The primary reason that most people purchase life insurance is for the death benefit, which will be provided to the family or other dependents, after the death of the insured. Another compelling reason may be to provide for a funeral and burial. You may not think it’s prudent to purchase life insurance when you’re young, but there are many advantages to buying at this time of life. Generally, you are healthier at a younger age, and therefore premiums are less, and it is far easier to qualify for life insurance.
There are many things to consider when researching insurance policies, including the cost of premiums, the length of time you wish to be covered, specific contract terms and exclusions, the type of coverage you prefer, and whether your policy is renewable and/or convertible.
Term insurance is for a specified amount of time only. If the insured dies within this time period, then a death benefit will be paid. No benefit is paid if the insured survives beyond the covered term. The premiums are very low in the beginning, though as the person ages, the cost of a term insurance policy increases. It is wise to purchase term insurance that is renewable at the end of the determined time, without requiring the insured to meet additional qualifications. Many term policies will allow you to convert to a permanent life insurance policy, if desired.
Permanent insurance (also known as whole life) provides coverage throughout the lifetime of the insured, and most policies have a provision for conversion to a cash value. Universal life insurance has features of both term and whole life.
It is important to consider the cost of coverage, as a policy that is too expensive could end up being terminated, requiring the insured to undergo a medical examination to determine eligibility for a new insurance policy. It is often less expensive to pay an annual rate, rather than a monthly premium.
Always consider the financial stability of any company, when evaluating life insurance policies. Make sure that the company and your agent are licensed.
Remember to update or review your insurance policies as you go through life changes, to make sure that your coverage is adequate for your needs.