No matter what your life circumstances are — whether you’re single, married, working, retired or recently unemployed; pinching pennies or financially well off — life insurance can be an important part of responsible financial planning. Your life insurance coverage can ensure that your spouse, child, or loved ones receive some financial support after you pass away. The cash benefit from your policy can help offset funeral costs, some remaining medical bills, help cover some general living expenses or even go toward education.
With so many options available, purchasing life insurance can seem confusing and complicated. Here are three things to know when shopping for coverage to boost your confidence in purchasing the right protection for you and your family.
1. A range of coverage options are available to suit your needs.
Life insurance coverage is available on a temporary or permanent basis. Based on your needs, one type may fit your lifestyle and goals better.
Term life insurance offers you protection for a certain period of time. Many people purchase term coverage to meet short-term needs. Some term life insurance policies allow policyholders to convert to new coverage (another term or a permanent policy) before existing coverage expires. This type of coverage is often available with no additional underwriting, and in some cases, no medical exam.
Permanent life insurance, or whole life coverage, is a life-long option that usually involves the accumulation of cash value. For some types of policies, you can access accumulated cash value during your lifetime. Because permanent coverage stays in effect throughout your entire life, your beneficiary (the person you appoint to receive your policy proceeds) receives the benefit amount of your policy whenever you pass away. This type of coverage can also be available with no medical exam.
2. You can control the cost of coverage.
Life insurance may not be as expensive as you think. Factors that determine the cost of your life insurance premium include the amount of coverage you want, your age at the time of purchase, in some cases your medical history and specific aspects of your lifestyle, such as occupation and hobbies. When deciding which type of life insurance product is right for you, keep in mind that term life insurance has a lower initial cost upfront, but premiums typically increase at the end of each term. Conversely, permanent life insurance tends to be more expensive initially than term coverage, but monthly rates tend to stay the same over time.
3. Independent ratings can help you find a reputable insurance company.
Insurance companies are rated by third-party agencies that evaluate and report on their current financial strength and stability. Each of these organizations uses a different assessment process and grading system to communicate how well a company can meet its obligations to policyholders.
Consumer endorsements may also be important when choosing a life insurance company. Trusted organizations can provide valuable information on the quality of their customer service, claims processing and other important aspects of coverage selection.
When you’re shopping for life insurance, take time to check the financial strength ratings (such as A.M. Best or Moody’s Investors Service) and endorsements provided by trusted consumer-advocacy groups before making a purchase decision.
This article is provided by New York Life Insurance Company for informational purposes only. This article is not intended to provide tax, legal, financial or accounting advice. Please consult your own professional for advice specific to your circumstances.