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Best Life Insurance

Best Life Insurance

BEST LIFE INSURANCE: POLICIES AND COMPANIES

Life insurance is an agreement or a contract between the policy owner and the company selling the policy. The company promises to pay beneficiaries a lump sum of money upon your death in exchange for the insurance premiums you will pay throughout your lifetime. Lets look at some of the best life insurance policies & companies in this article.

The insurance company will require that you truthfully disclose all your past and present health conditions and any high-risk activities you are involved with. If you die, your beneficiaries will claim the money and use it to pay daily bills, take a child to college, or pay debts or a mortgage. Life insurance policy can protect your family when you are gone, ensuring that they stay home and achieve their goals. 

Types of Life Insurance

Companies offer two main types of policies to meet the preference and needs of people. One can choose a policy depending on their long-term and short-term needs. This means that you could choose permanent or temporary life insurance policy. 

Term Life Insurance

It is the most affordable and popular policy type, with 71% of buyers preferring it over any other type. Term life insurance allows the policyholder to choose the number of years they would prefer the policy to mature. These terms could be 10, 15, 20, 30, or 35 years depending on your preference. Best term life insurance policies will strike a balance between long-term financial stability and affordability. 

If the policyholder dies before the term policy matures, the beneficiaries can claim and be given tax-free death benefit money. The policyholder can also decide to renew the policy if it expires during their lifetime, though the renewal rate will be higher. Term life is divided into three categories:

Convertible Term Life Insurance:

It allows policyholders to convert their term life to permanent life insurance.

Decreasing Term Life Insurance:

This term policy is renewable, with the coverage allowed to decrease throughout the policy at an established rate. 

Renewable Term Life Insurance:

It gives policyholders a relatively lower quote when the policy is bought; however, every year, the premiums increase. 

Permanent Life Insurance

Permanent life insurance remains active during the insured whole life provided they continue paying premiums and do not surrender the policy. It is expensive than term life insurance because it builds cash value during the insured lifetime. Permanent life insurance is a savings policy since policyholders can borrow or withdraw against the cash value. It is also categorized into four types of life insurance:

  • Whole life – This type of permanent life insurance accumulates cash value, allowing the policyholder to use them for various purposes, such as premium payment, cash withdrawals, or source of loans.
  • Universal Life – Universal permanent life insurance has a cash value that earns interest with flexible premiums. It differs with whole life and term in that its premiums are adjustable over time. 
  • Burial Insurance– Burial insurance is part of a whole life policy, offering a small death benefit of between ($5,000 and $25,000) designed to cover final funeral expenses. 
  • Variable Universal – This universal life insurance allows the insured to invest their policy cash value in a separate account. It also has adjustable premiums, allowing the policyholder to increase death benefits. 

How Much Life Insurance Should You Buy?

Several factors play a part in determining the amount of your life insurance premiums. Some of these factors may be within your control, while some are above your dictates. You could also ask for a reconsideration of risks class after making necessary lifestyle adjustments. It means that if your health improves for the initial underwriting, your premium may decrease. 

How Can You Choose the Best Life insurance Policy?

Since there are several available options, choosing the best policy can be complicated and confusing. However, the easiest route is to begin by deciding on permanent and term life insurance policies.

If you intend to pay a premium for a specific period, you do well to consider term life insurance. Term life is suitable for a person who wants to cover their working years income to help them and their family when they are retired. Additionally, people with a limited budget can also consider term life. However, expect a lower rate than permanent life insurance since you are only covered for a specific period, not a lifetime. You could also begin with a term life insurance policy and convert it to permanent life should your insurance needs change over time.

On the other hand, you could go for a permanent life insurance policy to last you all your life to benefit your remaining loved ones. This policy is suitable for individuals who long to build cash value. However, if you only want to maximize cash value accumulation, we recommend investing your money on investment or savings vehicles to avoid paying for the policy and the accompanying charges. If you die, any accumulated cash value goes to the insurance company and not beneficiaries, showing why you should not take an insurance policy primarily for cash value. 

Factors affecting Life Insurance Premiums and Costs

Your premium and costs are determined by various factors, including the type of insurance you choose to buy. For instance, a whole life insurance policy will cost more than term life insurance for the same coverage. Other factors that play a role in determining premiums include:

Age: Younger people have a longer life expectancy; thus, they will pay less premium than older adults. 

Gender: statistics show that females live five years longer than the male of a similar age. Insurance companies take this into account, charging a higher premium for male persons than females.

Smoking: A smoker will pay a higher premium because they are at risk of contracting many diseases; thus, having a reduced life span than a non-smoker. 

Health: insurance companies give your health the utmost priority in establishing insurance premiums. They will examine your past and present medical conditions to calculate your probable life expectancy. This means that conditions such as cancer, diabetes, and heart disease can significantly increase your life insurance premium than for a healthy individual. 

Lifestyle: Extreme lifestyles like reckless driving, dangerous occupation and hobbies, and a criminal record can increase your premium. 

Family medical history: if your immediate family has a history of major disease, your probability of developing such a condition is higher, meaning you will pay a higher premium. 

How Life Insurance Works

The outworking of life insurance policy involves two things: the premium and the death benefit. Permanent or whole life had an additional component; cash value. 

Death Benefit

Death benefit is the money the insurance company promises to pay the insured’s beneficiaries upon the policyholder’s death. For instance, a parent may be the insured and the children, the beneficiaries. The policy should outline the beneficiaries and their desired death benefits depending on their future needs. The insurance company will establish if the insured had an insurable interest, and if there is a qualification to that effect, the coverage is issued.  

Premium

This is money the insured pays the insurance company for the promise the company offers for future benefits of the beneficiaries. If the policyholder pays the premiums as stipulated in the contract, the insurer must pay the beneficiaries death benefit should the policyholder or the insured die. The insurance company uses part of the insurance premium to defray its operating expenses.

Cash Value

Cash value is a component of permanent life insurance, and it serves two purposes. The insured can use it for cash withdrawals based on how the money is to be used. It can also be used to pay the premium and to guarantee a loan. Cash value is valuable only to the insured since it reverts to the company once the insured dies. 

Best Life Insurance Companies

Choosing the best Policy & company can be challenging with so many companies in the market today. We have reviewed the top three best life insurance companies to make your search easier. 

Northwestern Mutual

Northwestern Mutual has over 160 years of experience, offering financial services and life insurance policies. The company offers life, universal, and term life insurance policies, thus providing customers with various options. Its coverage re low-tech but personalized insurance that meets different needs for the insured. The company’s financial advice makes it stand out in helping its customers get the most of its policies. Furthermore, it allows its customers with term life insurance to convert to permanent life insurance. The policyholder can pay their premium automatically online. 

Pros

  • It provides different coverage to choose from.
  • You can combine permanent and term life policies
  • It offers dividends to some customers.

Cons

  • You can not get all your questions answered on the website
  • You will need the company financial advisors to start the process. 

Haven Life

This company offers term life insurance coverage through an online process that does not involve personal engagement with a traditional agent. Though it is new in the insurance industry, it is supported by MassMutual, an already established company. Haven Life’s objective is to provide a term life insurance that is easy to manage through an online platform without the common stress of insurance shopping. 

The company accelerates its death benefit, allowing terminally ill policyholders to have access to part of the benefit before death to help with end-of-life needs and other medical care. The company has a disability waiver in some states that enables policyholders who become completely incapacitated through illness or disability to keep their policy without paying premiums when they are disabled. 

Pros

  • The company has a simple online application procedure.
  • It does not charge any commission
  • It has excellent customer service.

Cons

  • Customers have no personal interaction with an agent since the application takes place online. 
  • It only provides term life insurance.

State Farm

State Farm offers three types of insurance: term life insurance, whole, and universal life insurance. It has over 100 years of experience in the insurance and financial industry. It provides customers buying multiple policies with competitive discounts. With State Farm, you can pay your premium in various ways, such as in person, by mail, and online. If you outlive the period of your term life policies, the company will return you the premium fee. State Farm also offers specialized insurance products, such as online applications and immediate response on term life policies, survivorship and joint-life insurance, final expense insurance, and return of premium on term life policies. 

Pros

  • The company has a wide range of policies to choose from
  • Most of its policies can be customized to meet customers’ needs.

Cons

  • Too many policies may confuse some customers to choose.
  • Some of the company’s policies have extra customization riders. 

The Bottom Line

The best life insurance policy should balance been financial stability and affordability. Choosing a policy and company can be challenging due to many players existing in the market. To succeed in your quest for the best insurance policy and company, you must know what type of policy you want and your personal goals. You can choose either permanent or term life insurance depending on whether you intend to pay a premium for a specified time or your entire policy period. 

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