The Search for Life

If you’re in the market for life insurance, comparing policies can almost seem impossible. After all there are so many different types of life insurance policies, and countless features even when comparing similar types of insurance. While a financial professional can give you more information, there are some ways you can narrow your choices down.

Apples to Apples

There are a handful of different types of life insurance policies, but you can separate them into different piles: those offering only a death benefit and those that offer both a death benefit and potential cash value.

Within these categories are sub-categories. Term life insurance may be renewed annually (with premiums subject to increase) or over longer terms. Or you can buy level premium term life insurance, in which premium payments remain unchanged for a specified number of years. In the cash value life insurance category, there are policies in which the life insurance company pays you an interest rate and others in which your cash value depends on investments you choose.

The moral of this search: Don't compare apples to oranges, compare apples to apples.

Other Features

Once you get to comparing apples to apples, contrast ratings, which signify the financial strength of insurers. Compare features, of which there can be many.

These features, also known as riders, may be free or cost an additional premium. For example, a term life insurance policy may grant you the right for a fixed period of time to convert to a whole life insurance policy without medical underwriting. Other policy riders pay a portion of the death benefit before death if you are terminally ill, waive your premium payments if you become totally disabled and provide an additional death benefit in the event of some accidental deaths.

Don’t forget to look at exclusions when comparing policies. Some may fully insure your life immediately while others may not do the same for a year or two. Other exclusions could include manageable health conditions such as high blood pressure, a condition which another insurer may not exclude. Also make sure to look at other exclusions, such as death by drug overdose, suicide or even sky-diving.

For the most accurate comparison, remember to research policies with the same features when comparing costs.