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How to Choose the Best Life Insurance Policy

  • Life Insurance
  • Sara Sam
  • 5 minutes

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When it comes to planning your finances, you should always be the person with a plan. Life insurance is integral to any financial plan. Therefore, finding the best life insurance policy is necessary for a solid financial plan. However, with so many different types of policies, providers, and coverage options available, choosing the right life insurance policy can seem overwhelming. Here is a step-by-step guide on how to choose the best life insurance policy. 

What is a life insurance policy? 

In a life insurance policy, you pay premiums to the insurance company. Consequently, your beneficiaries will receive the death benefits upon your death when the policy is in effect. The tax-free payout can be used to pay funeral expenses or outstanding debts. In addition, certain kinds of life insurance can be an asset when they feature a cash value component that grows over time. 

Did you know that life insurance policy has tax benefits?

Types of life insurance policies 

Term Life Insurance  

Term life insurance provides coverage for a specific period. In other words, it covers a fixed term according to what we’ve chosen in the policy. However, term life insurance pays out the death benefit to the beneficiary if the policyholder dies during the policy term. In addition, there is no cash value associated with term life insurance policies.  

Whole Life Insurance  

This is a permanent life insurance policy. If you want coverage for your entire life, then whole life insurance is the way to go. However, the premiums for this life insurance policy are higher than those for term life insurance policies. But they include a cash value component that grows over time. Meanwhile, this can be used to borrow against the cash value or to pay premiums.  

Universal Life Insurance  

Universal life insurance is another type of permanent life insurance policy. It provides coverage for the policyholder’s entire life. Universal life insurance policies also include a cash value component. However, this is a flexible policy, as the premiums and death benefits can be adjusted by the policyholder over time.  

Variable Life Insurance  

This kind of policy is like whole life insurance, but it also lets you invest. In other words, owning this policy, allows the policyholder to invest in stocks, bonds, and mutual funds. However, the cash value and death benefit of the policy can fluctuate based on the performance of the investments.  

Indexed Universal Life Insurance  

This is also a permanent life insurance policy. However, the provision to adjust the premium and death benefits makes it similar to universal life insurance. What makes it different from the latter is the placement of cash value in sub-accounts, which is similar to a stock index. 

Want to know more about life insurance? Read here!

What is the best life insurance policy?  

There is no life insurance policy that works for everyone. The type of life insurance policy that is most suitable for you will be determined by the specific requirements and conditions of your life. Similarly, it’s important to consider factors that govern your need for a policy as well. In other words, your age, health, financial goals, and family situation act as the determinants of your insurance policy. 


Here is a general guide on choosing the best life insurance policy. 

How to choose the best life insurance policy 

Inspect your financial assets  

Firstly, assess your financial situation and family needs. Secondly, consider your current and future expenses, such as mortgage payments, debts, and education, and the income you would like to replace if you died. This assessment is necessary to choose the right policy and coverage amount.  

Assess your insurance needs  

The insurance needs typically include your possible policy period, the amount you can invest for a policy every month, and the kind of return you expect.   

Learn about the types of life insurance policy  

Term and permanent life insurance are the most common and major life insurance choices. However, while planning for a life insurance policy, it is important that you expand your choices by learning about the different types available. For instance, the cash value component is available with universal and whole life insurance and will be effective for those who consider their policy an asset with a growth value.  

Compare and research the quotes  

This can take a backseat seat until you finalize the type of policy. Once you’ve finalized that, research will help you understand the trend by comparing quotes and coverage options from different insurance providers. However, while choosing your provider, it is crucial that you look into factors like the financial stability of the company, the customer complaint rating, and the policy payout rate. Review the terms and conditions  

Seek expert help  

If you find the process overwhelming, make sure you contact an insurance agent who can assist you with it. In addition, you will also receive personalized recommendations that can help you choose the best life insurance policy.   

There are also no-exam life insurance policies like accelerated underwriting policies, simplified issue policies, and guaranteed issue life insurance policies. However, these can be expensive.

Therefore, premium rates should not be your only priority when making your final call about the best life insurance policy. In addition, one should remember to give accurate information while filling out the forms for the policy; otherwise, any discrepancy in the data can result in the rejection of claims.  

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