Best Life Insurance : How to Choose a Life Insurance Policy

01 Oct 2020

An insurance policy is a contract between an insurance company and an individual. The person pays a certain sum, either in installments or lump sum. This is called a premium.  This is paid against a written contract with the company that the beneficiary nominated by him will be paid the sum agreed upon after his death. Hence, one should choose the best life insurance policy so that the family can be compensated adequately.

The Insurer, Insured and Beneficiary

  • The policyholder is the insured.  
  • The company which promises to pay in case of demise is called the insurer. The insurer is not liable to pay in case of fraud or suicide.
  • The beneficiary is the person who receives the money when the policy matures.

Why should a life insurance policy?

The plight of widows and orphans who were left without financial support after wars in the 19th century inspired the army and naval officers to start a mutual benefit fund. Various denominations of the church also started funds which everyone contributed to help widows and orphans. Life insurance has its seed in these movements.

When a person buys a life insurance policy, he enjoys tax benefits during his life depending on the kind of policy he has taken. Some policies cover critical illness and even funeral expenses.

A life insurance policy is beneficial to the family of the insured. It takes care of any debts the deceased may leave behind. These could be mortgage, credit card payments or any other loans. The insured, which dies leaving behind young family, has in effect taken care of their financial needs even after he has passed away.

Factors to Consider while Buying the Best Insurance Policy

  • The first step in buying an insurance policy is to decide what your goal is.
  • Your age is crucial when you are purchasing a policy. The younger you are, the lesser is your premium.
  • You also have to decide how much you are able to pay a premium.
  • Keeping in mind your present and unforeseen expenditure, you have to choose how long you will be able to pay the premiums.
  • You can buy one life insurance policy for a big amount or many policies of smaller amounts with different beneficiaries.
  • You must choose a suitable beneficiary.
  • When you buy a life insurance policy, the company calculates how much you will have to pay.
  • The duration of the policy is a system factor. This calculation takes into account the amount that will be payable to your beneficiary when the policy matures. 

The company will also add the costs of running its establishment and a profit for itself.

If it has a public issue, then the dividend to the shareholder is also taken into account. The age of the insured and the gender play a significant role in the calculation of the premium. The age at which you buy the policy influences the cost of the premium to a great extent. The older you are, the higher will be the premium you will have to pay.

Apart from these factors, the most crucial factor is your health. The medical history of the insured and his family is examined and evaluated when the premium is calculated. BMI or the body mass index of the insured plays an important role. Premium calculations take into account your history as a driver if you hold a driving license.

The person to be insured is asked detailed questions about his lifestyle and habits. The company also uses mortality tables which are prepared by actuaries. These tables are based on the survey of the area. It studies the average age of death in a particular area in which you live. This table is used as the baseline for premium calculations.

Products offered by Some of the Best Insurance Companies –

Insurance companies offer different plans for different products to suit various needs.

  • Group insurance: This is a plan that is used by employees of a firm or an association. Individual health conditions are not as important as the financial sustainability of the group. A person who is leaving the company can buy individual insurance.
  • Accidental death: An accidental death policy is cheaper than other policies. It covers the insured only in case of death by accident. Accidents of different kinds are specified in this policy. In fact, the insured should die naturally, or of any other cause, this policy will not be payable to the beneficiary.
  • Term insurance: This policy is active only for a limited period. When you buy this policy, you specify the term or period for which you want the policy. The value does not increase as in the case of other policies.
  • Permanent life insurance: This policy will cover the rest of your life, no matter at what age you buy it. There is an age bar specified for buying this policy. The value of this policy keeps growing so long as the policy does not mature. The policyholder can access some of the amount available. He can also borrow against its cash value. If he surrenders the policy, he can get the surrender value of the policy.
  • Mortgage life insurance: This kind of policy ensures the principal sum of mortgage and the interest to be paid. The policy is for the outstanding sum plus the benefit to be paid in case the policyholder should die before the final installment of the mortgage is paid.
  • Return of premium term life insurance: This is a new type of insurance product offered by the insurance company. Although it is not as popular as term insurance, you must know about it. Although the other terms and conditions of this policy are the same as term insurance, you would have to pay a higher premium because the term of this policy is for 20 years so that you will get your money after 20 years.
  • Whole life: As evident from the name, this policy covers your whole life. It is one of the conventional insurance policies and is an excellent option if you are looking for a larger death benefit. It comes with additional benefits like access to policy funds, dividends, etc.

How to choose the best life insurance policy?

Buying a policy is a fearsome job.  It is one of the most important financial decisions you have to take. You could surf the internet to find out the best life insurance companies in 2020. But that is not enough. There will be innumerable companies offering you innumerable products. How will you decide which is best for you? Here are some valid points to check before you decide you must first decide the product you want.

  • You must find out the best life insurance quotes online.
  • The application form should be simple and easy to fill. It must answer the questions you have been asking yourself rather than raising doubts in your mind.
  • Premium rates for similar policies vary from company to company. You must see whether you are getting a reasonable rate for the product.
  • When you have chosen the provider and the product, compare the following points with other insurance providers

A. range of riders

B. coverage options

C. convertibility options

D. style of underwriting

E. payment of dividends

F. if you are a smoker, how does the company place you?


Each of these points will help you in choosing the best life insurance company. You will also find the most competitive rates with the company that is highly ranked in the insurance circles.

Best Life Insurance Companies 2020

Various insurance companies vie for the number one position in the national ranking in the United States of America. Different companies take that slot for different products. Various parameters are employed to rank the topmost companies in the country.

In the year 2020, companies that hold the distinction of being the best are as follows:

  • Haven Life Insurance
  • Mass Mutual Financial Group
  • Banner Life
  • Protective
  • Prudential
  • AIG
  • Assurity
  • MetLife

You must know why these companies hold the distinction of being top rated in the United States

  1. Haven Life Insurance Company has the most competitive rates in the market.

  • It processes applications and gives approvals quickly.
  • Its services are sterling and prompt.
  • It has an A++ rating.
  • It offers life term policies without a medical checkup to healthy individuals who meet their parameters.
  • Its term policies offer a unique feature.
  • It has death benefits up to an unprecedented $ 2,000,000
  1. Mass Mutual Financial Group has remained unchanged in its core area which is insurance. This company is wholly owned by policyholders and not by stockholders.

  • Its financial standing is rock solid and therefore this company can withstand any financial crisis.
  • It is rate A++
  • Its term policy has the privilege of conversion.
  • This can be done without hassles as per the company policy.
  • A variable universal life insurance policy is just right for you if you desire security along with growth.
  1. Banner Life: One can find a vast number of products under this banner.

  • Its strength lies in processing policy without a gamut of tests.
  • Unlike the other companies which insist on a medical examination and blood tests, you can get a policy without all these hassles with Banner Life.
  • It holds the record for processing the most significant of policies in working day.
  • The policy which is very popular under this umbrella is the OP Term series.
  • It assures a flat rate and flexibility in changing payment plans.
  • Life Step UL policy is better priced than similar products which are sold by other companies.
  • Other than that, this policy has a minimum death benefit which is guaranteed.
  • Another plus point is there is assured growth within the policy’s cash value.
  1. Protective:  This is a hundred-plus-year-old company.  It has been protecting businesses and individuals from financial upheavals.

  • It has A ratings.
  • Protective offers permanent insurance in different sectors such as estate planning.
  • Some of their products which are customer friendly are Universal, Variable Universal, Indexed Universal, and Survivorship Universal.
  • These policies allow the policyholder to choose the range of death benefits such as age and period.
  • You can also opt for investing a part of your premium in stocks.
  1. Prudential: If anyone falling in the high-risk group is looking for life insurance then Prudential is an obvious choice.

  • Prudential has relaxed parameters for even those who smoke cigarettes or cigars, chew dip, or even use marijuana.
  • Prudential is also an obvious choice for those who suffer from any impairment.
  • The essential requirement is for the applicant to be straight forward and honest.
  • It is clear that such individuals should be willing to pay a higher premium for the services from Prudential.
  • Life insurance is a must for every individual. The choice of the insurance company and product that is chosen depends on the suitability of the product and the financial ability of the individual.
  1. AIG – It is yet another popular life insurance option. AIG is a product of American General Life Insurance Company or AGLA.

  • It offers competitive pricing and exceptional customer service which makes it one of the popular choices amongst those who are looking for insurance policies.
  • It provides insurance even for the higher risk applicants, AIG has diabetic life insurance.
  • AIG also gives you a leverage to add child life insurance rider to your life insurance policy.
  • The term insurance ranges between 15-30 years.
  1. ASSURITY- It is also the right choice for those who are looking for a good life insurance policy.

  • Assurity Life Insurance Company, a mutual insurance company offers this product.
  • It has three major products which include the following:
  1. LifeScape NonMed Term 350- This is a great insurance policy because it doesn’t require a medical examination. The applicant needs to answer some questions and pass MIB, MVR and Pharmacy checks. This policy is available to people who fall in the age slab of 18-65 years. The insurance is available for a term of 10, 15, 20 and 30 years.
  2. LifeScape Whole Life Insurance- It is a fully underwritten whole life insurance policy. It is available to individuals for the age up to 85 years.
  3. LifeScape Term 350 Plus- It’s a wholly underwritten guaranteed premium term life insurance policy. People in the age group of 18-74 are eligible for this policy.

 

  1. MetLife – It is a renowned name in North America. From March 2017, the retail side of MetLife will be sold under Brighthouse Financial.

  • It offers myriads of products like level term life insurance coverage, whole life insurance coverage, guaranteed acceptance whole life insurance coverage, universal life insurance coverage.
  • Type 1 diabetics can also apply for MetLife Insurance.

Best Life Insurance for seniors over 70

If you are in your old age and want to avail insurance policy for the same, then there is a provision for the same as well. Financial emergencies are unexpected, and in such situations, you would need financial assistance. Having an insurance policy at this age would be beneficial.

Life insurance policies will get you covered and will help in times of need. But before applying for insurance, it is important to know that every insurer has different eligibility and approval parameters.

Why should one apply for insurance policies at the age of 70?

Being a senior citizen doesn’t stop you from availing a plethora of benefits which the insurance policy provides have to offer. In addition to becoming financial support in critical times, there are other benefits of life insurance for seniors above 70. Here is a look at some of the benefits that you can get if you apply for best life insurance for parents:

  1. You can use this loan amount to pay any outstanding debts
  2. Pay outstanding mortgage debt
  3. Legal fees
  4. Covering the cost of living of spouse and other dependents
  5.  Financial and estate planning expenses

How much does life insurance for people over 70 costs?

Well, it is true that most of the banks and financial institutions have to offer insurance coverage for elderly people, but an important point to note here is that these policies do come at a high cost if the applicant is a senior citizen. Every insurance policy provider takes into account different parameters for insurance approval, there is no set limit for the amount that one has to pay, but yes, the price is going to be on the higher side as compared to the young applicants. Hence, it is always advisable to start planning early and apply for insurance at a young age.

Whether you apply for a policy at a younger age or when you are in your 50s or more, the insurer is going to screen your application on various parameters and based on that; it will approve or disapprove the policy. Here is the list of factors that most of the insurance policy providers take into account:

•    Pre-existing medical conditions – If you are applying for an insurance policy at the age of 70 or more, the insurer will ask you for a medical test. This is to check your medical condition and based on it; the insurer will analyze whether you are a high-risk applicant or a low risk one.  

•    Smoker or not – We all know that smoking kills, but if you are a smoker, and then you might have to pay a higher cost of the insurance policy. Yes, many insurance policy providers take this factor into account while determining the candidature for an insurance policy. If one smokes then probably, they have to pay a higher cost of the policy.

•    Amount of coverage required – The coverage will be on a lower side since the elderly people fall in the high-risk category, the insurer will charge a higher premium and cost of the policy will also shoot up.

•    Risky occupation or hobbies – If the applicant is in a high-risk job, the insurer will ask for a higher premium.  

These are just some of the factors that an insurer may take into consideration when assessing whether they will provide cover to someone over 70 years of age.

Tabular Representation of best life insurance policies for seniors over 70

Policy Name

Issuing Age

Coverage Range

Medical examination

Leap Life

18-75 years old

$100,000 to $5,000,000

Depends on policyholder

Policygenius

18-85 years

$10,000 to $10,000,000+

Depends on policyholder

JRC Life Insurance

20 - 80 years old

$25,000 to $10,000,000

Not required

Simplified Life

18-80 years

$25,000 to $10,000,000

Depends on Policyholder

Ethos

18-75 years

$25,000 to $10,000,000

Yes, for policies over $1 million

 

Best Life Insurance for Kids

Planning is the best way to secure a child’s future. Many of the individuals start planning early, and the policyholders also provide various policies which will help the children as they grow up. It is a way to secure an amount for the bright future of the child.

Why should one take child insurance plans?

Applying for child insurance is a way to secure the future of the kid. In addition to this, these policies have several other benefits which include the following:

  1. Easy disbursal of funds on maturity or death
  2. A secured loan is available against child insurance plans
  3. One also gets the tax benefit
  4. The applicant has the option of choosing between the ULIP or endowment plan
  5. Flexible premium option

Importance of Best Life Insurance Child Plan

Secures the future of the child- There is no better step that you can take for your child’s future than to secure it. Opting for a child insurance plan is one of the ways to set some amount aside for the child. The plan will benefit the child whether or not the parents are alive. This amount can be used for a child’s education and marriage.

Inbuilt premium waiver- Yes, the child insurance plan some with this distinctive feature where the parents are assured that of the child receiving the amount.

Creating a corpus- Saving for the child’s future in times of need is a way to secure the child’s future. With these plans, you are creating a special corpus which only looks after the child even the parents are not there.

Disciplined Savings -If you opt for ULIP Child Plan then it allows the policyholder to start saving. This has to be done regularly, and a monthly premium payment mode in a ULIP provides similar coverage as the SIP. So, it’s a kind of systematic planning that you can do for your child’s future.

Carefully Chose Maturity Date- If you are opting for a child plan, then you would need this amount at a certain age. This is called the maturity date. For example, you might need this amount when your child turns 21. In this case, you must choose a date which is a week ahead of when your child turns 21. This is to avoid any delay in case of claim statement or paperwork, and your child will get the amount when it is actually required.

The right time to buy a child plan- The best time to start the child plan is ASAP. Yes, as soon as your child turns one year, start with a child plan. Remember, there is no better gift than a secured future that you can give to your child. Opting for this is a great and effective way of securing your child’s future.

Comparative analysis of how availing an insurance plan can make a difference in the life of a child:

With Child Plan

Without Child Plan

Secured future

No guarantee of monetary assistance in times of need

No need to worry about the child’s education as the policy gets it covered

A child may be deprived of an adequate fund when they want to study aboard or pursue the course of their choice

In case the parents die, the future of the child is safe because the policy gets the amount covered under it

There is no such security if one has not taken the child plan

Savings and creation of corpus for the future

No such planning

Systematic planning of the child’s future

It completely lacks any planning


 

What would be the right policy for me and when should I start planning for it?

Well, it’s never too late to start, but if you are smart enough, then it’s always good to start early. As mentioned above, the elderly people when applying for life insurance have to pay a higher premium, and there is a higher probability of insurer rejecting your application. It would not be the case when you apply for policies at a younger age.

Coming to the point that which policy would be right for you, then you must know that every policy has pros and cons, choosing the one which will benefit you involve a thorough analysis of these. We have compared a few of the above; in addition to this, you can also check the reviews and rating of the insurer to get a better insight into the policy and its benefits. Make sure that while applying for the policy plan you contact the right agent or insurance company.