How to Choose a Term Life Policy
- 1). Review your monthly budget. Determine how much money your beneficiaries, such as a spouse and children, need to survive if you die and they lose your income. Consider how much you own, and how much you owe on your house or other large items.
- 2). Calculate the desired length for your term life insurance policy. For example, if you want to purchase a policy to protect an 8-year-old child until he graduates college, buy a policy with a term lasting a minimum of 15 years. Term life insurance policies typically provide the option to choose coverage for one to 30 years.
- 3). Ask term life insurance providers for their current premiums. Your personal premium will depend on factors such as your age, your family's health history, your own health status and whether you use tobacco products. Examine each company's projected premium and benefit provision for the next five and 10 years, as premiums can increase through time, or benefits could decrease.
- 4). Inquire about the availability of riders at each term life insurance company. Riders are available options you can add to a life insurance policy for an additional premium, according to QuickQuote.com. For example, you can purchase additional death benefits that are paid out if your death was caused by an accident. You can also choose to continue life insurance coverage without further premium payments, if you become totally disabled.
- 5). Check if each insurance company offers an option to renew your term policy for a whole life policy at the term's end. A whole life policy costs more money, but offers both death benefits and cash value. If you live, you get back the amount you paid in premiums and more by cashing in the policy or borrowing against it, reports MSN Money, an online financial news source. Visit the websites of rating services such as Insurance.com, which shares financial strength ratings for various term life insurance policies, according to Standard & Poor's.