How to Compare Life Insurance Policies
There is quite a varied range of life insurance products on offer and it can be very confusing to someone who is not all that clued up on the ins and outs of insurance. The main thing to remember is that life insurance can be split into two major categories – term life and whole life. When comparing life insurance policies, the main thing is to compare apples with apples. You should look at policies with similar levels of cover in order to determine which is truly the best value for money.
The Face Value of the Policy
This is the part that most people focus on and it is the most important part – after all, that is what will be paid out on your death. When asking for insurance quotes, make sure that you ask for quotes with the same amount of death cover. Companies will work out their premiums differently so it is a good idea to see what the basic cost of cover is. Be aware that many companies throw in extras benefits – only take the value of those extra benefits that you would find useful into account.
The Type of Insurance on Offer
Whilst term insurance policies may offer you the same amount of cover at a reduced rate, they will expire after a set period. Hopefully you will outlive your insurance policy’s term but, if you do, you will need further insurance. Insurance taken out twenty years from now is liable to be a lot more expensive and this should be born in mind when comparing premiums and benefits.
The Valued Added Extras
As mentioned before, some policies have extras on them for free. Others have extras that you pay for. An example would be the “Waiver of Premium” benefit which would cover you in the event that you were retrenched or unable to work. Be sure that you do not sign up for additional costs that you are unlikely to need. Let’s say, for example, that your policy offers you double cover for accidental death. Is it worth paying extra for this cover or would the basic life insurance amount be sufficient?
The Reputation of the Underwriters
This is a very important point. Sometimes new insurance companies will undercut the big guys in order to gain entry into the market. This behaviour is not always sustainable and a lot of these companies fold. You should definitely stick to well-established companies. After all, insurance is no good if the company cannot afford to pay out in the event of a claim. Go for companies with a proven track record or you may risk the company not being around in ten years.
The Actual Cost
Cost is the last consideration but is still an important one. All the other things being equal and all bells and whistles removed, which policy offers the best value for money and is best suited to your needs? Insurance may vary quite a lot in price between various insurers so it is wise to take this into account before settling on a policy.