Purchasing life insurance is one of the best ways to make sure your family is taken care of after you die. Like any other type of insurance, there are a variety of carriers and numerous options when it comes to crafting a policy. There are many things to consider before purchasing a policy to make sure you are getting one that best meets your needs.
There are Two Major Kinds of Life Insurance
Life insurance comes it two major forms: term and permanent. Term life insurance involves the purchase of a policy for a set amount of money that your dependents will receive in the event of your death. Permanent life insurance has a similar policy in place in addition to cash value that is built through investments—you can access this cash or borrow against it while you are still alive.
Think About What You Need
Before buying a policy, you really need to assess your financial situation. Are you a single parent, empty nester, one or two income household? What type of debt do you carry? What is your expected income over the course of your life? What is the aim of buying this coverage, what do you want it to provide? By considering all these aspects, you will know an appropriate amount of coverage that will make sure you are not purchasing too little or spending needless money on higher premiums for coverage you do not need.
Make Sure You Shop Around
When shopping around for insurance, it is easy to think that different companies probably charge roughly the same for a similar policy. While this may be true in some instances, this is not necessarily the case. Before buying a policy, it is important to shop around and get rates from all the top companies. Each has their own way of pricing and determining premiums.
Do Not Lie on Your Application
Do not lie on your application. It can be tempting to fudge the truth a bit or leave out information that may affect your rates, but the whole point of buying life insurance is to protect your family and dishonesty can defeat this purpose. Should your insurance company find out you provided misleading information, they may reduce your policy or cancel it altogether. Should your death be related to a condition you did not disclose, they could refuse to pay out the policy.
Do not Consider Guaranteed Policies if You Are Healthy
Regardless of your health, there are ways to get life insurance coverage. Guaranteed policies allow you to purchase a policy with no medical exam; naturally, they are going to cost more because anyone buying a policy like this probably has health issues that make it difficult to get regular policies. If you are relatively healthy, there is really no reason to purchase a policy like this since you are likely to get a similar amount of coverage from a standard policy for less money. Many health issues may not affect premiums like you think if they are well-managed and you are in otherwise good health.
Do Not Rely Only on Coverage Provided by Your Employer
Some companies may offer their employees life insurance at group rates that will typically pay out one to two times your base salary. But, while a group rate may sound appealing, you may actually be paying much more since this coverage is based on rates that include coverage for co-workers who may be unhealthier and deemed higher risk. This coverage will not follow you if you go and if you leave your job when you are older, you may have a difficult time getting an individual policy.
Get Your Health in Tip-Top Shape
If you do not qualify for a carrier’s premium rates due to health issues that should not stop you from buying a policy that will offer your family protection. But, if you commit to getting healthier, you can have your policy reevaluated to get more favorable rates.
Consider a Joint Policy
If you and your spouse plan on buying life insurance, you may want to consider a joint policy rather than a separate policy for each. This can result in savings up to 15 percent.
Make Sure You Fully Understand Your Policy
Review Your Policy Every Few Years
Life insurance should not be one of those ‘’set it and forget it’’ deals. As the years go by, the circumstances of your life may change in such a way that you may need to adjust your coverage, whether you buy more or reduce it. Carefully go over your policy every few years to make sure it is still meeting your needs.
Kelli Cooper is a freelance writer who covers a range of insurance topics. If you are in need of Canadian life insurance, do a Kanetix comparison to see quote from multiple providers.