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Life Insurance Tips

How to Pick a Life Insurance Company

Insurance is a highly competitive business and in most cases, you will have hundreds of companies to choose from. When shopping for insurance, you should consider some of the following:

  • Price. Premiums vary widely between different companies. Compare prices from at least three companies before buying to make sure you are getting the best value. Prices may differ among companies because of different features or different levels of service or the financial strength of the insurance company. You should make sure, however, that you compare similar insurance plans. Use the following criteria:
    • Your age
    • Type of policy
    • Amount of insurance you are purchasing

  • Budget. Think twice before making your choice. If you are not able to afford the premiums you will be wasting your money when forced to drop the coverage after a few years.

  • Stability of the insurance company. The price is definitely the key factor, but the confidence that the insurance company will be in good health financially to pay your claim if necessary is also important. There are various companies that rate insurer's financial stability. Among them are the following:

  • Service. The least you should get is excellent service. Your agent or company representative should clearly explain all of your options, so you can make the best choice for your needs. If you have a claim or question, the company should handle it promptly and accurately. Your state insurance department will be able to tell you if the insurance company you are planning to do business with had many consumer complaints about its service relative to the number of policies it sold.

  • Beneficiaries. The proceeds of a life insurance policy are distributed upon death to your chosen beneficiary. A life insurance beneficiary can be an individual, your estate, or an organization. When designating a beneficiary, you should specifically name the individual and indicate the portion of the proceeds she or he is to receive. There are few restrictions on whom you may name as your life insurance beneficiary. Several states only allow you to choose a relative if you are bequeathing the proceeds to an individual. Also, a minor can only be named as a beneficiary if a guardian is assigned to supervise the life insurance proceeds and the spending of them until the minor reaches adulthood.

  • Multiple beneficiaries. Multiple life insurance beneficiaries should also be identified in the policy by name (there are no limits to the number of beneficiaries you can name). It is better to designate a percentage of the life insurance proceeds to each individual rather than a specific amount. Usually your policy will grow throughout its life and specifying a percentage each beneficiary would receive instead of a precise amount eliminates the need to correct the policy each time the policy's worth is adjusted.

  • Necessary information. In order to get an accurate life insurance quote you need to submit some data about yourself. You should be able to get an initial quote even without a lot of the specifics listed below, but it simply may not be very accurate:
    • Basic personal information.
    • Work and leisure profile (whether your occupation or hobbies are dangerous; whether you smoke, etc.).
    • Driving record (most insurers will want pretty specific information about any recent accidents, tickets, or DUI's).
    • Health profile (including both a family and personal illness histories and a basic data of your current health such as cholesterol count, blood pressure, etc.).
    • Coverage details (how much coverage you want, the type and length of policy you're seeking, etc.).

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