Finding the Right Life Insurance
Because family is one of the most important parts of life, taking care of your loved ones after you are gone is among the primary concerns of devoted parents and spouses. If your family financially depends on you now, losing you can deal a devastating blow both emotionally and financially.
Preparing for your passing and saving now can ensure your family’s well-being for many years after you are gone. With life insurance, you can develop a plan that fits your needs and budget to bring you peace of mind.
Types of Life Insurance
There are different types of life insurance that cater to different people at various stages in their lives. Likewise, these life insurance policies come with different coverage options, duration and benefits.
Term Life Insurance typically lasts for a set interval such as 10 or 20 years. Premiums usually remain the same over the duration of the policy period and may increase if the insured wants to continue thereafter. The funds granted to beneficiaries of term life insurance can be used to replace income during working years, pay off a mortgage or pay for college. However, the payout is given as a lump sum.
Universal Life Insurance –is a type of insurance designed to provide lifetime coverage. It is characterized by its flexibility in terms of premium payments over the lifetime of the policy with rates typically higher than term life insurance. It can be used to replace long-term income beyond the beneficiary’s working years and for estate planning.
Whole Life Insurance is used to preserve and transfer wealth to beneficiaries and can be used for tax-deferred wealth accumulation. It lasts a lifetime and premiums are generally more expensive than term life insurance. Unlike universal life insurance, premium rates remain fixed over the lifetime of the policy.
What does life insurance cover?
Life insurance is an important type of insurance that grants your family money in the event of your death. Depending on the stipulations of your policy, the amount going to your family and the duration of benefits can vary.
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In some cases, the surviving members of your family are granted enough funds to handle large purchases and emergency necessities. Funds received by the family are often used to pay for the following:
- The deceased’s funeral – If it has not already been planned and paid for, the funds granted to beneficiaries of a life insurance policy may be used to cover the costs of a funeral, burial/cremation and celebration of life reception.
- Mortgage payments/rent – Housing costs are typically the largest expense for a family. If you were paying for the rent at more than one residence (e.g. your child’s college apartment, a vacation home, etc.), leaving your family with this expense can be stressful. Your family may opt to use some of the benefits to pay off a mortgage or ongoing rent.
- Outstanding debt – Many beneficiaries of a life insurance policy may have to use the funds left behind to pay off some of your outstanding debts or some of their own.
- College tuition – If you have college-age children who want to obtain their post-secondary education, some of the funds from your life insurance policy may go toward helping your child realize that goal.
- Medical expenses – Medical expenses are among the most important funds to have when a family member falls ill. Having enough money to take care of illness, disease, hospital stays, medications and surgeries is a prime concern of surviving family members.
- Everyday living expenses – Aside from the above, your policy may provide enough monetary support for your named beneficiaries to live off of.
How to Apply for Life Insurance
There is a general process to apply for life insurance. While many life insurance companies may come with its own set of required tasks, the general process is as follows:
- Research different life insurance companies – Ask your friends and family which life insurance company they have and why. Compare the product and service offerings by going to a few different websites and considering which plans or products are right for you and fit into your family budget. Then, narrow your potential list to between five and 10 companies.
- Call around for quotes – You may be able to obtain an insurance quote online as well. Determine how much you are willing to spend on the services and duration.
- Talk to an insurance representative – You need to answer questions regarding your current health status, exercise and diet habits and whether you drink or smoke. The agent may ask several other questions about your life and profession to build a quote.
- Pick a policy and fill out an application – Complete an application to provide the remaining information needed.
- Take a medical exam – Not all life insurance providers require medical exams but many do. Take the medical exam and have the results sent to the provider.
- Wait for your policy details – Shortly after the underwriting process begins, you will have a life insurance policy in place.
Top Five Life Insurance Companies in the U.S.
There are several companies that offer life insurance policies. The following are the top five life insurance companies in the United States:
- Metropolitan Life Insurance Company (MetLife) – Among the biggest and best life insurance policy providers, Metropolitan Life Insurance Company offers a wide suite of services, including term, whole life and universal insurance. The company also offers annuities and employee benefits programs worldwide. Not only is MetLife a leading life insurance company in the U.S., but it also ranks highly for its services globally, which includes Africa, Asia, the Middle East and Latin America.
- American International Group (AIG) – The American International Group operates its finance and life insurance services across 80 countries worldwide. Headquartered in New York City, AIG has won several awards for its notable accomplishments for innovations in business insurance, diversity and corporate equality. The company employs nearly 49,000 people and is considered the largest life insurance provider in the world today.
- New York Life – A privately held insurance company, New York Life was the largest mutual life insurance company in 2014, with revenues reaching $38.7 billion. In addition to life insurance and an investment management arm of the business, the company also sells long-term care insurance policies, mutual funds and annuities.
- Prudential – As one of the oldest and highest-ranking life insurance policy providers out there, Prudential interestingly does not place tobacco chewers in the smoking category. To boot, individuals who choose Prudential over AIG can save nearly $1,300 in a 10-year span. They are revered for their creative approach to underwriting and solid product line.
- Lincoln National – Unlike some of the other large players on this list, Lincoln National does not operate outside of the United States. The company grew its revenue more than 13 percent in one year, accounting for nearly 4.5 percent of the market share in 2014. Lincoln National sells life insurance, long-term care insurance, retirement plan services and annuities.
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