How Different Types of Life Insurance Affect Costs

Naturally, no one wants to spend more money than they have to. As a result, people opt for cheaper life insurance plans. However, Criss Crombie, Life and Financial expert at Empower Brokerage, suggests people consider some key factors while shopping for a life insurance policy before choosing the cheapest policy. Check out the video below so you know what to look for in a life insurance policy!

Understanding the Different Types of Life Insurance

Essentially, there are two different types of life insurance: term life insurance and permanent life insurance. Term life insurance will allow you to buy a lot of coverage for a low premium. However, there’s one stipulation; eventually, the term policy is going to expire or the premiums are going to significantly increase. When you’re shopping for life insurance, it’s important to know what the different types of life insurance are and make sure you get the right kind to fit your needs.

Moreover, lowest cost isn’t always the best. For example, if you have term life, you might need permanent coverage down the road. In that case, you want to make sure that the policy you’re buying now has the option to convert later. Since health fluctuates, you may no longer qualify for permanent life insurance once your term policy expires. Therefore, make sure whatever term policy you purchase has the ability to convert. Don’t simply choose the lowest price. Furthermore, if you’re shopping online and you find a low premium policy, make sure that you understand the benefits of that policy. Knowing if the policy is convertible is important, but you should also know how much the conversion costs.

Finding an Insurance Broker

The cheapest plan is also not always the most appropriate type of plan. Again, make sure you understand the different types of life insurance, i.e. term and permanent life insurance. Because there are nuanced details to life insurance policies that not everyone is aware of, it’s important to get with an experienced insurance agent, especially a broker. It’s good to work with an insurance broker because they’re independent. More importantly, they represent many companies rather than just one or two so they can shop and get the best rate for you. They’ll ask you questions like:

  • How much do you need?
  • Do you need this to cover your house?
  • Do you want to make sure there’s income set aside for your family if you’re gone?
  • You want your kids to go to college?
  • What you want your life insurance to do for you when you’re gone?

Income replacement is the number one reason people buy life insurance because that’s the most valuable thing that we provide in our lifetime. Making sure that you have enough coverage, as well as having the right type of coverage for the right period of time, is more important than shopping for the lowest rate right now.

Since insurance is oftentimes overwhelmingly confusing, we want to shed light on this industry by answering YOUR questions.  So if you have any questions or concerns, comment below and your question may be the topic of our next video!

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