For a lot of people who are shopping for life insurance, one of the first questions they ask themselves is, “what type of life insurance should I buy?” This question usually ends with some form of “whole life” or “term life,” as though those are the only two options. That’s the wrong way to think about life insurance.
I’m pretty sure I understand what people mean by the question. But I also understand why it’s based on misunderstandings of how life insurance really works. And I understand how the wrong question opens you up to the qualms of well-trained life insurance agents.
Here’s a tip: Think about the type of life insurance you buy last.
When the type of Life Insurance does matter and When it doesn’t
Obviously, if you plan on using life insurance to supplement your retirement, then you need some form of permanent insurance. Many call this “whole life.” But for most people, who see life insurance as a layer of protection for their families – to help replace part of their income, pay down debts, and support their families – it doesn’t matter.
That’s right, it doesn’t matter what type of life insurance you buy. The reason it doesn’t matter is because all you care about is the death benefit (the part that pays when you die). Any and all types of life insurance have a death benefit. The rest of it doesn’t matter.
Life insurance goals
Of course you want it from a life insurance company you can rely on, and of course you care about the price and how long the policy lasts. So the secret to buying the life insurance policy you need is to define those things in advance. Ask yourself these questions:
- How much life insurance do you need?
- How long does that need last?
- How important is having a guaranteed policy?
- How important is company quality?
- How important is price?
After you have these questions answered and outlined, go shopping for life insurance. Your answers might eliminate some types of insurance, but you might be surprised how many options are still on the table. That’s why focusing on your goals and priorities pays off. Stay focused on your goal and the jargon-filled slick presentation of insurance agents won’t impress you much.
Do you need that extra feature that gives you your premiums back if you hang on to the policy for the entire time? Do you want to be able to participate indirectly in market gains without having to worry about losses? All that sounds great, but if it’s not on your shopping list, it’s not all that important to you.
Shopping for life insurance and temptation
It’s like going to the grocery store when you’re hungry. Anything looks good, and the high-calorie stuff looks even better. If you make a shopping list instead, you get everything you need without succumbing to temptation.
If you had popsicles for the kids on your list and they have fancy ice cream on a super-sale, it’s okay to pick that up instead. But stay focused and don’t get distracted.
Think about the type of life insurance to buy last and the rest of your goals will take priority. By forcing insurance agents to compete for you based on what you want instead of letting them sell what they want, you will be able to make a better and wiser choice. If you can find that competition without a bunch of annoying phone calls and emails from agents… well it sounds like a special place.
This is a guest post by Aaron, the president of Clarifinancial – the only way to get custom life insurance quotes from multiple agents anonymously. Because they let real life insurance agents compete for you without any unwanted phone calls or emails from agents, choosing from the competition is a clear choice. If you are looking for quality life insurance quotes without the hassle, give Clarifinancial a try today.