Life insurance is one of those financial matters that is often complicated, time consuming and expensive. People are often naturally cautious of life insurance when they cannot understand the labyrinth of terms, scenarios and cost structures set out by the policy. This is a financially healthy perspective to take and reflects awareness of possible red flags in the insurance acquisition process.
The terms of life insurance influence cost, however these conditions are not always favorable. For example, in a CBS MoneyWatch report, it is pointed out that the age of an insured person at the time of death affects pay outs. If this age range is unrealistic, then the benefits of the insurance are less likely to be obtained. When reviewing a policy ask specific questions that clarify broad claims. For example, if an insurance agents says the return of policy X will be Y amount per year that may be true, but is that before or after additional surcharges and fees?
Numerous variables affect the quality and cost of life insurance. For instance, according to the Wall Street Journal, life insurance agents have an advantage over brokers because they can offer lower rates by working with a single insurer. Being aware of all the factors that influence a policy as well as the various types of policies is important. To build consumer awareness, also consult and compare insurance ratings from companies such as A.M. Best, and take time reviewing the policy details before signing anything.
Knowing how to assess and evaluate life insurance involves more than just referring to ratings and assuming it is the right financial decision. To illustrate, the insurance needs of a single person with no debt and no children are far different from those of an indebted single parent of three. Identification and incorporation of financial planning goals, in addition to individual and family needs is prudent before embarking on a long-term life insurance contract. Completing a life insurance question list such as the one provided by the Motley Fool Insurance Center is one way to accomplish this task.
There should be no pressure to decide whether or not a life insurance policy is the right choice. Offer expirations, time related policy benefits and incentive rates are somewhat relevant, but also distracting to overall financial objectives that are more important. Effective policy choices take into account individual health, available insurance products, agent compensation and much more. Self-educating via sources such as CNN Money's "Money 101", rather than relying on just what a salesperson says helps with making informed decisions.
Life insurance is a financial instrument that serves to protect financial needs and interests in addition to being a potential source of retirement savings. Life insurance products do have some advantages such as creditor protection, however they also have costs and require substantial financial commitment. When assessing life insurance, and in order to fully benefit from a policy, it is wise to consider future financial scenarios such as affordability after layoff, and opportunity cost in addition to financial security.