Like buying a car, getting life insurance requires a good idea of what you want. Policy costs vary widely – from administrative and overhead expenses to interest and dividends affecting cash values. Ultimately, your objective is to provide your family with a comfortable financial cushion during your death. To do this, you need to consider the following factors:
Coverage
Depending on the policy type, a life insurance policy can pay a lump sum to cover funeral expenses, debts or other financial obligations. It can also provide income replacement to help a spouse or other family members if you should die before them. Many helpful agents can help determine how many life insurance quotes Woodbridge VA you need. A life insurance quote is an estimate based on minimal information. It will vary from your final rate, determined after the insurer reviews more detailed health and lifestyle information in your formal application. This review can be done online, over the phone or in person. The money that the policyholder pays, either all at once or regularly, is known as the premium. It is also helpful to speak with a financial professional or licensed agent about your options and the specifics of each policy before making a decision.
Premiums
Life insurance quotes aren’t always comparable – each insurer evaluates you differently, and your evaluation can change during underwriting. For example, if you find out that you have high blood pressure or a family history of cancer, it may increase your risk to the insurer, causing your premium to rise. The money the policyholder pays to obtain the insurance, whether in one lump sum or regularly, is known as the premium. The policy beneficiaries use this money to cover expenses if the policyholder dies. The premiums are also income for the insurance company, and they can be invested to generate interest, which helps lower the policy cost. In addition, the policyholder can borrow against the accumulated cash value under certain conditions. The cash value is usually limited, but it is a useful tool to help plan for the future.
Riders
Many policies come with riders that allow you to tailor the policy to your specific needs. Some of these riders may be free, and some will be extra expensive. These options can range from covering children’s education to providing an additional death benefit in the event of a terminal illness. You can include these riders in a life insurance policy based on your requirements and situation after it has been issued. However, you should consult a financial or life insurance advisor to understand your unique situation and determine whether these riders are worth the extra expense. The cost of a rider can add up to a substantial percentage of your life insurance premium. If the benefits of a rider are not enough to justify its added cost, consider other financial solutions that can provide similar coverage. For example, an income replacement plan or an annuity better suits your goals and circumstances.
Benefits
The benefits provided by a life insurance policy include the death benefit and any riders attached to the policy. These policies are designed to provide your loved ones with a lump sum upon death, cover any debt or unpaid bills, and help replace your income. Choosing the right type of life insurance is also important. Term life policies offer flexibility, while permanent life insurance options such as whole life and variable universal life can accumulate cash value. These policies also allow you to funnel some of the cash into investment subaccounts with varying levels of risk, similar to an individual retirement account. Before submitting your application, be sure to compare the quotes you receive. Remember that a quote is an estimate based on minimal information, and the final rate may differ if your health history and other factors are reviewed during the formal underwriting process. Also, consider your budget limitations and whether you smoke cigarettes, as some insurers will charge lower rates for non-smokers.
