Tips for Buying Life Insurance
If you are looking for life insurance, there are a few things you can do to help yourself make a more informed decision about the coverage you want. What should you do to make the best life insurance choices possible? We explore your options below. You’ll find important differences between military life insurance policies and those offered by commercial insurance agencies, and the rules can be different for private insurers compared to your SGLI, VGLI, and FSGLI options.
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Tips for Buying Life Insurance: Take Financial Stock
Your current income, assets, debts, and investments are crucial in deciding on the best life insurance policy. If you don’t know how much cash it takes to pay off your mortgage, student loans, auto loans, and credit card debt, you aren’t really ready to make life insurance decisions.
The going advice includes having enough coverage to pay all outstanding bills and replace your lost income.
You can discuss these options with a financial planner to get some added perspective on what it takes to be insured to cover all these needs.
But it’s not just about your current income and expenses. What about your future income from investments, pay raises, or other sources? You’ll want to consider a policy that addresses those issues, too.
Some use a “10X guideline” to establish life insurance coverage. By that, we mean having a policy that pays your annual salary times 10, should the benefit be needed. Compare the cost of such coverage versus lower amounts (your salary times 5 instead of 10, etc.)
Know What Factors May Increase Your Insurance Rates
Certain lifestyle and career factors may increase your life insurance payments. Why? Because they can, in the eyes of the insurer, make you an increased risk.
Age is one factor. Certain pre-existing conditions may be another. The risks associated with insuring you are lower when you start earlier. Smokers will pay more for life insurance than non-smokers, and even in an era where gender roles and related issues have changed a great deal, women may pay less for life insurance due to traditional life expectancy factors.
Your career field may also be a factor. Are you in a high-risk job? Did you serve in the military in high-risk environments? Does your medical record show a history of health issues? These factors may increase your premiums, but not all insurers have the same policies. It pays to shop around.
Are you applying for a no-exam policy? Be sure to ask if there is a cost difference between your options for no-exam policies. Some plans may involve minimal exams or exam questions, while others may have none at all. But they can be more expensive. It pays to ask.
Read more: Can I Get Life Insurance With PTSD?
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Be Honest on the Application
It’s tempting to paint a rosy picture on your life insurance application but your insurer will have a much easier time approving you if you are forthcoming about issues in your medical records.
The insurer is likely to learn about any documented medical issue eventually, and signing an agreement in bad faith may be grounds for legal action or termination of the policy at a minimum.
Related: What is VA Life Insurance?
Ask the Right Questions
Ask about any applicable internal costs of the policy, when they might apply, and how much. Is your policy a whole life or term life insurance policy? Does it cover you for a specific amount of time only? Or is it considered “permanent?”
Are there circumstances that nullify your coverage or that your insurance won’t cover? What if there is a dispute over your policy? You’ll want to know the answers to these questions based on the insurer’s official policies.
Do You Need Temporary Coverage?
Ask each insurer you compare whether there is a temporary coverage option to protect you while your life insurance application is being approved. Forbes.com reports, “If the underwriting process will take a few weeks or more for the policy you’re buying, you can usually lock in temporary coverage by attaching a check with your first premium payment to your application.”
Be sure to ask your insurer about this option ahead of time for best results.
Please review our Comprehensive Private Military Life Insurance Guide
>> Get easy, affordable life insurance coverage with no medical exam or labs required. To determine your eligibility, please go here.
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.