7 tips for buying the right life insurance policy
Search the internet and you'll find all sorts of advice about buying life insurance. Everyone from insurance companies to government agencies have their own priorities when it comes to what is important before buying a policy. We've scoured the web and compiled a list of the seven best life insurance buying tips.
- Understand what you're buying: State insurance commissions such as those in Washington and Idaho stress that consumers need to know how their plan works. If you don't realize that you could lose the death benefit from your variable universal life insurance policy if the stock market tanks, then you probably shouldn't buy it. Rather than relying only on your agent or life insurance company, review independent information such as that provided in the Budget Life buying guides or by state insurance commissions.
- Don't skimp on coverage: Life insurance, particularly term life insurance, is very affordable when you are young and healthy. When you are older, not so much. Life insurance companies such as New York Life and SBLI recommend maximizing coverage when you initially buy life insurance rather than assuming you can add on to your policy as you get older.
- Buy from a reputable company:The National Association of Insurance Commissioners (NAIC) advises consumers check the financial stability of life insurance companies by reviewing their ratings from firms such as Standard & Poor's and A.M. Best. In addition, confirm with your state insurance commission that the company is authorized to do business in your state.
- Shop around: The NAIC also recommends that consumers compare life insurance quotes before making a purchase. With the market being so competitive, cheap life insurance can be found by those willing to do a little legwork.
- Don't lie on your application: It may be tempting to fudge the truth about your health history but honesty is always the best policy. Life insurance companies share information through MIB reports, and CNN Money notes that if an insurance company needs to pay a large claim, you can be sure that they will conduct an investigation.
- Never sign a policy with blank spaces: Insurance commissioners from South Carolina to Washington agree: don't sign a life insurance policy that is incomplete. Even if your agent assures you the missing information is just a formality, it is important that you are able to see and read all the provisions before buying a plan.
- Don't wait: Craig Garrison, a financial advisor with Northwestern Mutual writing for Colorado Biz magazine, cautions that life insurance should not be a purchase that is delayed. Make sure your family's financial future is protected by purchasing a term life or whole life plan today.
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