7 Tips For Buying Life Insurance - June 25, 2008 -

Here are seven tips for consumers who are in the market for life insurance:

1. Know what you need:

The classic and best reason for an individual to buy life insurance is for protection against dying too soon. The person buying life insurance should be primarily concerned with seeing that his or her survivors do not face a financial handicap. There may be other reasons that apply: Life insurance is also purchased to pay estate taxes. Business relationships often require life insurance or can benefit from it, for example. Annuities offer a secure way for consumers to make sure they dont outlive their money. Beware of anyone who tries to sell you life insurance as an investment. Life insurance should be purchased for the protection it will give you.

Term life insurance:

Most consumer advocates feel that term insurance is the best life insurance buy. Term is different from whole life or ordinary life in that you build up no equity, or cash value. In term, you pay each year for the cost of insurance, which typically increases annually as your chances of being alive the next year decline. Most term policies are renewable on an annual basis, and some have level premiums or a decreasing death benefit for a stated period one, five or ten years, or even to a specified age.

Whole life insurance:

Whole, or ordinary, life insurance is usually sold with a level premium. In the early years of the policy, the annual premium will be higher than comparable term insurance. (But because its premiums are level, whole lifes annual premiums may eventually be less than term.) Whole life policies build up a cash value that consumers can withdraw or borrow against. There are many variations of whole life. Premiums may be payable for a specified number of years on a limited-payment basis. Consumers also may have the option of a single premium paying all of the premiums at once with a single lump sum.

2. Know the company you are buying from:

You can check the financial stability of any life insurance company through several reputable national rating companies. Some ratings are available at public libraries.

3. Shop around for rates:

Life insurance is a competitive marketplace, and much of the competition focuses on price. Dont hesitate to seek premium quotes from several different companies.

4. Shop for your own needs:

If term insurance fits, thats what you should shop for. If you want to lower your premium at all costs, you may want to consider using a direct writer a company that cuts costs by operating without agents. Consider your own convenience, however: Do you want personal contact with an agent? Or if you buy an annuity, how fast can you get to your money in case of an emergency? If you are buying whole life, how fast does your money accumulate? What will the cash value be in one year? Three years? Ten years?

5. Update your coverage as your circumstances change:

Dont be misled by someone who tells you you should buy additional policies for children as they are born. Children rarely have an income and seldom require life insurance. But your situation may change dramatically from year to year. Review your net worth every few years and reconsider the prospects your survivors may face if you die.

6. Dont let yourself get fast-talked into changes:

Some life insurance policyholders in recent years have fallen victim to a practice called twisting or churning. Churning occurs when your coverage is changed only to benefit the seller even though you may suffer a loss in the process. Churning often happens when people with cash-value policies are persuaded to convert their coverage to another policy, often one with a promise of better benefits. The problem is that the cash value of the original policy is raided in order to pay for the new policy. Luckless consumers may not realize until years later that the higher benefit policy is actually worth only a fraction of the value of the original policy.

7. Never buy a policy you dont understand:

If you are given illustrations or booklets, save that material with your policy. If your agent or company cannot explain the policy terms to your satisfaction, shop elsewhere. Make sure you understand the guarantees in your policy (not just the agents promises of returns) and the surrender penalties if you choose to drop the policy at any time. These costs are often hidden in a life insurance or annuity policy.

David Wilson covers how to save money on your insurance needs at Cheap Insurance Network. His latest article on Cheap Life Insurance provides tips on how to save money when buying life insurance.

Compare Term Life Insurance Steps to Take Before You Buy
If you have made the admirable decision to purchase a term life insurance policy, congratulations! Many people put off buying a term life insurance policy due to the nature of the purchase; it can be an unpleasant thing to think about, much less discuss, and before they know it, time has run out.So, you have made the first step. But before you mo...

A Look at Life Insurance
Every year, billions of dollars is spent on life insurance. In todays world, families are buying more life insurance that ever before. The demand for insurance has really made the cost for insurance to skyrocket. Since life insurance is needed by almost every family, the demand for life insurance will continue to increase.Obviously, to some indi...

Buy Term Life Insurance But How?
Buying any kind of life insurance is a major purchase. One reason for this is youre choosing the policy that is going to financially assist your loved ones once youre gone. Below are some tips for buying the best term life insurance from the best term life insurance company and agent. The Company You want to choose a term life insurance...

Lowest Life Insurance Rate Consider Group Insurance
Everyone knows that one of the main perks of a job, if not the main perk of a job, is the insurance it provides. In fact, many people choose a job based on the insurance benefits, and some even leave a job if it does not provide adequate insurance benefits and search for one that does.When we think about the insurance benefits provided by our jobs...

Life Insurance Brokers
When you are talking about human life, this is not a matter that is to be taken lightly, especially when you have a family and are the head of the family. The uncertainty of life can cause one person much anguish because someone will have to take care of their loved ones when something unexpected happens to them. But how will they be taken care of?...

Five Simple Tips To Save Money On Life Insurance Costs
Many people do not think about life insurance until they are either married or thinking of starting a family. The problem many people then face is fitting life insurance into their budgets, but by applying a few simple tips and shopping smartly the savvy consumer should be able to save money on life insurance policies quite easily. Buy Term Life ...

Life Insurance Rate Quotes - Where to Get the Best Rates
Few people like to think about dying, but buying life insurance is a necessary way to make sure your family is provided for in case of your death. Where can you get the best rate quotes? Right at your computer!Using the Internet to Choose InsuranceWhen you need to buy life insurance, the Internet can be an excellent resource. First of all, you can ...