurance company has the financial strength to be there when they pay out your death benefit. There are several organizations that offer an assessment of the financial strength of insurance companies, but one that has been around for over a century is AM Best. You can register on their site and get their free evaluation of the company that you intend to purchase insurance from.
Tip #2 – Make A Forecast Of Your Obligations And Fit Life Insurance Into Your Plans
Life insurance performs several roles in your long term financial planning. First, and probably foremost, you need to provide for your family in the case that you are not there to do it yourself. That implies that you need to forecast into the future and determine just how much cash will be needed, and for how long.
That means knowing how much the mortgage is, and when it will be paid off. What are the monthly household expenses for food, utilities, clothing and the like? Are there college expenses in the future? Will you need to care for an elderly parent? Stretch the required expenses out over a time line and you will get an idea of how much money you need and when.
Some of the basic needs are met by a permanent policy that cannot be voided by the insurance company, so long as you make the payments. This is likely to cover expenses for your spouse.
Other expenses will peak at some point. College tuition, room and board, will not extend beyond the kids’ 22nd or 23rd birthday and your obligation to have money available to pay that expense will no longer be required. That implies that some form of term life insurance could fit into the plan, providing extra benefits when they will be needed.
Tip #3 – Look For Benefits Other Than Death Benefits
Permanent life insurance often carries with it other benefits, such as cash surrender value, which allows you to borrow against the policy for a specific need. College expenses, for example, could be met in part by loans against your permanent life insurance.
Further, some policies will allow you to use the borrowing power of the policy to pay the premiums. After the policy has been in effect for a period, usually several years and when you are in a less productive period of your career, you can continue to pay for the permanent insurance by borrowing against the cash value.
Tip #4 – Make Certain That The Insurance Company Has Easy To Use Support
It used to be that the best insurance support came from a local agent. Not so true anymore. With the immediate access of the net, you do not necessarily need someone in your neighborhood and online can be the most convenient way to do things in today’s world.
Tip #5 – Look For An Affordable Premium
After you have figured out what it is that you want and need, it isn’t a bad idea to save some money.
This article was written by Dave Olson, an expert in the Personal Insurance category at www.yoexpert.com.
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