Life insurance policy rates are determined by insurance company actuaries. They use mortality tables and other statistical information to determine actual rates. The insurance buyer is usually unaware of life insurance pricing procedures, but there are many factors you can evaluate before making a purchase. Purchasing life insurance requires some planning for it to become effective and meaningful. There are many purchased life insurance policies that end up expiring because the need was not clearly defined from the start. This can lead to repeat purchases and the loss of the benefit of keeping a policy in force. Permanent life insurance accumulates cash value over the years, so it's sometimes particularly damaging to cash out your policy and start over.
Things to consider
1. What is the goal? – This question is the most important question you will ever answer before buying life insurance. You need to be very clear about the purpose of the life insurance, otherwise you will let the policy expire when your budget needs some relief. Life insurance needs are many and therefore it is important to do some kind of needs analysis so that you are satisfied with the amount of life insurance and the type of life insurance you are buying.
2. What type of life insurance? – Once you have determined your needs, it is a good idea to set aside a certain amount of money for life insurance. This is important as it will help determine how much permanent or term life insurance to purchase.
3. What type of service? – Some people want to buy life insurance from an insurance agent because they want the agent to service the policy and keep them informed of future needs. More and more people do not want an agent and prefer to do business over the Internet or by telephone.
