1. All policies fall into one of two categories
There is pure insurance coverage in the form of term policies, and the variety of options of whole life which provide a combination of pure term insurance and a built-in investment vehicle which builds cash value.
2. Insurance is sold, not bought
The majority of insurance policies written in the US are whole-life because of their high profitability. Be sure to review all of your options before purchasing a policy.
3. Whole life is more expensive
The investment vehicles offered in whole life increase the cost of the policy. Generally, several people who purchase a whole life policy cannot afford the adequate face value for their needs, often times leaving themselves underinsured.
4. Keep your insurance needs and investing goals completely separate
There are several other options for investing that do have the potential adverse affects of a whole life policy.
5. Buy enough term coverage to meet your needs
Life insurance is a serious matter and the low rates of term coverage allow you to comfortably acquire the coverage you need.
6. Match the term of the policy to your needs
The term of the policy should last as long as necessary for your dependents to leave the nest and/or for when you retirement income begins.
7. Buy when you’re healthy
Rates are lower when you’re younger and healthy, making it an ideal time to buy. However, do not buy a policy until you have dependents. Older people pay substantially higher rates due to deteriorating health.
8. Don’t lie
Insurance companies will investigate if a large claim is made. Do not endanger your policy by shading the facts when you initially apply in order to get a lower rate.
9. Shop your options online
The internet has made learning about, shopping for, and buying life insurance much easier. You can get several quotes without the hassle of meeting pushy sales representatives.