How can I get the best deal on life insurance?
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Asked August 2, 2010
Life insurance companies will look at 3 major factors when determining your insurance rates. The first factor is you, the second is the amount of insurance you need, and the third is the type of policy you are applying for. The first two factors can be broken down into smaller sections, and the final one will determine the type of policy you have, as well as how and when it will pay a claim.
Everything about you is a factor in life insurance. Your age, gender, and marital status play a part, as well as your occupation and your health. For example, your rates will be lower if you purchase insurance while you are still in your 20's or 30's, and lower still if you have been a non-smoker for at least a year before applying for the policy. Similarly, a high-risk occupation will entail higher rates because of the increased risk of a payout.
Don't apply for a life insurance policy that goes beyond your net worth. Insurance companies are wary of people with multiple large insurance policies, and the premiums you pay will go up with each successive policy you add. Consider the reasons for each policy carefully, and only purchase what you need. Typically, a single whole life insurance policy is supplemented by term life policies as new financial situations arise.
Whole life insurance policies cost more than term life insurance, but they also offer the policyholder a lot more flexibility in managing their insurance needs. Term life policies are a better and less expensive choice for such things as protecting the mortgage on the family home, making sure that your kids will be able to attend college, or even providing the cash for your family to move to a new location after your death. The disadvantage of these lower-cost policies is that they have a potential to expire before a payout is made, and your investment in the policy could be lost after years of paying into the policy.
Answered August 2, 2010 by Anonymous