Tips Regarding Life Insurance Coverage

Its natural to feel that talking about a subject like dying  and life insurance is morbid.  The reality is we are all mortal.  It is wise to face this reality and protect our loved ones in the event we do leave this world early.  With that said I’ve provided tips below that will help in seeking out life insurance coverage.

  1. The first thing to do is to estimate how much coverage you’ll need to purchase.  This is important because you’ll want to make sure you’re not under insured or even over insured.  So you’ll want to sit down and think about all the things that will have to be payed for and come up with an itemized list.   Its in your best interest to think about this very seriously and deeply as you don’t want to miss anything.  Ask yourself questions like:  Do I want my mortgage payed off?  What other debts do I have that I don’t want passing to my spouse and family?  How about college tuition for the kids?  If you need help with this task enlist an insurance professional, financial advisor and or take advantage of an online calculator like:  LIFE (a non profit organization) Life Insurance Needs Calculator.
  2. Consider the different types of life insurance coverages that are available.  Its important to understand on a basic level what the differences are between term life insurance,whole life insurance, variable life and universal life insurance.  Don’t let all the choices intimidate you,  just have a basic understanding before for you go shopping.  Most often term life insurance is the most appropriate but not always.
  3. Your employer may offer you a life insurance program.   Find out how much coverage they provide to you for free (if any) and if you can buy more to cover your needs.  Just remember this usually isn’t the end all be all of your life insurance needs.
  4. Buy life insurance from a reputable and financially sound insurance company.  Getting payed by an insolvent company is obviously less likely.  Your state regulates the insurance companies so find out if the prospective life insurance company participates in the  state’s guarantee  fund (which backs up insurance companies in the event they can’t pay) .  At the same time find out how much the guarantee fund covers for life insurance death benefits as well as cash value on policys.  Also take a look how the ratings agency’s  are viewing the insurance company.  Cross check the rating against at least these 4 agencys: AM Best, Fitch, Moodys and S&P.
  5. If you’re going to work with a financial advisor or insurance agent etc. ask them to disclose what they are getting out of selling you a policy.  You could work with a flat fee professional or a commissioned pro.  Either one may be appropriate but its vital to ask about what fees at they are getting out of it.  They are supposed to act in your best interest.  Call your state insurance commissioner’s department to see if the advisor or agent has any complaints against them.  Ask for references and don’t be afraid to conduct an interview with tough questions.
  6. Understand and ask for disclosure on what the insurance company is getting from you fee wise.  Certain types of policies will charge you fees that is in your best interest to know what they are.  This is especially true of variable and universal life insurance policies.
  7. Your health correlates to what your insurance premium cost will be.  So keeping a health life style will not only make you look, and feel better, it increase your life expectancy which equals more affordable insurance premiums.
  8. Use the worldwide web to your advantage in obtaining quotes.  You can go directly to an insurers website and ask for free quotes generally.  There are life insurance quotes services that may make this easier in obtaining multiple quotes.
  9. Don’t forget about using your own personal network for help in with finding an insurer.  Ask for references from your friends and family and their experience in finding life insurance coverage.
  10. Involve those that you’re protecting the life insurance with in this process of finding and understanding life insurance.  This will help them understand what you’ve provided too them and what to expect if you do pass.  It may also help them see the importance of life insurance and teach them how to search for their own policy.

Standard Risk, Preferred and Sub-Standard Risk Life Insurance Definitions

With life insurance policies the term standard risk pertains to when an insured doesn’t have any ailment, special condition or otherwise that the company providing coverage would deem riskier than the average (hence the word standard).  This of course is determined in the carrier’s underwriting rules or standards to whom would qualify as standard risk.  The average person without any major health problems but isn’t in athletic condition either would fit into this category.

An individual that is in very good health, considered above the average in their condition health wise and considered low risk as per the insurance company is known a preferred risk.  The factors used to calculated this vary but some things can help an individual get life insurance as preferred risk.  A couple examples would be not to smoke and too have the right blood pressure readings.  There are other factors though that a person cannot not do anything about that may matter to the company, for instance a history of cancer in the family.

Now to the sub-standard risk which is an individual that would be looked at as high risk to give a life insurance policy to.  This would pertain to a person that has a a poor medical history but it can go beyond just that.   A dangerous occupation can play a role as well as other things such as harsh living environment,  family history of disease and more.