Shopping for life insurance can make one feel insecure about whether he or she is buying the right policy. Here are some important factors to consider:

Think carefully about what would happen to your family if you or your spouse were to pass away… This should help you come up with some ideas on what you want your life insurance to cover. Typically, people use life insurance to make up for the income lost from the deceased person. Also, a family may have a loans and credit card debt to be paid off, or childcare expenses that were not there before. Finally, family savings goals like college and retirement could be short-changed since there wasn’t enough time to accumulate required savings.

For covering normal family needs, a Term Life insurance policy is probably best. Term Life premiums must be paid each year to maintain coverage. There is no savings component to this insurance. If you stop paying, your coverage will end.

Permanent Life insurance is offered in two common forms: Whole Life and Universal. This type of insurance requires higher regular premium payments initially, but a portion of the payments will build cash value within the policy. In later years, premium payments should be much less than if you had been paying for Term Insurance. Eventually, the cash value build-up could eliminate the need to pay any more premiums – if the policy was properly funded for this.

Again, unless you have a permanent/long-term need for your life insurance such as estate planning or you have retirement planning issues, term insurance will likely better meet your family’s needs.

Besides a great rate, here are some other factors in choosing the right policy:

• Choose an insurance company with a strong financial rating. Most professionals recommend purchasing life insurance only from a company who has a rating of either A++ or A+ from the A.M. Best Rating Service (www.ambest.com). The reason is simple: You want the insurance company to be around and financially able to pay claims. September 11th taught us a great deal about how important a strong insurance company can be to one’s family.


• Look for certain provisions within the policy. When purchasing a Term Policy, be sure it offers an acceptable conversion privilege. This allows you to convert your policy to a Universal Life or Whole Life policy without evidence of insurability. This is important if you develop significant medical problems and cannot qualify for a new policy once your term insurance rates start to increase after its level-rate guarantee has ended.


• Be sure the premium you pay is guaranteed for the entire level premium period. If not, you could experience rate increases during your level premium period. This should be taken more seriously on plans with a 15-year or longer level premium period


• Be sure you can convert for the entire period that your rates remain level. Otherwise, eventually you may not be able to afford the insurance when the rates start to increase.

Some other helpful provisions that exist with many life insurance programs can allow you to collect the benefit before you die. One provision is called an Accelerated Death Benefit. This allows a terminally ill person with only a few months to live the ability to receive life insurance benefits prior to death. Some policies may also provide for certain types of Long-Term Care. Be careful in exercising these benefits, reductions in the death benefit may occur.