If you are on the hunt for the perfect life insurance policy, you’ll be searching through tons of companies, comparing all their rates and deciding between term life insurance or whole life insurance. Consider giving whole life insurance a second look because the benefits might be precisely what you need.
But how do you know when you have found the right plan that suits your needs?
It is not always easy to determine. Sometimes it can be a complete guessing game. But we have laid out a few guidelines that may help you find the best whole life insurance policy for you.
What is Whole Life Insurance?
Whole life insurance acts exactly as it sounds – it lasts for your entire life. As long as you keep making your payments, your policy will be there to protect you. This idea can be quite appealing, but it does have a downside. The rates are high.
Since the insurance company giving you the policy is at a higher risk of paying out your death benefit (the agreed dollar amount paid to the beneficiary upon your death), the rates are significantly higher compared to a term policy.
Another reason your premiums tend to be higher is the option of cashing out your policy. Although this option cancels the insurance policy, the money you receive usually provides some form of needed financial help.
So what do you look for when it is time to buy?
Consider the Company You Are Purchasing From
To provide the best whole life insurance policy, the company you buy for needs to be stable and reliable. This means doing a little research.
Look at their performance history over many years. Have they been able to pay out policies when needed or have they struggled to stay afloat? If a company has survived through economic disasters like the Great Depression or the 2008 Market Crash for more modern events, chances are they are pretty reliable.
But they also need to be stable and flexible. Check for a grade on the company. There are specific organizations that are made to rate insurance companies. Usually, the higher the rating, the more stable the company is. If you cannot find a grade or the company will not give it to you, this should be a red flag.
Compare Quotes, Fees and Returns
Shop around for your policy. You’ll find that rates for the same plan may vary from company to company. If you can get a less expensive rate for the same insurance policy at a reliable company, you could be saving a substantial amount of money over the years.
Whole life insurance has a cash value feature, similar to a savings account. Part of your monthly premium is invested in the cash value. Your policy has a guaranteed minimum growth rate so make sure to compare that as well.
Ideally, you should not pick the first policy presented to you. Instead, shop around at different companies. This policy you are buying is meant to protect your family in case of sudden death. So don’t leave your family’s financial protection in the hands of the first company you meet.