Choosing the Right Life Insurance Company For You

the Right Life Insurance Company For You

Choosing any kind of insurance, whether it’s health insurance, car insurance, life insurance, or any other type, really, can be a challenger to navigate if you’ve never done it before!

There’s plenty to consider, like what determines the rates for policies, coverage options, finding the right company, and so on that can make the process seem more involved than it is. And while there are some nuances to the various policies you’ll find, the basic purpose is always the same: life insurance is designed to provide your beneficiaries with a cash payout if you die.

Choosing the right life insurance company for you is actually pretty straightforward once you’re familiar with some of the terminology involved, so let’s dive in.

Factors to Consider When Choosing Life Insurance

Before embarking on your quest for the perfect life insurance policy, there are a few factors to consider to make your search easier.

Decide how long you want your coverage to be

Policies can be 10, 15, 20, 30 years long, or even for life. If you think you’ll only need insurance for the length of your mortgage or while your kids are growing up, for example, a temporary term policy is a good option. If you want the security of having it your whole life, permanent coverage is a solution.

Calculate the payout amount you need

When getting a life insurance quote, you’ll have the option of selecting the coverage amount, which can be $250,000, $400,000, $500,000, or more.

Ladder Life Insurance has policies that cover up to $1 million and they have 0 fees.

So how do you know how much you’ll need?

Use the DIME method—which stands for:

  • Debt (like car loans, mortgage, credit cards, etc)
  • Income replacement (consider who depends on your income and how long you’d want to replace your income)
  • Mortality (funeral and burial costs)
  • Education (Do you want the payout to cover education costs, like college, for your beneficiaries? Do you have kids who will need daycare covered, and do you want your policy to cover it?)

Think about other goals

There are permanent life insurance policies that have a cash value that increases over time (depending on the market and interest). Some people use these types of policies as an investment vehicle when they’ve already maxed out their other retirement accounts, like 401(k)s and Roth IRAs.

Choose your beneficiary

Who do you want the proceeds of your policy to go to when you die? This person is your beneficiary. When choosing, it’s best to avoid naming a minor since there can be some legal complications, like a child not being able to receive the funds directly.

Speak with a trusted advisor

While it’s not necessary, speaking with a trusted advisor—someone who has your best interests in mind—is a great way to get through the process if you’re still unsure about something or have any questions.

Types of Life Insurance

Once you’ve considered points from the section above, like how long you want the coverage to last and the amount needed, it’s time to think about what type of insurance is best for you.

  • Term life insurance: This is the most common type and easiest to understand. You can choose to have coverage for a specified length of time, typically between 10-30 years. This is the cheapest option since it’s temporary, but you can always choose to renew your term when it expires. Fabric life insurance offers affordable term policies that take less than 10 minutes to apply for.
  • Whole life insurance: This option covers you for life and so the premiums for it are much higher than a term policy. It also offers a cash value component since a piece of your premiums will partly go toward the policy and partly toward a savings account. The more you put in over the years, the more the value is built up.
  • Universal life insurance: This policy also covers you for life and comes with a cas