Finding the right life insurance policy

Apr 18, 2011

A life insurance shopper should research their options before committing to a policy.

While television commercials can make it seem like a breeze to purchase a life insurance plan that will leave the policyholder's family financially secure in the event of their death, that may not always be the case.

Most of those advertisements refer to term life insurance, according to financial news website Investopedia, meaning that it only provides protection for a specific "term" that could range from 10 to even 30 years. However, the catch is that the policyholder's beneficiary will only receive a death benefit if he or she passes while the policy is active.

When investigating life insurance options, the source said shoppers should first ask themselves why they need a policy. Those who outlive their term life insurance may have to pay higher premiums or even buy a new policy to keep their coverage active, according to the site. Consumers looking for a constant plan they won't have to periodically renew should consider permanent life insurance, which doesn't expire and may even allow the policyholder to build a cash value.

Life insurance can provide comfort for loved ones during a distressing time. However, while a claim can be used in a variety of ways - such as paying off the policyholder's debts or funeral costs, or covering the beneficiary's housing expenses - a recent report from LIMRA found that less than half of U.S. households own an individual policy.

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