Six Things to Look for in a Life Insurance Policy

If you’re an adult with a house, a spouse, kids, or any financial liabilities, and you should consider buying a life insurance policy. With life insurance in place, you won’t have to lose sleep worrying about the financial burden your loved ones would inherit if you were to die unexpectedly.

What to Consider When Buying Life Insurance
But, what should you look for in a policy? And how can you know whether the life insurance you’re considering is actually ideal for your needs? Because of the wide selection of life insurance companies and policy details available, it’s smart to conduct some due diligence before you dive in.
To help with the process, we have provided a list of 6 things to look for in a Life Insurance Policy:

​#1: Affordability
An affordable life insurance policy is not only important now – it is important for the future, too. That’s because, when life happens and times get tough, life insurance is often one of the first items people stop paying for.

If you buy a policy that’s affordable, you’ll be much more likely to be able to hold onto it if you have to make any serious cuts to your budget. The bottom line: Plan on a premium you can afford to pay long-term.

#2: Immediate Payout
Did you know that there’s often a two- or three-year waiting period after purchase before an insurance company will pay out 100% of the proceeds upon death. If you want life insurance coverage that starts right away, this is obviously imperfect.
Make sure your policy pays 100% of the “face value” from day one if possible. Stay away from simplified issues policies unless it’s a last resort.

#3: Underwriting Leniency
You could be making a huge financial mistake if you buy a policy from a company that does not treat your particular health or personal activities fairly. Companies range widely on how they price out risks like diabetes, smoking, travel outside the U.S., or your family’s medical history.
Be sure to speak to a knowledgeable independent agent who can ‘shop’ various companies to find the best rates for your particular situation. If you don’t, you risk overpaying for a life insurance policy – or not being accepted altogether.

#4: Automatic Payments
While there are certain bills you may want to pay manually, life insurance is one of those recurring expenses that is usually best set up as an automatic bank draft or credit card charge – especially in the case of term life insurance where your premium stays the same.
The reason for this is simple: If you forget about your life insurance bill and don’t make your payment on time (or within your grace period, which is usually 30 days), your policy may be cancelled altogether. At that point, your issuer may not allow you to pay back your missed premiums, and they’re not required to reinstate your policy, either.

Look for a life insurance company that will let you pay your monthly premium automatically, and you’ll never have to worry about letting your policy lapse or missing a bill.

#5: Conversion Feature
If you’re looking into term life insurance, beware of policies that don’t allow you to “convert” your term policy into a permanent one. This feature typically allows you to exchange your term policy for a permanent plan (such as universal life or whole life) without proving you’re still healthy.
If you buy a 20-year term life insurance policy, for example, and decide after 19 years that you still need coverage but have developed some medical conditions since your initial term purchase, the conversion feature would allow you to keep your coverage, whereas you may not be able to qualify if you were to go back out to the market for a new policy. Most term policies include a conversion feature, but not all, so be sure to find out.

#6: Living Benefits
Thanks to a new wave of life insurance companies striving to meet consumer needs, there are more ways than ever to use life insurance while you’re living.
For example, many newer policies give you the option to receive payments if you get a chronic illness or need to be placed in a care facility. Several companies also give you 20- or 25-year windows at which you can get back some or all of your premium paid into the policy if you no longer want or need the coverage.
If you want the option to get cash out of your life insurance policy if you get cancer or need end-of-life care, then looking for a company that offers this option is a smart move.

How to Save Money on Life Insurance
Now that you know what to look for in a life insurance policy, you need to know the best ways to score a policy at the perfect price. As you shop for life insurance, consider these money-saving tips:

• Compare the costs of term and whole life before you buy. If you decide whole life insurance is best for your needs, that’s perfectly fine. But you still might want to shop around for term life insurance so you can compare costs. 
• Get several quotes. Applying for life insurance coverage with a broker such as USA Mutual Insurance that sells multiple policies is a much smarter move than visiting a life insurance agent that works with a single company. Ideally, you’ll want to get life insurance quotes from several companies so you can compare costs as well as policy details.
• Don’t buy way more coverage than you need. Buying the right amount of life insurance (and not too much) is one way to cut down on costs. A good life insurance calculator can help you figure out how much coverage you need.
• Buy now, not later. Last but not least, don’t put off your life insurance policy for another year – or even another week. The rates you’ll pay for coverage will go up every year, no matter what. The sooner you buy, the better chance you have at affording the level of coverage you need.

If you have additional questions about Life Insurance or need help with getting a policy, click here to speak with one of our Insurance professionals.