Life Insurance Comparison

Life insurance is one of the few products that you want to have but never want to have to use. As a form of financial protection, life insurance can help your family and loved ones pay for financial obligations and other expenses that would become a burden otherwise.

By buying life insurance, you can ensure that anyone who is dependent on your income will be able to maintain their standard of living after you die.

With death being one of the two things in life that are guaranteed, buying insurance is more of a necessity than a gamble.

No one wants to think about death, but financial planning is a crucial part of life when you have responsibilities and people depending on you. Part of the financial planning process is to select products that will help you earn investment income, diversify risk and build your portfolio.

While it is possible to build a savings that your family can live off of if they must live without your income, paying pennies on the dollar for coverage helps you pass the burden on to an insurer so that you can build a savings that becomes your legacy and not a survival fund.

You cannot begin comparing life insurance if you do not know what you are comparing. While the premise of life insurance may seem very basic, there are several details you may not know.

When you are covering the life insurance basics you will need to learn what types of policies you can choose from, who each type of plan caters to, and how the type of insurance that you choose can affect cost.

After all, all types of insurance do not carry the same rates and comparing the premium of one type of insurance with a specific company to the premium of another product type with another insurer is not effective comparison shopping.

Be sure to use the FREE quote comparison tool at the top of this page!

Here are the factors that you need to keep in mind:

What types of life insurance policies are available to you?

The type of life insurance that is available to you depends on your age, lifestyle and medical condition.

A young, healthy applicant who does not participate in extreme sports or hazardous occupations will qualify for almost all types of insurance and someone approaching retirement who may have mild or moderate health issues may have to opt for only a handful of plans because they are considered high-risk.

The types of life insurance that are available in the market today fall into either the term or permanent life insurance category. Here is a brief explanation of each along with the products that are considered term or permanent insurance.

Term Life Insurance

Term life insurance is a temporary plan that will provide your beneficiaries with financial protection for a specific period of time. The length of time that the policy lasts is called a term.

This term can range from 1 to 30 years, and the premiums can be level or rising depending on the plan.

Many refer to term insurance as renting instead of owning because you pay for pure insurance and do not have anything to show for once the “term” expires.

While this is true, term insurance is much more affordable than permanent insurance and the most popular option today.

Annual Term

Annual terms are the oldest form of term life. These plans last for one year and will renew at every anniversary date. At the time of renewal, the rates will be based on your new age.

This is why the premiums of an annual term rise steadily throughout the years. The death benefit will remain level, but can go up if you apply for more cover upon your renewal.

Level Term

Level terms last for an extended period of time and offer a level death benefit. Terms can last between 5 years and 30 years, with the longer terms carrying higher premiums.

Over time, the premiums for level policies are lower than the premiums for annual policies.

Today, most level terms have a guaranteed premium feature on it that will lock in your rates for the entire term.

When the rates are locked in, they are based on your age at the time that you applied for your insurance and they cannot go up even if the company adapts a new rate filing in the meantime.

This is a feature that everyone shopping for level term insurance should look for.

Decreasing Term

Your financial obligations will go down as you age. At least, this is what most people aim for when they are coming up with a financial planning strategy. If you are successful with your planning, your need for life insurance should go down over the years.

You may need $500,000 in coverage today, but 20 years from now the need will drop to $200,000. A decreasing term has a death benefit that drops in one or five year increments. As the benefit decreases, so do the premiums.

Permanent Life Insurance

Permanent insurance is a policy that included term insurance coverage and investment components. You will pay premiums that cover the cost of pure insurance, but the remainder is invested. You will earn money in a cash value account that can be used as a living benefit as well.

Unlike term insurance, all permanent plans stay in effect for life once you are approved as long as you keep the policy funded.

Whole Life

Whole life is a traditional permanent life insurance policy that offers lifetime protection and a vehicle for saving and earning interest.

The premiums that you pay will stay level as the death benefit grows. This option does not offer much flexibility because the money in the policy is what will pay for the growing cost of insurance as you age.

Universal Life

Universal Life is a newer type of insurance that will provide you with pure insurance, cash values and flexibility. With this type of insurance, you can decide how much you can afford to pay and then come up with a plan to fund the policy.

You can pay less in the beginning and raise your payment as the policy ages. It is important to keep up with the illustrations on the plan to ensure that the money will not run out.

Which type of insurance is right for you?

Life insurance products are definitely not one-size-fits-all just because all people have even a small need for coverage. If you are not sure which insurance is best for you, you need to consider your current financial circumstances, your future financial plans, and also what types of insurance you qualify for.

Here are some guidelines to help you sift through the options so that you can make the best choice:

• If you will only need coverage for a specific period of time, you need term insurance. Level term insurance is good for those who can medically qualify and who can see an end in sight for their financial obligations.
• If you have a medical condition and a temporary need for insurance, annual term insurance may be suitable. Annual term insurance does not require medical underwriting, which helps you buy insurance in the short-term regardless of your medical conditions.
• If you are traveling out of the country or you are going on a vacation to scuba dive or drag race, you should consider an annual term policy because it has less underwriting, less restrictions and is issued within days.
• If you want to replace you income, consider how long you will be working until you can receive retirement benefits. This is the length of the term that you should choose when buying a temporary insurance plan.
• If you are buying coverage on a limited budget, term insurance offers the best rates. If you choose a convertible plan, it can be converted to a permanent plan at a later time.
• If you need coverage for the remainder of your life to pay for estate taxes, permanent insurance options are ideal.
• If you want a savings vehicle that is built into your life insurance policy, whole life or universal life will work. You must be sure to compare the payment options of each.
• If you want to build a legacy and the death benefit amount is not as important as the interest you earn, permanent insurance offers a growing death benefit.

With this information, you should be prepared to choose the best insurance policy to suit the needs of the people that you love the most in life.

Comparing life insurance can be a very involved process if you are not resourceful. There are plenty of tools that you can use.

One tool is an online quote comparison tool, such as the FREE one below, that can connect you with several insurers at once.

Enter your information into the tool, choose the policy type and death benefit, and see which rates are most competitive in the industry.