Developing a good understanding of the different policies & options that life insurance companies in Memphis offer is the most important step in finding what best suits your needs. You will feel a lot better walking into an agency or speaking with an agent if you are already up to speed on policy specifics and know exactly what options & amount of coverage you would like. We are going to list the 20 most important things you need to know before speaking with an agent to decide what type of life insurance policy is for you.
1. The 2 main types of life insurance are permanent & term.
2. The main difference between permanent & term life insurance lies within how long your coverage lasts.
3. The price of every life insurance policy is determined by your morality cost & policy expense cost.
4. Permanent life insurance covers you for your entire life: It is more expensive than term insurance, but is best suited for those looking to provide additional funds for your living loved ones or to cover debt, burial, or mortgage costs in your absence.
5. The 3 types of permanent life insurance available today are:
- Whole: you take zero risk and have a guaranteed lifetime monthly cost, but when your company saves money you do not reap the benefits because of your fixed rates
- Universal: a more flexible policy that has no guaranteed fixed rates, therefore when your company’s expenses increase so will your costs, but when things are going good you will benefit as well
- Variable: gives you more earning potential with several investment options, but in return you take on stock market risks
6. When comparing permanent options check out the investment options and cash returns available on each policy.
7. Term life insurance policy options differ in the length of the coverage term, renewability, the length of the price guarantee, and whether they can be converted to a permanent policy.
8. Term life insurance is geared towards those needing coverage for a period of time, typically 1-30 years, rather than permanently: For instance, if you only want coverage to cover your twenty-five year mortgage or your child’s college tuition in the event of your death, then term insurance is right for you.
9. The 3 most common types of term insurance are:
- Annual Renewable Term (ART): Allows you to renew your policy on a year-to-year basis up to a certain age. Monthly premiums start out low and increase as you age, which makes this policy ideal for people in between jobs or wanting to cover short-term debts.
- Fixed-Rate Level: Allows you to lock in prices for five year increments usually from a 5-30 year period. Insurance companies are able to spread out your policy startup costs and therefore can offer more competitive prices than they can with ART policies.
- Decreasing Term: Premium stays stable & the rates usually stay the same for the length of the policy, but your coverage reduces annually. This policy is usually only a good option if it is required due to a divorce or through terms of a loan.
10. Monthly premiums for term insurance are lower than permanent life insurance because term policies generally lack a cash value element, but your premium will increase as you age.
I’m sure this probably seems like a lot of new information to absorb all at once. To make sure you have a thorough understanding we have also outlined some key pointers on making the best life insurance coverage choices for your unique situation.
Get free expert insurance advice before you shop for your next policy. It pays to be prepared so check out our blog and take advantage of the several topics we cover so you won’t have to think twice about your next move.