Strategies When Buying Life Insurance
People discover that the purchase of a life insurance policy at the right price to be either a very simple or a complicated procedure. In certain circumstances, the process is not helped by the insurance industry being an extremely competitive business, with sales persons motivated by earning commissions, sometimes their only source of income.
The insurance company, from which you buy your life insurance, pays a substantial commission for your business. It could mean as much as 80% of your first annual premium is destined for the agent. With whole-life premiums significantly more than those for term-life, agents naturally earn more money selling a whole-life policy to you. Therefore, it is not surprising that they will try to influence your buying of this type of policy.
Read the small print
If the whole-life policy was beneficial to the insured, there would not be an issue, but in most cases, potential buyers should buy term-life! It can be argued by agents that you will benefit more from a whole-life policy because they can be kept for the remainder of your life. Furthermore, you can accumulate cash in them that is free of tax and from which you can borrow.
This is true, but what agents do not generally reveal are the high fees and commissions that are incorporated into a whole-life policy. Adding to this, are the surrender charges should you wish to cancel it, that could leave you with a minimum or no cash value on the policy, up to 15 years after you committed to the policy.
Another factor is that a tax-free cash build-up is no longer a huge incentive. This is because of the IRA 401(k) s and other tax advantage savings facilities offering small commissions, with higher yields and they are portable. Therefore, generally it would be wise to remain with term-life and if you want to make investments then consider other sources.
A primary rule is being aware of the type of insurance policy that is best for your particular needs and how much coverage you require. In this respect, it is worth obtaining some professional and specialized qualified advice. If you intend buying your insurance online, then do some research and shop around for your life insurance.
Not only insurance companies, banks and other institutions sell life insurance. Retailers and supermarkets offer their own options and are worth considering. It can happen that a particular company will promote the insurance policies of another, but the premium you pay will depend on who you buy the policy from! Even if the products you are offered are identical, and from the same insurer, your premium could still vary between agents.
A convenient and easy way of comparing the different insurance providers is by using a price comparison website, of which there are several. Be certain that you visit a variety of websites, as there is not one that extends coverage over the complete market. Another point to keep in mind is to be on the lookout for one insurer offering better deals on one site compared its offers on others.