Life insurance is a necessity. It can help cover final expenses, provide a savings component, and even be a source of quick cash in an emergency. All of this protection comes at a price, and life insurance can be expensive, especially permanent life insurance.
While you should never skimp on life insurance, you should shop smart. Determine your needs, shop around and look for ways to make your premium affordable over the life of the policy. These six tips should help you find a great permanent life policy that provides the protection and flexibility you need at a price that fits your budget.
Permanent life insurance tends to be more expensive than a simple term policy, but if you buy a policy that meets your specific needs, it can be a bargain over the long haul.
The main differences between term and permanent life insurance are that permanent life insurance is in force for your entire life (as long as you pay the premiums) instead of a certain “term,” and permanent insurance accumulates cash value over the life of the policy.
Here are a few of the more useful features of permanent life insurance:
One of the most useful features of permanent life insurance is the cash value that accumulates over the life of the policy, which can be:
Permanent life can be an excellent investment vehicle. It guarantees your principal; unlike a 401(k) or mutual fund, your account balance is not going to tank during the next market downturn. In addition, you have access to the cash value at any point without penalties.
One of the other major benefits of a permanent policy is that you’re insured for life. As you grow older, term insurance becomes so expensive that it can be unaffordable. Even if you buy a long-term policy (30 years), once that term is up, the cost of a new term policy will be out of reach, leaving you uninsured during your retirement.
The cash component can be a financial lifesaver during an emergency or even in retirement if your savings fall short of your goals. The policy can be converted into a guaranteed income and added to your retirement savings.
Finally, a permanent policy can be an excellent tool for estate planning. It offers liquidity to help cover estate taxes, which is useful if the rest of your estate is made up of real estate or other assets your heirs would be reluctant to sell to cover the cost of estate taxes.
Half the battle with finding an affordable premium is buying the right type of policy. Knowing the advantages and disadvantages of each type of permanent life insurance is key to making the right decision. Here is a quick rundown on the various types of permanent coverage.
The two most common types of permanent life insurance are whole life and universal life. While these policies are similar, there are also major differences.
Whole Life Insurance: The benefits of this policy type include:
Whole life offers protection for your entire life and accumulates cash value in addition to paying out a death benefit. The main benefit of whole life is stability. It offers a guaranteed rate of return for the cash value portion of the policy as well as a level premium that will not change.
Universal Life Insurance: The benefits of this policy type include:
Universal life is a much more flexible product. It’s possible to adjust both the death benefit and the premium over the life of the policy.
As with all insurance products, a number of factors have a major impact on how much you end up paying for a policy. Here are just a few factors that affect your premium:
Full disclosure is necessary when buying a policy. Omitting relevant information can result in denial of a claim or cancellation of your policy. Let your agent know if you take up a dangerous hobby or begin a high-risk job after the policy is in force.
Riders can dramatically push up the cost of a policy, so you should pay very close attention to riders that are recommended with your policy. Avoid as many riders as possible, but don’t pass on something that makes sense for your particular situation. A few examples of riders:
Life insurance is not a “one policy fits all” product. Working with a Trusted Choice® agent is a great way to establish a balance between managing your risk and an affordable whole life or universal life insurance policy.
There are a number of ways to lower the cost of your permanent life insurance. This includes everything from actively managing your health to making sure you qualify for any available discounts. Here are a few ideas on how to control permanent life insurance costs:
Also avoid guaranteed plans that do not require a physical. These policies often offer less coverage and are more expensive.
Consulting with an expert is always recommended when shopping for a life insurance policy, and using an independent agent will ensure you get the best possible coverage. Trusted Choice independent agents are usually the best choice because they have access to a large pool of insurers and are not bound to a specific insurance company. They can find multiple quotes for affordable whole life insurance and universal life insurance.
Permanent life insurance is great way to protect your family and build cash value that can be used in a variety of situations. A Trusted Choice agent will help you clarify your goals and tailor a policy that meets your financial needs at a price that is affordable.
Contact a local agent for personalized assistance today.